Exhibit 10.5

 

COPART, INC.

 

2007 EQUITY INCENTIVE PLAN

 

STOCK OPTION AWARD AGREEMENT

 

Unless otherwise defined herein, the terms defined in the Copart, Inc. 2007
Equity Incentive Plan (the “Plan”) will have the same defined meanings in this
Stock Option Award Agreement (the “Award Agreement”).

 

I.                                         NOTICE OF STOCK OPTION GRANT

 

Participant Name:

 

Address:

 

You have been granted an Option to purchase Common Stock of Copart, Inc. (the
“Company”), subject to the terms and conditions of the Plan and this Award
Agreement, as follows:

 

Grant Number

 

 

 

 

 

Date of Grant

 

 

 

 

 

Vesting Commencement Date

 

 

 

 

 

Exercise Price per Share

 

$                                 

 

 

 

Total Number of Shares Granted

 

 

 

 

 

Total Exercise Price

 

$                                   

 

 

 

Type of Option:

 

      Incentive Stock Option

 

 

 

 

 

      Nonstatutory Stock Option

 

 

 

Term/Expiration Date:

 

 

 

Vesting Schedule:

 

Subject to any acceleration provisions contained in the Plan or set forth below,
this Option may be exercised, in whole or in part, in accordance with the
following schedule:

 

[INSERT VESTING SCHEDULE]

 

Termination Period:

 

This Option will be exercisable for three (3) months after Participant ceases to
be a Service Provider, unless such termination is due to Participant’s death or
Disability, in which case this Option will be exercisable for twelve (12) months
after Participant ceases to be Service Provider. 

 

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

 

Notwithstanding the foregoing, in no event may this Option be exercised after
the Term/Expiration Date as provided above and may be subject to earlier
termination as provided in Section 14(c) of the Plan.

 

By Participant’s signature and the signature of the Company’s representative
below, Participant and the Company agree that this Option is granted under and
governed by the terms and conditions of the Plan and this Award Agreement,
including the Terms and Conditions of Stock Option Grant, attached hereto as
Exhibit A, all of which are made a part of this document.  Participant has
reviewed the Plan and this Award Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Award
Agreement and fully understands all provisions of the Plan and Award Agreement. 
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions relating to
the Plan and Award Agreement.  Participant further agrees to notify the Company
upon any change in the residence address indicated below.

 

PARTICIPANT:

COPART, INC.

 

 

 

 

 

 

 

Signature

By

 

 

 

 

 

Print Name

Title

 

 

Residence Address:

 

 

 

 

 

 

 

 

 

 

 

 

2

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

 

EXHIBIT A

 

TERMS AND CONDITIONS OF STOCK OPTION GRANT

 

1.                                       Grant of Option.  The Company hereby
grants to the Participant named in the Notice of Grant attached as Part I of
this Award Agreement (the “Participant”) an option (the “Option”) to purchase
the number of Shares, as set forth in the Notice of Grant, at the exercise price
per Share set forth in the Notice of Grant (the “Exercise Price”), subject to
all of the terms and conditions in this Award Agreement and the Plan, which is
incorporated herein by reference.  Subject to Section 19(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and the terms
and conditions of this Award Agreement, the terms and conditions of the Plan
will prevail.

 

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this
Option is intended to qualify as an ISO under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”).  However, if this Option is
intended to be an ISO, to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it will be treated as a Nonstatutory Stock Option (“NSO”).

 

2.                                       Vesting Schedule.  Except as provided
in Section 3, the Option awarded by this Award Agreement will vest in accordance
with the vesting provisions set forth in the Notice of Grant.  Shares scheduled
to vest on a certain date or upon the occurrence of a certain condition will not
vest in Participant in accordance with any of the provisions of this Award
Agreement, unless Participant will have been continuously a Service Provider
from the Date of Grant until the date such vesting occurs.

 

3.                                       Administrator Discretion.  The
Administrator, in its discretion, may accelerate the vesting of the balance, or
some lesser portion of the balance, of the unvested Option at any time, subject
to the terms of the Plan.  If so accelerated, such Option will be considered as
having vested as of the date specified by the Administrator.

 

4.                                       Exercise of Option.

 

(a)           Right to Exercise.  This Option may be exercised only within the
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Award Agreement.

 

(b)           Method of Exercise.  This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit B (the “Exercise Notice”) or in
a manner and pursuant to such procedures as the Administrator may determine,
which will state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the “Exercised Shares”), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan.  The Exercise Notice will be completed
by Participant and delivered to the Company.  The Exercise Notice will be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares together with any applicable tax withholding.  This Option will be deemed
to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price.

