Exhibit 10.5
CUSTOMTRACKS CORPORATION
1996 DIRECTORS' STOCK OPTION PLAN
(Amended and Restated as of November 1998)
Section 1. Purpose
The purpose of the CustomTracks Corporation 1996 Directors' Stock Option
Plan (hereinafter called the "Plan") is to advance the interests of CustomTracks
Corporation (hereinafter called the "Company") by strengthening the ability of
the Company to attract, on its behalf, and retain non-employee directors of high
caliber through encouraging a sense of proprietorship by means of stock
ownership.
Section 2. Definitions
"Adoption Date" shall mean December 14, 1995.
"Board of Directors" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean a committee of the Board of Directors comprised
of at least two directors. Members of the Committee shall be selected by the
Board of Directors. To the extent necessary to comply with the requirements of
Rule 16b-3, the Committee shall consist of two or more Disinterested Directors.
Also, if the requirements of (S)162(m) of the Code are intended to be met, the
Committee shall consist of two or more "outside directors" within the meaning of
(S)162(m) of the Code.
"Common Stock" shall mean the Common Stock of the Company, par value
$.01 per share.
"Date of Grant" shall mean the date on which an Option is granted under
the Plan.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive amounts due the
Participant in the event of the Participant's death. In the absence of an
effective designation by the Participant, Designated Beneficiary shall mean the
Participant's estate.
"Disinterested Director" shall mean a director who has not been, during
the one year prior to service as an administrator of the Plan, granted or
awarded an option pursuant to the Plan or any other plan of the Company or any
of its affiliates (except for grants or awards pursuant to Section 6(a) of the
Plan or as may be permitted by Rule 16b-3 promulgated under the Exchange Act).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"External Director" shall mean a Director of the Company who is not an
employee of the Company or a subsidiary.
"Fair Market Value" shall mean the closing sales price (or average of
the quoted closing bid and asked prices if there is no closing sales price
reported) of the Common Stock on the date specified as reported by the Nasdaq
Stock Market, or by the principal national stock exchange on which the Common
1
Stock is then listed. If there is no reported price information for such date,
the Fair Market Value will be determined by the reported price information for
Common Stock on the day nearest preceding such date.
"Option" shall mean a Stock Option granted pursuant to Section 6.
"Optionee" shall mean the person to whom an option is granted under the
Plan or who has obtained the right to exercise an option in accordance with the
provisions of the Plan.
"Participant" shall mean a person who receives an award of Options under
the Plan.
"Qualifying External Director" shall mean an External Director who is
not a person, an employee or affiliate of a person, or a designee to the Board
of Directors of a person (in each case, other than a person that is a
strategic/business partner of the Company), that is required to file a statement
under Section 13(d) or 13(g) of the Exchange Act or the rules, regulations, and
interpretations of the Securities and Exchange Commission thereunder with
respect to ownership of the Common Stock.
"Rule 16b-3" shall mean Rule 16b-3 of the rules and regulations under
the Exchange Act as it may be amended from time-to-time and any successor
provision to Rule 16b-3 under the Exchange Act.
Section 3. Administration
The Plan shall be administered by the Committee. The Committee shall
have sole and complete authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time deem advisable, and to construe, interpret, and administer the
terms and provisions of the Plan and the agreements thereunder. The
determinations and interpretations made by the Committee are final and
conclusive.
Section 4. Eligibility
All Qualifying External Directors shall be eligible to receive awards of
Options under the Plan.
Section 5. Maximum Amount Available for Awards
Subject to the provisions of Section 9, the maximum number of shares of
Common Stock in respect of which Options may be granted under the Plan shall be
225,000 shares of Common Stock. No Participant may be granted Options for more
than 50,000 shares of Common Stock in the aggregate during the term of the Plan.
Shares of Common Stock may be made available from authorized but unissued shares
of the Company or from shares reacquired by the Company, including shares
purchased in the open market. In the event that an Option is terminated
unexercised as to any shares of Common Stock covered thereby, such shares shall
thereafter be again available for award pursuant to the Plan.
