Exhibit 10.12

FORM OF
STOCK OPTION AGREEMENT

     This STOCK OPTION AGREEMENT (this “Agreement”) is entered into by and
between AUTONATION, INC., a Delaware corporation (together with its subsidiaries
and affiliates, the “Company”), and _________(“Optionee”) as of this ___th day
of ___, 200___. This Agreement shall not constitute a binding obligation of the
Company until it is signed by the [AUTHORIZED OFFICER] of the Company, and a
signed copy is delivered to Optionee. This Agreement shall be of no force and
effect unless Optionee has signed this Agreement and it has been received by the
Company’s Stock Option Plan Administrator by ___, 200___.

Recitals:

     A. The Company has established the Amended and Restated [Year] Employee
Stock Option 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 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 $.01 per share (“Common Stock”), on the terms and
conditions set forth in this Agreement.

Terms of Agreement

     NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, 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 of this Agreement
and the terms and conditions of the Plan, Optionee is hereby granted the right
and option to purchase from the Company all or any part of an aggregate of
[SHARE AMOUNT] shares of Common Stock at the exercise price of $____ per share
(the “Option”) under the Plan. 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 on the date of this
Agreement and expire ten (10) years from the date of this Agreement, subject to
the terms and conditions hereof and the terms and conditions of the Plan, as may
be amended from time to time.

 

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     4. Vesting. The Option will vest in four equal annual installments
beginning on _______, subject to continuous employment by Optionee with the
Company as of each such date.

     5. Termination of Option if Employment is Terminated Due to a Change in
Ownership of Subsidiary or Affiliate or Spin-Off. 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 because the corporation or other entity by which Optionee was
employed ceases to be a Subsidiary or Affiliate of the Company or otherwise),
then the Option shall immediately terminate.

     6. Optionee Bound by Terms of Plan. Optionee hereby acknowledges receipt of
a copy of the Plan and agrees to be bound by all of the terms, conditions and
provisions thereof (including, without limitation, the termination of the Option
in the event of a termination of the Optionee’s employment with the Company for
Cause).

     7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without regard to its
principles of conflict of laws. The parties agree that any action, suit or
proceeding arising out of or relative to this Agreement or the relationship of
Optionee and the Company shall be instituted only in the State or federal courts
located in Broward County in the State of Florida, and each party waives any
objection that such party may now or hereafter have to such venue or
jurisdiction in any action, suit or proceeding brought in any State or federal
court located in Broward County, Florida. Optionee affirms that he or she has
sufficient contact with Florida such that Optionee would reasonably anticipate
being hailed into said courts in Florida regarding this Agreement or any other
contract or issues arising between the parties hereto. Any and all service of
process and any other notice in any such action, suit or proceeding shall be
effective against Optionee if given by mail (registered or certified where
possible, return receipt requested), postage prepaid, mailed to Optionee at the
address set forth on the signature page hereof, or shall be effective against
the Company if given in accordance with Paragraph 10 hereof.

     8. No Right to Continued Employment. Nothing contained in this Agreement
shall confer on Optionee the right to continue in the employment of the Company
or otherwise shall impede the Company’s ability to terminate Optionee’s
employment.

     9. Severability. The invalidity or enforceability or any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

     10. Notices. All notices, requests, demands, claims and other
communications by Optionee with respect to the Option shall be in writing and
shall be deemed given if delivered by certified or registered mail (first class
postage prepaid), guaranteed overnight delivery or facsimile transmission if
such transmission is confirmed by delivery by certified or registered mail
(first class postage prepaid) or guaranteed overnight delivery, to the following
address (or to

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such other addresses or telecopy numbers which the Company shall designate in
writing to Optionee from time to time):

     

  AutoNation, Inc.
110 S.E. 6th Street
Fort Lauderdale, Florida 33301
Attention: Stock Option Plan Analyst
Telecopy: (954) 769-3110
 
   
     with a copy to:
  AutoNation, Inc.
110 S.E. 6th Street
Fort Lauderdale, Florida 33301
Attention: General Counsel
Telecopy: (954) 769-6340
(no copy required for notice of Option exercise)

     11. Binding Effect. This Agreement shall not constitute a binding
obligation of the Company until it is signed by the [AUTHORIZED OFFICER] of the
Company. Subject to the limitations stated above and in the Plan, this Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
the Company and to Optionee’s heirs, legatees, distributees and personal
representatives. No handmarked or interlineated modifications shall constitute a
part of this Agreement.

