Incentive Stock Option Agreement




Exhibit 10.2
INCENTIVE STOCK OPTION AGREEMENT

(AUTOZONE OPTIONEE)



           
This INCENTIVE STOCK OPTION AGREEMENT (this "Agreement"), dated as of ----------------,
is made by and between AutoZone, Inc., a Nevada corporation (the "Company"),
and the person identified as the "Optionee" on Schedule I, an employee
of the Company ("Optionee") (together, the "Parties").


RECITALS



           
A.        The Company wishes to carry
out the AutoZone, Inc. Second Amended and Restated 1996 Stock Option Plan
(the "Plan") (the terms of which are hereby incorporated by reference and
made a part of this Agreement).


           
B.        The Compensation Committee
of the Company's Board of Directors has determined that it would be to
the advantage and best interest of the Company and its stockholders to
grant the Incentive Stock Option provided for herein to Optionee and has
advised the Company thereof and instructed the undersigned officers to
issue said Option.


           
In order to implement the following and in consideration of the mutual
covenants contained herein and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the Parties do hereby agree
as follows:


ARTICLE I

 

DEFINITIONS





           
Whenever the following terms are used in this Agreement they shall have
the meaning specified below unless the context clearly indicates to the
contrary.  Whenever the context so indicates, the masculine pronoun
shall include the feminine and neuter, and the singular the plural.

 

	 

Section 1.01 - Affiliate


 

           "Affiliate"
shall mean any Subsidiary and any limited partnership of which the Company
or any Subsidiary is the general partner.


Section 1.02 - Cause

	 

           
"Cause" shall mean the willful engagement by the Optionee in conduct which
is demonstrably or materially injurious to the Employer, monetarily or
otherwise.  For this purpose, no act or failure to act by the Optionee
shall be considered "willful" unless done, or omitted to be done, by the
Optionee not in good faith and without reasonable belief that his action
or omission was in the best interest of the Employer.
Section 1.03 - Code

 



           
"Code" shall mean the Internal Revenue Code of 1986, as amended.


 

Section 1.04 - Committee

	 

           
"Committee" shall mean the Compensation Committee of the Company's Board
of Directors which has been appointed to administer the Plan.

	 

Section 1.05 - Common Stock

	 

           
"Common Stock" shall mean shares of the Company's common stock, $.01 par
value per share.

 

	 

Section 1.06 - Corporate Transaction

	 

           
"Corporate Transaction" shall mean any of the following stockholder-approved
transactions to which the Company is a party:


           
(a)        a merger or consolidation
in which the Company is not the surviving entity, except for a transaction
the principal purpose of which is to change the State in which the Company
is incorporated, from a holding company or effect a similar reorganization
as to form whereupon this Plan and all Awards are assumed by the successor
entity;


 

           (b)       
the sale, transfer, exchange or other disposition of all or substantially
all of the assets of the Company, in complete liquidation or dissolution
of the Company in a transaction not covered by the exceptions to clause
(a), above; or


 

           (c)       
any reverse merger in which the Company is the surviving entity but in
which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities are transferred
or issued to a person or persons different from those who held such securities
immediately prior to such merger.




Section 1.07 - Duly Endorsed


 

           "Duly
Endorsed" shall mean duly endorsed by the person or persons in whose name
a stock certificate is registered in blank or accompanied by a duly executed
stock assignment separate from certificate with the signature(s) thereon
guaranteed by a commercial bank or trust company or a member of a national
securities exchange or a member of the National Association of Securities
Dealers.


 

Section 1.08 - Employer


 

           "Employer"
shall mean the Company, or any Affiliate, whichever at the time employs
the Optionee.



Section 1.09 - Option


           
"Option" shall mean the incentive stock option or options to purchase Common
Stock granted under this Agreement.


 

Section 1.10 - Option Stock


 

           "Option
Stock" shall mean all shares of Common Stock acquired by Optionee pursuant
to the exercise of this Option or any portion hereof.


 

Section 1.11 - Permanent Disability


 

           Optionee
shall be deemed to have a "Permanent Disability" hereunder when the majority
of the Board of Directors of the Employer shall, in good faith, so determine.