 

3

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

 

5.                                       Method of Payment.  Payment of the
aggregate Exercise Price will be by any of the following, or a combination
thereof, at the election of Participant.

 

(A)                                  CASH;

 

(B)                                 CHECK;

 

(C)                                  CONSIDERATION RECEIVED BY THE COMPANY UNDER
A FORMAL CASHLESS EXERCISE PROGRAM ADOPTED BY THE COMPANY IN CONNECTION WITH THE
PLAN; OR

 

(D)                                 SURRENDER OF OTHER SHARES WHICH HAVE A FAIR
MARKET VALUE ON THE DATE OF SURRENDER EQUAL TO THE AGGREGATE EXERCISE PRICE OF
THE EXERCISED SHARES, PROVIDED THAT ACCEPTING SUCH SHARES, IN THE SOLE
DISCRETION OF THE ADMINISTRATOR, WILL NOT RESULT IN ANY ADVERSE ACCOUNTING
CONSEQUENCES TO THE COMPANY.

 

6.                                       Tax Obligations.

 

(A)                                  WITHHOLDING TAXES.  NOTWITHSTANDING ANY
CONTRARY PROVISION OF THIS AWARD AGREEMENT, NO CERTIFICATE REPRESENTING THE
SHARES WILL BE ISSUED TO PARTICIPANT, UNLESS AND UNTIL SATISFACTORY ARRANGEMENTS
(AS DETERMINED BY THE ADMINISTRATOR) WILL HAVE BEEN MADE BY PARTICIPANT WITH
RESPECT TO THE PAYMENT OF INCOME, EMPLOYMENT AND OTHER TAXES WHICH THE COMPANY
DETERMINES MUST BE WITHHELD WITH RESPECT TO SUCH SHARES.  TO THE EXTENT
DETERMINED APPROPRIATE BY THE COMPANY IN ITS DISCRETION, IT WILL HAVE THE RIGHT
(BUT NOT THE OBLIGATION) TO SATISFY ANY TAX WITHHOLDING OBLIGATIONS BY REDUCING
THE NUMBER OF SHARES OTHERWISE DELIVERABLE TO PARTICIPANT.  IF PARTICIPANT FAILS
TO MAKE SATISFACTORY ARRANGEMENTS FOR THE PAYMENT OF ANY REQUIRED TAX
WITHHOLDING OBLIGATIONS HEREUNDER AT THE TIME OF THE OPTION EXERCISE,
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE COMPANY MAY REFUSE TO HONOR THE
EXERCISE AND REFUSE TO DELIVER SHARES IF SUCH WITHHOLDING AMOUNTS ARE NOT
DELIVERED AT THE TIME OF EXERCISE.

 

(B)                                 NOTICE OF DISQUALIFYING DISPOSITION OF ISO
SHARES.  IF THE OPTION GRANTED TO PARTICIPANT HEREIN IS AN ISO, AND IF
PARTICIPANT SELLS OR OTHERWISE DISPOSES OF ANY OF THE SHARES ACQUIRED PURSUANT
TO THE ISO ON OR BEFORE THE LATER OF (I) THE DATE TWO (2) YEARS AFTER THE GRANT
DATE, OR (II) THE DATE ONE (1) YEAR AFTER THE DATE OF EXERCISE, PARTICIPANT WILL
IMMEDIATELY NOTIFY THE COMPANY IN WRITING OF SUCH DISPOSITION.  PARTICIPANT
AGREES THAT PARTICIPANT MAY BE SUBJECT TO INCOME TAX WITHHOLDING BY THE COMPANY
ON THE COMPENSATION INCOME RECOGNIZED BY PARTICIPANT.