     12. Conflict with Terms of Plan. In the event that any provision of this
Agreement conflicts with any provision of the Plan and cannot reasonably be
interpreted to be a clarification of such provision of the Plan or an exercise
of the authority granted to the Plan’s administrator pursuant to the Plan, the
provision of the Plan shall govern and be controlling. For purposes of
clarification, Paragraph 5 hereof shall govern notwithstanding any provisions of
the Plan.

     13. Integration. This Agreement supersedes all prior agreements and
understandings between the Company and Optionee relating to the grant of the
Option, whether oral or otherwise.

* * * * * *

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.

     
AUTONATION, INC.
  OPTIONEE
 
   
By:
   
 
   

  Signature
 
   
 
   
Its:
   
 
   

  Print or Type Name
 
   
 
   

   

  Address
 
   
 
   

   

  City, State, Zip
 
   
 
   

   

  Social Security Number
 
   
 
   

   

  Date

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EXHIBIT A

STOCK OPTION PLAN

 

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SCHEDULE 1

GLOSSARY

     The terms below shall have the following meanings when used throughout the
Agreement. Capitalized terms that are used but not defined in the Agreement or
this Glossary shall have the meanings given to them in the Plan.

     “Affiliate” shall mean a Subsidiary or any other entity of which on the
relevant date at least a majority of the Voting Securities are at the time owned
directly or indirectly by the Company or any Subsidiary.

     “Cause” shall mean: (i) Optionee’s conviction for commission of a felony or
other crime; (ii) the commission by Optionee of any act against the Company
constituting willful misconduct, dishonesty, fraud, theft or embezzlement;
(iii) Optionee’s failure, inability or refusal to perform any of the material
services, duties or responsibilities required by him or her by the Company, or
to materially comply with the policies or procedures established from time to
time by the Company, for any reason other than his or her illness or physical or
mental incapacity; (iv) Optionee’s dependence, as determined in good faith by
the Company, on any addictive substance, including, but not limited to, alcohol
or any illegal or narcotic drugs; (v) the destruction of or material damage to
Company property caused by Optionee’s willful or grossly negligent conduct; and
(vi) the willful engaging by Optionee in any other conduct which is demonstrably
injurious to the Company or its Subsidiaries, monetarily or otherwise.

     “Change in Ownership” A Change in Ownership shall be deemed to have
occurred with respect to an Optionee if (i) as a result of a merger,
consolidation, reorganization, business combination, sale, exchange or other
disposition of Voting Securities or other transaction, the corporation or other
entity by which Optionee is employed ceases to be a Subsidiary or Affiliate of
the Company and, immediately after such transaction, the persons who were
stockholders of the Company immediately before such transaction do not own at
least a majority of the Voting Securities of such corporation or other entity,
or (ii) there is a sale or other disposition of all or substantially all of the
assets of the trade, business, corporation or other entity by which Optionee is
employed and, immediately after such transaction, the Company or the persons who
were stockholders of the Company immediately before such transaction do not own
at least a majority of the Voting Securities of a corporation or other entity
that acquires such assets or engages in such trade or business. Notwithstanding
the foregoing, a Change in Ownership shall not include a Change in Control (as
defined in the Plan) of the Company.

     “Spin-Off” A Spin-Off shall be deemed to have occurred with respect to an
Optionee if the corporation or other entity by which Optionee was employed, or
the entity that succeeds to the business unit or trade by which Optionee was
employed, is not a Subsidiary or Affiliate of the Company following a pro rata
distribution or dividend of its capital stock to the persons who were
stockholders of the Company immediately before

 

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such transaction and, immediately after such transaction, such corporation or
other entity has a class of Voting Securities that is traded publicly on a
national securities exchange.

     “Subsidiary” shall have the meaning given to it in Section 424(f) of the
Internal Revenue Code of 1986, as amended.

     “Voting Securities” shall mean securities or other ownership interest
having ordinary voting power (absolutely or contingently) for the election of
directors or other persons performing similar functions.