 

Section 1.12 - Public Offering


 

           "Public
Offering" shall mean the sale of any shares of Common Stock, or any securities
convertible into or exercisable or exchangeable for shares of Common Stock,
to the public pursuant to an effective underwritten registration statement
filed under the Securities Act of 1933, as amended (the "Act").


 

Section 1.13 - Secretary


 

           "Secretary"
shall mean the Secretary of the Company.


 

Section 1.14 - Subsidiary


 

           "Subsidiary"
shall mean any corporation in an unbroken chain of corporations beginning
with the Company if each of the corporations other than the last corporation
in the unbroken chain then owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.


 

Section 1.15 - Termination of Employment

	 

           
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Optionee and the Employer is terminated for any
reason, including, but not by way of limitation, a termination for Permanent
Disability or by resignation, discharge with or without Cause, death or
retirement, but excluding any termination where there is a simultaneous
reemployment by the Employer.  The Committee, in its absolute discretion,
shall determine the effect of all other matters and questions relating
to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from a discharge
with or without Cause, and all questions of whether particular leaves of
absence constitute Termination of Employment.



ARTICLE II

GRANT OF OPTION


 

Section 2.01 - Grant of Option


 

           For good
and valuable consideration, on the date hereof the Company irrevocably
grants to the Optionee the Option to purchase the number of shares of its
$.01 par value Common Stock set forth on Schedule I attached hereto upon
the terms and conditions set forth in this Agreement.  The Option
is intended to be an incentive stock option within the meaning of Section
422 of the Code.


 

Section 2.02 - Purchase Price


 

           The purchase
price of the shares of Common Stock covered by the Option shall be the
applicable amount per share without commission or other charge as set forth
for the Option in Schedule I attached hereto.  The exercise price
per share shall not be less than 100% (110% in the case of a grant
to an individual then owning (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 or parent corporation thereof within
the meaning of Section 422 of the Code) of the Fair Market Value (as defined
in the Plan) of a share of Common Stock on the date this incentive stock
option is granted.


 

Section 2.03 - Adjustments in Option

	 

           
In the event that the outstanding shares of Common Stock subject to the
Option are changed into or exchanged for a different number or kind of
shares or other securities of the Company, or of another corporation, by
reason of merger, consolidation, recapitalization, reclassification, stock
split, stock dividend or combination of shares, the Committee shall make
an appropriate and equitable adjustment in the number and kind of shares
as to which the Option, or portions thereof then unexercised, shall be
exercisable, to the end that after such event the Optionee's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in the Option shall be made without change in the aggregate
price applicable to the unexercised portion of the Option (except for any
change in the aggregate price resulting from rounding-off of share quantities
or prices) and with any necessary corresponding adjustment in the option
price per share.  Any such adjustment made by the Committee shall
be final and binding upon the Optionee, the Company and all other interested
persons.




ARTICLE III

PERIOD OF EXERCISABILITY



Section
3.01 - Commencement of Exercisability


           
The Option shall become exercisable as of the applicable Exercise Dates
set forth on Schedule I hereto. Notwithstanding the Exercise Dates set
forth on Schedule I, the Option shall become immediately exercisable on
the date of Optionee's death.   The Optionee acknowledges that,
to the extent that the aggregate fair market value of stock with respect
to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code), including
the Option, are exercisable for the first time by the Optionee during any
calendar year (under the Plan and all other incentive stock option plans
of the Company, any Subsidiary and any parent corporation thereof within
the meaning of Section 422 of the Code) exceeds $100,000, such options
shall be treated as not qualifying under Section 422 of the Code but rather
shall be taxed as non-qualified options.  The Optionee further acknowledges
that the rule set forth in the preceding sentence shall be applied by taking
options into account in the order in which they were granted.  For
purposes of these rules, the fair market value of stock shall be determined
as of the time the option with respect to such stock is granted.


Section 3.02 - Duration of Exercisability


           
The Option, once it becomes exercisable pursuant to Section 3.01, shall
remain exercisable until it becomes unexercisable under Section 3.03.