Section 6. Stock Options
(a) During the term of the Plan, on the date that a Qualifying External
Director is first appointed or elected to the Board of Directors after the
Adoption Date, such director shall be granted nonqualified Options to purchase
25,000 shares of Common Stock. Each Qualifying External Director serving on the
Board of Directors on the Adoption Date shall be granted nonqualified Options to
purchase 22,500 shares of Common Stock, effective as of the Adoption Date. In
addition, subject to the provisions of the last two sentences of this
Subsection, on each subsequent date that a Qualifying External Director is re-
2
elected to the Board of Directors, such director shall be granted nonqualified
Options to purchase 2,500 shares of Common Stock. All options granted pursuant
to this Subsection shall vest six months from the date of grant, subject to the
provisions of Subsection 11(j). No 2,500 share Option grant shall be made to a
Qualifying External Director under this Subsection in a calendar year when such
director received an Option grant under Section 4(c) of the Company's 1992 Stock
Option Plan or under Subsection 6(a)(4) of the Company's 1995 Long-Term
Incentive Plan. No 2,500 share Option grant shall be made under this Subsection,
(i) after December 31, 1998, to a Qualifying External Director who does not own
at least 10,000 shares of the Common Stock (in the case of directors serving on
the Board of Directors on the Adoption Date) or (ii) after the third anniversary
of a director's initial appointment or election to the Board of Directors if
such director does not own at least 10,000 shares of the Common Stock by such
third anniversary (in the case of all other Qualifying External Directors).
(b) All Options granted under the Plan prior to shareholder approval of
the Plan shall be subject to the approval of the Plan by the shareholders of the
Company.
(c) The exercise price for Options granted hereunder shall be 100% of
the Fair Market Value of the Common Stock on the Date of Grant.
(d) Each Option shall be exercisable at such times and subject to such
terms and conditions as specified in the applicable grant; provided, however,
that in no event may any Option granted hereunder be exercisable after the
expiration of ten years from the Date of Grant. The Committee may impose such
conditions with respect to the exercise of Options, including without
limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable.
(e) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in cash, or its equivalent, or, if and to the extent
permitted by the Committee, by exchanging shares of Common Stock owned by the
Optionee (which are not the subject of any pledge or other security interest),
or by a combination of the foregoing, provided that the combined value of all
cash and cash equivalents and the Fair Market Value of any such Common Stock so
tendered to the Company, valued as of the date of such tender, is at least equal
to such option price.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, any Option may be exercised by a
broker-dealer acting on behalf of an Optionee if (a) the broker-dealer has
received from the Optionee instructions signed by the Optionee requesting the
Company to deliver the shares of Common Stock subject to such option to the
broker-dealer on behalf of the Optionee and specifying the account into which
such shares should be deposited, (b) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise, and (c)
the broker-dealer and the Optionee have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor provision.
(f) The Company shall not be required to issue any fractional shares
upon the exercise of any Options granted under the Plan. No Optionee or such
Optionee's legal representatives, legatees or distributees, as the case may be,
will be, or will be deemed to be, a holder of any shares subject to an Option
unless and until said Option has been exercised and the purchase price of the
shares in respect of which the Option has been exercised has been paid. Unless
otherwise provided in the agreement applicable thereto, an Option shall not be
exercisable except by the Optionee or by a person who has obtained the
Optionee's rights under the Option by will or under the laws of descent and
distribution or pursuant to a "qualified domestic relations order" as defined in
the Code.
3
Section 7. Plan Amendments
To the extent necessary to comply with Rule 16b-3, Subsections 6(a) and
6(c) shall not be amended more than once every six months, other than to comport
with changes in the Code or in the Employee Retirement Income Security Act of
1974, as amended, or the rules promulgated thereunder. Except as provided in the
immediately preceding sentence, the Board of Directors may amend, abandon,
suspend or terminate the Plan or any portion thereof at any time in such
respects as it may deem advisable in its sole discretion, provided that no
amendment shall be made without shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for these
purposes any approval requirement that is a prerequisite for exemptive relief
under Section 16(b) of the Exchange Act.
Section 8. Restrictions on Transfer of Common Stock
Without the Company's prior written consent, any Common Stock issued to
a person subject to the provisions of Section 16(b) of the Exchange Act, as
interpreted by the rules, regulations, and interpretations of the Securities and
Exchange Commission thereunder, pursuant to the exercise of an Option granted
under the Plan and intended to comply with the requirements of Rule 16b-3 shall
not be transferred until at least six months after the later of (i) the date of
grant of such Option or (ii) the date on which the Plan is approved by the
Company's shareholders in accordance with Rule 16b-3.
Section 9. Adjustment to Shares
In the event that the Committee shall determine that any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below Fair Market Value, or other similar
corporate event affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall adjust appropriately any or
all of (i) the number and kind of shares which thereafter may be optioned under
the Plan, (ii) the number and kind of shares subject of Options, and (iii) the
exercise price with respect to any of the foregoing and/or, if deemed
appropriate, make provision for cash payment to a Participant or a person who
has an outstanding Option; provided, however, that the number of shares subject
to any Option shall always be a whole number.
Section 10. Effective Date
Subject to the approval of the shareholders of the Company, the Plan
shall be effective as of the Adoption Date.
