EX-10.3






PHANTOM STOCK AGREEMENT




THIS PHANTOM STOCK AGREEMENT (this “Agreement”) is made as of the effective date set
forth on the attached notice of grant (the “Grant Notice”), between GROUP 1 AUTOMOTIVE,
INC., a Delaware corporation (the “Company”), and the employee set forth on the Grant
Notice (“Employee”).



1. Award of Phantom Shares. Pursuant to the GROUP 1 AUTOMOTIVE, INC. 1996 STOCK
INCENTIVE PLAN, as amended (the “Plan”), the Company hereby awards the number of phantom
shares of the Company (the “Phantom Shares”) set forth in the Grant Notice to Employee,
subject to the terms and restrictions set forth herein. Employee acknowledges receipt of a copy of
the Plan, and agrees that this award of Phantom Shares shall be subject to all of the terms and
provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof.
In the event of any conflict between the terms of this Agreement and the Plan, the Plan shall
control. The Plan and the Grant Notice are incorporated herein by reference as a part of this
Agreement.



2. Vesting and Forfeiture of Phantom Shares. (a) The Phantom Shares shall become
vested in accordance with the schedule set forth on the Grant Notice, provided that Employee has
been continuously employed by the Company from the date of this Agreement through the applicable
vesting date set forth on the Grant Notice. Notwithstanding the foregoing, all unvested Phantom
Shares shall become fully vested on the date Employee’s employment with the Company is terminated
by reason of death or “Disability” (which shall mean that Employee has become disabled
within the meaning of section 409A(a)(2)(C) of the Internal Revenue Code of 1986, as amended (the
“Code”), and any regulations or administrative guidance issued thereunder).



(b) While a Phantom Share remains outstanding pursuant to this Agreement, an amount equivalent
to the cash dividends paid with respect to a share of the Company’s common stock (“Common
Stock”) during such period shall be held by the Company without interest until a share of
Common Stock is deliverable to Employee with respect to such Phantom Share or such Phantom Share is
forfeited, and then such amount shall be paid to Employee or forfeited, as the case may be.



(c) In the event of the termination of Employee’s employment with the Company for any reason
other than death or Disability, Employee shall, for no consideration, forfeit to the Company all
unvested Phantom Shares.



3. Delivery/Certificates. Upon Employee’s termination of employment with the Company
for any reason, the Company shall cause a certificate or certificates for shares of Common Stock to
be issued without legend (except for any legend required pursuant to applicable securities laws or
any other agreement to which Employee is a party) in the name of Employee in cancellation for the
Phantom Shares that are vested, if any, as of the date of such termination. Notwithstanding the
foregoing however, issuance of Common Stock may not be made pursuant to this Agreement prior to the
first day such issuance would not be subject to the additional tax imposed by Section 409A of the
Code.



The Company, in its sole discretion, may elect to deliver certificates either in certificate
form or electronically to a brokerage account established for Employee’s benefit at a
brokerage/financial institution selected by the Company. Employee agrees to complete and sign any
documents and take additional action that the Company may request to enable it to deliver the
shares on Employee’s behalf.



4. Nontransferability of Phantom Shares. Employee may not sell, transfer, pledge,
exchange, hypothecate or dispose of the Phantom Shares. A breach of these terms of this Agreement
shall cause a forfeiture of the Phantom Shares.



5. Withholding of Tax. To the extent that the grant or vesting of the Phantom Shares,
or the delivery of Common Stock with respect thereto, results in compensation income to Employee
for federal or state income tax purposes, Employee shall deliver to the Company such amount of
money at such time as the Company may require to meet its obligation under applicable tax laws or
regulations or make such other arrangements to satisfy such withholding obligation as the Company,
in its sole discretion, may approve. In addition, the Company may withhold shares of Common Stock
(valued at their fair market value on the date of withholding of such shares) otherwise to be
delivered to Employee to satisfy its withholding obligations.



6. Status of Stock. Employee agrees that the Common Stock that may be issued under
this Agreement will not be sold or otherwise disposed of in any manner which would constitute a
violation of any applicable securities laws, whether federal or state, or the Company’s Code of
Conduct. Employee also agrees that (a) the certificates representing shares of Common Stock that
may be issued under this Agreement may bear such legend or legends as the Committee deems
appropriate in order to assure compliance with applicable securities laws, (b) the Company may
refuse to register the transfer of such shares of Common Stock on the stock transfer records of the
Company if such proposed transfer would in the opinion of counsel satisfactory to the Company
constitute a violation of any applicable securities law, and (c) the Company may give related
instructions to its transfer agent, if any, to stop registration of the transfer of such shares of
Common Stock.



7. Employment Relationship. For purposes of this Agreement, Employee shall be
considered to be in the employment of the Company as long as Employee remains an employee or
consultant of either the Company, a parent or subsidiary corporation (as defined in section 424 of
the Code) of the Company, or any successor corporation. Nothing in the adoption of the Plan, nor
the award of Phantom Shares thereunder pursuant to this Agreement, shall confer upon Employee the
right to continued employment or engagement as a consultant by the Company or affect in any way the
right of the Company to terminate such employment or consulting relationship at any time. Unless
otherwise provided in a written employment or consulting agreement or by applicable law, Employee’s
employment or engagement as a consultant by the Company shall be on an at-will basis, and the
employment and/or consulting relationship may be terminated at any time by either Employee or the
Company for any reason whatsoever, with or without cause. Any question as to whether and when
there has been a termination of such employment and/or consulting relationship, and the cause of
such termination, shall be determined by the Committee, and its determination shall be final.



8. Entire Agreement; Amendment. This Agreement and the documents incorporated by
reference herein replace and merge all previous agreements and discussions relating to the same or
similar subject matters between Employee and the Company and constitute the entire agreement
between Employee and the Company with respect to the subject matter of this Agreement; provided,
however, that the terms of this Agreement shall not modify and shall be subject to the terms and
conditions of any employment, consulting and/or severance agreement between the Company and
Employee in effect as of the date a determination is to be made under this Agreement. Without
limiting the scope of the preceding sentence, except as provided therein, all prior understandings
and agreements, if any, among the parties hereto relating to the subject matter hereof are hereby
null and void and of no further force and effect.



Except as provided below, any modification of this Agreement shall be effective only if it is
in writing and signed by both Employee and an authorized officer of the Company. Notwithstanding
anything in the Plan, this Agreement or any employment, consulting and/or severance agreement
between the Company and Employee to the contrary, if the Committee determines that the terms of
this grant do not, in whole or in part, satisfy the requirements of Section 409A of the Code, the
Committee, in its sole discretion, may unilaterally modify this Agreement in such manner as it
deems appropriate to comply with such section and any regulations or administrative guidance issued
thereunder.



9. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
any successors to the Company and all persons lawfully claiming under Employee.



10. Controlling Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to conflicts of laws principles thereof.