Section 3.03 - 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 (10)
years from the date hereof; or


 

           (b)       
The expiration of five (5) years from the date hereof if the Optionee at
the time of grant 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 or parent corporation thereof (within
the meaning of Section 422 of the Code); or


 

           (c)       
The time of the Optionee's Termination of Employment unless such Termination
of Employment results from Optionee's death, Permanent Disability, voluntary
termination, involuntary termination without Cause or retirement from the
Company at the Optionee's normal retirement age as set forth in the AutoZone,
Inc. Associate's Pension Plan, as it may be amended from time to time;
or


 

           (d)       
The expiration of thirty (30) days from the date of the Optionee's Termination
of Employment by reason of Optionee's Permanent Disability, voluntary termination
or involuntary termination without Cause, unless the Optionee dies within
said thirty-day period; or


 

           (e)       
The expiration of one (1) year from the date of the Optionee's death; or


 

           (f)       
The effective date of either the merger or consolidation of the Company
with or into another corporation (except a wholly-owned subsidiary of the
Company), or the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's
then outstanding voting stock, or the liquidation or dissolution of the
Company, unless the Committee waives this provision in connection with
such transaction.  At least ten (10) days prior the effective date
of such merger, consolidation, exchange, acquisition, liquidation or dissolution,
the Committee shall give the Optionee notice of such event if the Option
has then neither been fully exercised nor become unexercisable under this
Section 3.03.




Section 3.04 - Reduction In or Expiration of Option
In Event of Demotion


 

              
In the event that the Optionee is assigned to a position in the Company
or an Affiliate, which, as determined by the Committee in good faith, pays
a lower salary or involves less responsibility than the Optionee's position
with the Company on the date of grant, the Committee may, in its sole discretion,
reduce the number of shares of Common Stock subject to this Option or terminate
the entire Option in accordance with Section 3.03 as if the Optionee's
employment were terminated for Cause.


ARTICLE IV
EXERCISE OF OPTIONS



Section
4.01 - Person Eligible to Exercise


           
During the lifetime of the Optionee, only the Optionee may exercise the
Option or any portion thereof.  After the death of the Optionee, any
exercisable portion of the Option may, prior to the time when the Option
becomes unexercisable under Section 3.03, be exercised by his personal
representative or by any person empowered to do so under the Optionee's
will or under the then applicable laws of descent and distribution.


Section 4.02 - Manner of Exercise


           
The Option, or any exercisable portion thereof, may be exercised solely
by delivery to the Secretary or his designee of all of the following prior
to the time when the Option or such portion becomes unexercisable under
Section 3.03:

 


(a)       
Notice in writing signed by the Optionee or the other person then entitled
to exercise the Option or portion thereof, stating that the Option or portion
thereof is thereby exercised, such notice complying with all applicable
rules established by the Committee; and


 

(b)        (i)       
Full payment (in cash or by check) for the shares with respect to which
such Option or portion is exercised; or


 

           (ii)       
Delivery of a notice that the Optionee has placed a market sell order with
a broker approved by the Company with respect to shares of Common 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 option exercise price; or


 

           (iii)       
A combination of the consideration provided in the foregoing subparagraphs
(i) and (ii); and


 

(c)        Full payment in cash
to the Company of all amounts which, under federal, state or local law,
it is required to withhold upon exercise of the Option; and

 

	 

(d)       
In the event the Option or portion thereof shall be exercised pursuant
to Section 4.01 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option.




Section 4.03 - Conditions to Issuance of Stock
Certificates


 

           The shares
of Option Stock may be either previously authorized but unissued shares
or issued shares which have then been reacquired by the Company. 
Such shares shall be fully paid and nonassessable.  The Company shall
not be required to issue or deliver any certificate or certificates for
shares of Option Stock prior to fulfillment of all of the following conditions:



           
(a)        The admission of such shares
to listing on all stock exchanges on which such class of stock is then
listed; and


 


           
(b)        The completion of any registration
or other qualification of such shares 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 Committee shall,
in its absolute discretion, determine to be necessary or advisable; and


 

           
(c)        The receipt of any approval
or other clearance from any state or federal governmental agency which
the Committee shall, in its absolute discretion, determine to be necessary
or advisable; and


 

           (d)       
Full payment as stated under Section 4.02(b) for the Option exercised;
and

	 

          
(e)        The payment to the Employer
of all amounts which, under federal, state or local law, it is required
to withhold upon exercise of the Option; and

	 

          
(f)        The lapse of such reasonable
period of time following the exercise of the Option as the Committee may
from time to time establish for reasons of administrative convenience.