Section 11. General Provisions
(a) The Company shall have the right to deduct from all amounts paid to
a Participant in cash (whether under the Plan or otherwise) any taxes required
by law to be withheld in respect of Options under the Plan. However, if
permitted by the Committee or under the terms of the applicable agreement, the
Participant may pay all or any portion of the taxes required to be withheld by
the Company by electing to have the Company withhold shares of Common Stock, or
by delivering previously owned shares of Common Stock, having a Fair Market
Value equal to the amount required to be withheld or paid. The Participant must
make the foregoing election on or before the date that the amount of tax to be
withheld is determined ("Tax Date"). Any such election is irrevocable and
subject to disapproval by the Committee. If the Participant is subject to the
short-swing profits recapture provisions of Section 16(b) of the Exchange
4
Act, then the applicable agreement shall not provide the Participant an election
option, or, if it does, any such election shall be subject to the restrictions
imposed by Rule 16b-3.
(b) Each Option hereunder shall be evidenced in writing, delivered to
the Participant, and shall specify the terms and conditions thereof and any
rules applicable thereto, including but not limited to, the effect on such
Option of the death, retirement, disability or other separation from
directorship of the Participant and the effect thereon, if any, of a change in
control of the Company.
(c) Unless otherwise provided in the agreement applicable thereto, no
Option shall be assignable or transferable except by will or under the laws of
descent and distribution or pursuant to a "qualified domestic relations order"
as defined in the Code, and no right or interest of any Participant shall be
subject to any lien, obligation or liability of the Participant.
(d) Neither the Plan nor any Option granted hereunder is intended to
confer upon any Participant any rights with respect to continuance of the
utilization of his or her services by the Company, nor to interfere in any way
with his or her right or that of the Company to terminate his or her services at
any time (subject to the terms of any applicable contract, law, regulation, and
the articles and bylaws of the Company). The conditions to apply to the exercise
of an Option in the event an Participant ceases to serve as a director of the
Company for any reason shall be determined by the Committee, and such conditions
shall be specified in the written agreement evidencing the award.
(e) Subject to the provisions of the applicable Option, no Participant
or Designated Beneficiary shall have any rights as a stockholder with respect to
any shares of Common Stock to be distributed under the Plan until he or she has
become the holder thereof.
(f) The validity, construction, interpretation, administration and
effect of the Plan and of its rules and regulations, and rights relating to the
Plan, shall be determined solely in accordance with the laws of the State of
Texas (without giving effect to its conflicts of laws rules) and, to the extent
applicable, federal law.
(g) No Options may be granted under the Plan after December 13, 2005;
however, all previous Options granted that have not expired under their original
terms or will not then expire at the time the Plan expires will remain
outstanding.
(h) Restrictions on Issuance of Shares
(1) The Company shall not be obligated to issue any shares upon the
exercise of any Option granted under the Plan unless: (i) the shares
pertaining to such Option have been registered under applicable
securities laws or are exempt from such registration; (ii) the prior
approval of such sale or issuance has been obtained from any state
regulatory body having jurisdiction; and (iii) in the event the Common
Stock has been listed on any exchange, the shares pertaining to such
Option have been duly listed on such exchange in accordance with the
procedure specified therefor. The Company shall be under no obligation
to effect or obtain any listing, registration, qualification, consent or
approval with respect to shares pertaining to any Option granted under
the Plan. If the shares to be issued upon the exercise of any Option
granted under the Plan are intended to be issued by the Company in
reliance upon the exemptions from the registration requirements of
applicable federal and state securities laws, the recipient of the
Option, if so requested by the Company, shall furnish to the Company
such evidence and representations, including an opinion of counsel,
satisfactory to it, as the Company may reasonably request.
5
(2) The Company shall not be liable for damages due to a delay in
the delivery or issuance of any stock certificates for any reason whatsoever,
including, but not limited to, a delay caused by listing, registration or
qualification of the shares of Common Stock pertaining to any Option granted
under the Plan upon any securities exchange or under any federal or state law or
the effecting or obtaining of any consent or approval of any governmental body.
(i) The Committee may impose such other restrictions on the ownership
and transfer of shares issued pursuant to the Plan as it deems desirable; any
such restrictions shall be set forth in the agreement applicable thereto.
(j) The vesting of all Options granted hereunder shall automatically
accelerate upon a "change in control" of the Company.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
its behalf as of the 18th day of November, 1998.
CUSTOMTRACKS CORPORATION
By: /s/ Ronald A. Woessner
-------------------------------
Title: Vice President
----------------------------
Date: November 18, 1998
-----------------------------
6