FORM
OF AUTONATION, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this “Agreement”)
is entered into as of
, by and between AUTONATION, INC., a Delaware corporation (together
with its subsidiaries and affiliates, the “Company”),
and the designated Company associate (“Optionee”) who
accepts the grant of employee stock options made hereby, and agrees
to be bound by this Agreement, through Merrill Lynch’s
Benefits OnLine System (the “BOL System”). This
Agreement shall be of no force and effect unless Optionee has
accepted this Agreement on the BOL System by
.
A. The
Company has established the AutoNation, Inc. 2008 Employee Equity
and Incentive Plan (the “Plan”), a copy of which is
attached as Exhibit A hereto, in order to provide
incentive to valued employees of the Company; and
B. The
Executive Compensation Subcommittee of the Board of Directors (the
“Board”) of the Company (the “Committee”)
has approved the grant to Optionee of a non-qualified employee
stock option to purchase from the Company shares of the
Company’s common stock, par value $0.01 per share
(“Common Stock”), on the terms and conditions set forth
in this Agreement.
NOW
THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereby agree as
follows:
1.
Definitions . Schedule 1 sets forth a Glossary
of terms that are used herein. All capitalized terms used but not
defined in this Agreement shall have the meanings given to them in
the Glossary or the Plan.
2.
Grant of Option . Subject to the terms and conditions set
forth herein and in the Plan, Optionee shall be granted under the
Plan the right and option (the “Option”) to purchase
from the Company all or any part of the number of shares of Common
Stock set forth for Optionee on the BOL System under the Grant
Information tab (for the date hereof). One-quarter (1/4) of the
Option is hereby granted as of March
at the exercise price of $[ • ] per share. Except as
otherwise provided herein or in the Plan, an additional one-quarter
(1/4) of the Option shall be granted to the Optionee on the first
trading day of the New York Stock Exchange (“NYSE”), or
the principal exchange upon which the Common Stock is listed, of
each of June, September and December
, with an exercise price equal to the fair market value of a share
of Common Stock on such grant date (which shall mean the closing
price of a share of the Common Stock on such grant date as reported
on the principal nationally recognized stock exchange on which the
Common Stock is traded on such date), subject to
continuous
employment
by Optionee with the Company from the date hereof until such date.
The Option shall not be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as
amended.
3.
Term . The term of the Option shall commence with respect to
the number of shares of Common Stock subject to the portion of the
Option granted on the respective dates on which each portion of the
Option is granted in accordance with Section 2 of this
Agreement and shall, in each case, expire ten (10) years from
the date of this Agreement, subject to the terms and conditions set
forth herein and in the Plan, as may be amended from time to
time.
4.
Vesting . Except as otherwise provided herein or in the
Plan, each separately granted portion of the Option shall vest in
four equal annual installments, 25% on
, 25% on
, 25% on
, and 25% on
, subject to continuous employment by Optionee with the Company
from the date hereof until such date. The Optionee agrees that,
notwithstanding the terms of the Plan and so long as the terms and
conditions set forth in the Consents are applicable (or such terms
and conditions have been waived, modified or eliminated with the
approval of the Board), neither (A) the acquisition by ESL of
either (x) direct or indirect beneficial ownership of 50% or
more of the Common Stock or (y) direct or indirect beneficial
ownership of more than 50% of the total combined voting power with
respect to the election of directors of the issued and outstanding
stock of the Company nor (B) ESL having the power (whether as
a result of stock ownership, revocable or irrevocable proxies,
contract or otherwise) or ability to elect or cause the election of
directors consisting at the time of such election of a majority of
the Board, shall constitute a Change in Control with respect to the
Option granted pursuant to this Agreement or constitute a
“change in control” with respect to any other option to
purchase stock of the Company held by Optionee as of the date
hereof or granted to Optionee in the future under the Plan or any
other Company stock option plan; provided , however ,
that the following events shall constitute a Change in Control for
purposes of this Agreement and constitute a “change in
control” with respect to any other option to purchase stock
of the Company held by Optionee as of the date hereof or granted to
Optionee in the future under the Plan or any other Company stock
option plan: (i) a transaction in which the Company is
acquired by or merges, consolidates or combines with, or is merged,
consolidated or combined with, ESL or any entity controlled by ESL;
or (ii) a “Rule 13e-3 transaction” with ESL, as
such term is defined in Rule 13e-3 of the Securities Exchange
Act of 1934. Any portion of the Option may be exercised only to
purchase whole shares of Common Stock, and in no case may a
fraction of a share be purchased. If any fractional share of Common
Stock would be deliverable upon exercise, such fraction shall be
rounded down to the nearest whole number.
5.
Termination of Option if Employment is Terminated Due to a
Change in Ownership of Subsidiary or Affiliate or Spin-Off .
For the purpose of clarification, if Optionee ceases to be an
employee of the Company or any Subsidiary or Affiliate of the
Company following a Change in Ownership or Spin-Off of the
Subsidiary, Affiliate or business unit by which Optionee is
employed (whether because of the termination of employment of
Optionee or be
|