Section 4.04 - 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 purchasable upon
the exercise of any part of the Option unless and until certificates representing
such shares shall have been issued by the Company to such holder.


 

Section 4.05 - Number of Shares Exercised


 

           Optionee
shall not exercise the Option to purchase fewer than one hundred (100)
shares of Option Stock at a time, unless the vested portion is less than
100 shares, in which event the Optionee shall exercise the right to purchase
all vested Options at the time of exercise.


ARTICLE V
TRANSFER AND OTHER RESTRICTIONS



Section 5.01 - Rule 144


           
If the Company shall have filed a registration statement pursuant to the
requirements of Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or engaged in a Public Offering, the Company will
file the reports required to be filed by it under the Act and the Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission ("SEC") thereunder, to the extent required from time to time
to enable the Optionee to sell shares of Option Stock without registration
under the Act within the limitations of the exemptions provided by (i)
Rule 144 under the Act, as such Rule may be amended from time to time,
or (ii) any similar rule or regulation hereafter adopted by the SEC. Notwithstanding
anything contained in this Section 5.01, the Company may deregister under
Section 12 of the Exchange Act if it is then permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder.


Section 5.02 - Rule 144 Sales


           
If any of the Option Stock is to be disposed of in accordance with Rule
144 under the Act or otherwise, the Optionee shall promptly notify the
Company of such intended disposition and shall deliver to the Company at
or prior to the time of such disposition such documentation as the Company
may reasonably request in connection with such sale and, in the case of
a disposition pursuant to Rule 144, shall deliver to the Company an executed
copy of any notice on Form 144 required to be filed with the SEC.


Section 5.03 - Resales Prohibited During Public Offerings


           
Optionee agrees that if any shares of the capital stock of the Company
are offered to the public pursuant to an effective registration statement
under the Act, that upon the written request of the Company, Optionee will
not effect any public sale or distribution of any of the Option Stock not
covered by such registration statement within a period beginning seven
days prior to and ending 120 days after the effective date of such registration
statement.


ARTICLE VI

OTHER PROVISIONS



Section 6.01 - Administration


           
The Committee 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 or revoke any
such rules.  All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon the
Optionee, the Company and all other interested persons.  No member
of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or this Agreement.


Section 6.02 - Option Not Transferable


           
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Optionee or his
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; provided, however, that
this Section 6.02 shall not prevent transfers by will or by the applicable
laws of descent and distribution.


Section 6.03 - Shares to Be Reserved


           
The Company shall at all times during the term of the Option reserve and
keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Agreement.


Section 6.04 - 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 and any notice
to be given to the Optionee shall be addressed to him at the address given
on Schedule I hereof.  By a notice given pursuant to this Section
6.04, either party may hereafter designate a different address for notices
to be given to him.  Any notice which is required to be given to the
Optionee shall, if the Optionee is then deceased, be given to the Optionee's
personal representative if such representative has previously informed
the Company of his status and address by written notice under this Section
6.04.  Any notice shall have been deemed duly given when enclosed
in a properly sealed envelope or wrapper addressed as aforesaid, deposited
(with postage prepaid) in a post office or branch post office regularly
maintained by the United States Postal Service.


Section 6.05 - Titles


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


Section
6.06 - Binding Effect


           
The provisions of this Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective heirs, legal representatives,
successors and assigns.  In the case of a transferee permitted under
Section 6.02 hereof, such transferee shall be deemed the Optionee hereunder
for purposes of obtaining the benefits or enforcing the rights of Optionee
hereunder; provided, however, that no transferee shall derive any rights
under this Agreement unless and until such transferee has delivered to
the Company a valid undertaking and becomes bound by the terms of this
Agreement.