 

(C)                                  CODE SECTION 409A.  UNDER CODE
SECTION 409A, AN OPTION THAT VESTS AFTER DECEMBER 31, 2004 THAT WAS GRANTED WITH
A PER SHARE EXERCISE PRICE THAT IS DETERMINED BY THE INTERNAL REVENUE SERVICE
(THE “IRS”) TO BE LESS THAN THE FAIR MARKET VALUE OF A SHARE ON THE DATE OF
GRANT (A “DISCOUNT OPTION”) MAY BE CONSIDERED “DEFERRED COMPENSATION.”  A
DISCOUNT OPTION MAY RESULT IN (I) INCOME RECOGNITION BY PARTICIPANT PRIOR TO THE
EXERCISE OF THE OPTION, (II) AN ADDITIONAL TWENTY PERCENT (20%) FEDERAL INCOME
TAX, AND (III) POTENTIAL PENALTY AND INTEREST CHARGES.  THE DISCOUNT OPTION MAY
ALSO RESULT IN ADDITIONAL STATE INCOME, PENALTY AND INTEREST CHARGES TO THE
PARTICIPANT.  PARTICIPANT ACKNOWLEDGES THAT THE COMPANY CANNOT AND HAS NOT
GUARANTEED THAT THE IRS WILL AGREE THAT THE PER SHARE EXERCISE PRICE OF THIS
OPTION EQUALS OR EXCEEDS THE FAIR MARKET VALUE OF A SHARE ON THE DATE OF GRANT
IN A LATER EXAMINATION.  PARTICIPANT AGREES THAT IF THE IRS DETERMINES THAT THE
OPTION WAS GRANTED WITH A PER SHARE EXERCISE PRICE THAT WAS LESS THAN THE FAIR
MARKET VALUE

 

4

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

 

OF A SHARE ON THE DATE OF GRANT, PARTICIPANT WILL BE SOLELY RESPONSIBLE FOR
PARTICIPANT’S COSTS RELATED TO SUCH A DETERMINATION;

 

7.                                       Rights as Stockholder.  Neither
Participant nor any person claiming under or through Participant will have any
of the rights or privileges of a stockholder of the Company in respect of any
Shares deliverable hereunder unless and until certificates representing such
Shares will have been issued, recorded on the records of the Company or its
transfer agents or registrars, and delivered to Participant.  After such
issuance, recordation and delivery, Participant will have all the rights of a
stockholder of the Company with respect to voting such Shares and receipt of
dividends and distributions on such Shares.

 

8.                                       No Guarantee of Continued Service. 
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT
THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING
PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR
ACQUIRING SHARES HEREUNDER.  PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR
THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING
PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT
ANY TIME, WITH OR WITHOUT CAUSE.

 

9.                                       Address for Notices.  Any notice to be
given to the Company under the terms of this Award Agreement will be addressed
to the Company, in care of its General Counsel at Copart, Inc., 4665 Business
Center Drive, Fairfield, California, 94534, or at such other address as the
Company may hereafter designate in writing.

 

10.                                 Non-Transferability of Option.  This Option
may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Participant
only by Participant.

 

11.                                 Binding Agreement.  Subject to the
limitation on the transferability of this grant contained herein, this Award
Agreement will be binding upon and inure to the benefit of the heirs, legatees,
legal representatives, successors and assigns of the parties hereto.

 

12.                                 Additional Conditions to Issuance of Stock. 
If at any time the Company will determine, in its discretion, that the listing,
registration or qualification of the Shares upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory authority is necessary or desirable as a condition to the issuance of
Shares to Participant (or his or her estate), such issuance will not occur
unless and until such listing, registration, qualification, consent or approval
will have been effected or obtained free of any conditions not acceptable to the
Company.  The Company will make all reasonable efforts to meet the requirements
of any such state or federal law or securities exchange and to obtain any such
consent or approval of any such governmental authority.  Assuming such
compliance, for income tax purposes the

 

5

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

 

Exercised Shares will be considered transferred to Participant on the date the
Option is exercised with respect to such Exercised Shares.

 

13.                                 Plan Governs.  This Award Agreement is
subject to all terms and provisions of the Plan.  In the event of a conflict
between one or more provisions of this Award Agreement and one or more
provisions of the Plan, the provisions of the Plan will govern.  Capitalized
terms used and not defined in this Award Agreement will have the meaning set
forth in the Plan.

 

14.                                 Administrator Authority.  The Administrator
will have the power to interpret the Plan and this Award Agreement and to adopt
such rules for the administration, interpretation and application of the Plan as
are consistent therewith and to interpret or revoke any such rules (including,
but not limited to, the determination of whether or not any Shares subject to
the Option have vested).  All actions taken and all interpretations and
determinations made by the Administrator in good faith will be final and binding
upon Participant, the Company and all other interested persons.  No member of
the Administrator will be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Award
Agreement.