Section 6.07 - Amendment


           
Except as otherwise stated in this Agreement, this Agreement may be amended
only be a written instrument signed by the Parties which specifically states
that it is amending this Agreement.


Section 6.08 - Applicable Law


           
The laws of the State of Nevada shall govern the interpretation, validity
and performance of the terms of this Agreement, regardless of the law that
might be applied under principles of conflicts of law.


Section 6.09 -Adjustment of Options


           
(a)        Subject to Section 6.09(c),
in the event that the Committee determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or the
disposition of all or substantially all of the assets of the Company (including,
but not limited to, a Corporate Transaction), or exchange of Common Stock
or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Committee's sole discretion, affects
the Common Stock such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the benefits
intended to be made available under the Plan or with respect to an Option,
then the Committee shall, in such manner as it may deem equitable, adjust
any or all of the number and kind of shares of Common Stock subject to
this Option, or the grant or exercise price with respect to this Option.


 

           (b)       
Subject to Section 6.09(c), in the event of any Corporate Transaction or
other transaction or event described in Section 6.09(a) or any unusual
or nonrecurring transactions or events affecting the Company, any affiliate
of the Company, or the financial statements of the Company or any affiliate,
or of changes in applicable laws, regulations, or accounting principles,
the Committee in its discretion may take any one or more of the following
actions whenever the Committee determines that such action is appropriate
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available with respect to the Option, to facilitate
such transactions or events, or to give effect to such changes in laws,
regulations or principles:



           
(i)        In its sole and absolute
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide by action taken prior to the occurrence of such transaction
or event and either automatically or upon the Optionee's request, for either
the purchase of the Option for an amount of cash equal to the amount that
could have been attained upon the exercise of such Option or realization
of the Optionee's rights had such Option been currently exercisable or
payable or fully vested or the replacement of such Option with other rights
or property selected by the Committee in its sole discretion;


 

           (ii)       
In its sole and absolute discretion, the Committee may provide by action
taken prior to the occurrence of such transaction or event that the Option
cannot be exercised after such event;


 

           
(iii)        In its sole and absolute
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, by action taken prior to the occurrence of such
transaction or event, that for a specified period of time prior to such
transaction or event, the Option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in Section 3.01;


           
(iv)        In its sole and absolute
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, by action taken prior to the occurrence of such
transaction or event, that upon such event, the Option be assumed by the
successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards covering
the stock of the successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments in the number and kind of shares
and prices; or
          (v)       
In its sole and absolute discretion, and on such terms and conditions as
it deems appropriate, the Committee may make adjustments in the number
and type of shares of Common Stock subject to the Option.





           
(c)        No adjustment or action described
in this Section 6.09 or in any other provision of this Agreement shall
be authorized to the extent that such adjustment or action would cause
the Option to cease to be an incentive stock option within the meaning
of Section 422 of the Code or would cause the Option to fail to qualify
as performance-based compensation under Section 162(m) of the Code (if
the Committee intended for the Option to qualify as performance-based compensation
under Section 162(m) of the Code), as the case may be, or any successor
provisions thereto.  Furthermore, no such adjustment shall be made
in a manner that constitutes a "modification" within the meaning of Section
424(h)(3) of the Code.  Furthermore, no such adjustment or action
shall be authorized to the extent such adjustment or action would result
in short-swing profits liability under Section 16 of the Exchange Act or
violate the exemptive conditions of Rule 16b-3 under the Exchange Act.


 

           
(d)        The number of shares of Common
Stock subject to any Option or the vesting thereof shall always be rounded
to the nearest whole number.




Section 6.10 - Optionee's
Employment by Employer


 

           Nothing
contained in this Agreement or in any other agreement entered into by the
Company and the Optionee contemporaneously with the execution of this Agreement
(i) obligates the Employer to employ Optionee in any capacity whatsoever,
or (ii) prohibits or restricts the Employer from terminating the employment
of the Optionee at any time or for any reason whatsoever, with or without
cause, and the Optionee hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises whatsoever
to the Optionee concerning the Optionee's employment or continued employment
by the Employer.


 

           IN WITNESS
WHEREOF, this Agreement has been executed and delivered by the parties
hereto by their signatures on the following Schedule I.