 

15.                                 Electronic Delivery.  The Company may, in
its sole discretion, decide to deliver any documents related to Options awarded
under the Plan or future Options that may be awarded under the Plan by
electronic means or request Participant’s consent to participate in the Plan by
electronic means.  Participant hereby consents to receive such documents by
electronic delivery and agrees to participate in the Plan through any on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

 

16.                                 Captions.  Captions provided herein are for
convenience only and are not to serve as a basis for interpretation or
construction of this Award Agreement.

 

17.                                 Agreement Severable.  In the event that any
provision in this Award Agreement will be held invalid or unenforceable, such
provision will be severable from, and such invalidity or unenforceability will
not be construed to have any effect on, the remaining provisions of this Award
Agreement.

 

18.                                 Modifications to the Agreement.  This Award
Agreement constitutes the entire understanding of the parties on the subjects
covered.  Participant expressly warrants that he or she is not accepting this
Award Agreement in reliance on any promises, representations, or inducements
other than those contained herein.  Modifications to this Award Agreement or the
Plan can be made only in an express written contract executed by a duly
authorized officer of the Company.  Notwithstanding anything to the contrary in
the Plan or this Award Agreement, the Company reserves the right to revise this
Award Agreement as it deems necessary or advisable, in its sole discretion and
without the consent of Participant, to comply with Code Section 409A or to
otherwise avoid imposition of any additional tax or income recognition under
Section 409A of the Code in connection to this Option.

 

19.                                 Amendment, Suspension or Termination of the
Plan.  By accepting this Award, Participant expressly warrants that he or she
has received an Option under the Plan, and has received, read and understood a
description of the Plan.  Participant understands that the Plan is discretionary
in nature and may be amended, suspended or terminated by the Company at any
time.

 

6

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

 

20.                                 Governing Law.  This Award Agreement will be
governed by the laws of the State of California, without giving effect to the
conflict of law principles thereof.  For purposes of litigating any dispute that
arises under this Option or this Award Agreement, the parties hereby submit to
and consent to the jurisdiction of the State of California, and agree that such
litigation will be conducted in the courts of Solano County, California, or the
federal courts for the United States for the Northern District of California,
and no other courts, where this Option is made and/or to be performed.

 

[Remainder of Page Intentionally Left Blank]

 

7

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

 

EXHIBIT B

 

COPART, INC.

 

2007 EQUITY INCENTIVE PLAN

 

EXERCISE NOTICE

 

Copart, Inc.

 

4665 Business Center Drive

 

Fairfield, CA 94534

 

Attention:  [              ]

 

1.                                       Exercise of Option.  Effective as of
today,                                 ,           , the undersigned
(“Purchaser”) hereby elects to purchase                              shares (the
“Shares”) of the Common Stock of Copart, Inc. (the “Company”) under and pursuant
to the 2007 Equity Incentive Plan (the “Plan”) and the Stock Option Award
Agreement dated                  (the “Award Agreement”).  The purchase price
for the Shares will be $                          , as required by the Award
Agreement.

 

2.                                       Delivery of Payment.  Purchaser
herewith delivers to the Company the full purchase price of the Shares and any
required tax withholding to be paid in connection with the exercise of the
Option.

 

3.                                       Representations of Purchaser. 
Purchaser acknowledges that Purchaser has received, read and understood the Plan
and the Award Agreement and agrees to abide by and be bound by their terms and
conditions.

 

4.                                       Rights as Stockholder.  Until the
issuance (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company) of the Shares, no right to
vote or receive dividends or any other rights as a stockholder will exist with
respect to the Shares subject to the Option, notwithstanding the exercise of the
Option.  The Shares so acquired will be issued to Participant as soon as
practicable after exercise of the Option.  No adjustment will be made for a
dividend or other right for which the record date is prior to the date of
issuance, except as provided in Section 14 of the Plan.

 

5.                                       Tax Consultation.  Purchaser
understands that Purchaser may suffer adverse tax consequences as a result of
Purchaser’s purchase or disposition of the Shares.  Purchaser represents that
Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is
not relying on the Company for any tax advice.

 

6.                                       Entire Agreement; Governing Law.  The
Plan and Award Agreement are incorporated herein by reference.  This Exercise
Notice, the Plan and the Award Agreement constitute the entire

 

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

 

agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser’s interest except by means of a writing signed by the
Company and Purchaser.  This agreement is governed by the internal substantive
laws, but not the choice of law rules, of the State of California.

 

Submitted by:

Accepted by:

 

 

PURCHASER

COPART, INC.

 

 

 

 

 

 

 

 

Signature

By

 

 

 

 

 

 

Print Name

Title

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date Received

 

2

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