EX-10.1






EMPLOYMENT AGREEMENT




This Employment Agreement (this “Agreement”) is entered into as of July 25, 2007 by and
between AutoNation, Inc. (together with its subsidiaries and affiliates, the “Company”), and
Michael J. Jackson (the “Executive”), an individual resident of the State of Florida.



RECITALS




WHEREAS, the Executive currently serves as the Chairman and Chief Executive Officer of the
Company pursuant to an Employment Agreement dated as of December 30, 2004, as amended on March 25,
2005 (the “Prior Employment Agreement”), which is scheduled to expire by its terms on September 24,
2007; and



WHEREAS, the Company and the Executive desire to replace and supersede the Prior Employment
Agreement with this Agreement, effective as of the date hereof, and desire to set forth herein the
terms and conditions of the Executive’s employment with the Company following termination of the
Prior Employment Agreement, as well as certain non-competition covenants applicable to the
Executive.



TERMS OF AGREEMENT




In consideration of the mutual representations, warranties, covenants and agreements contained
in this Agreement, the parties hereto agree as follows:




1. Employment.




(a) Employment Period. The Executive shall serve as Chairman and Chief Executive
Officer of the Company. The period during which the Executive shall serve as Chairman and
Chief Executive Officer of the Company (the “Employment Period”) pursuant to the terms of this
Agreement shall commence on the date hereof and shall continue until the close of business on
September 24, 2010, unless earlier terminated pursuant to Paragraph 2 of this
Agreement. The parties hereto agree that the Prior Employment Agreement shall terminate and be
of no further force and effect as of the execution and delivery of this Agreement.




(b) Duties and Responsibilities. During the Employment Period, the Executive
shall have such authority and responsibility and perform such duties as are customary to the
offices the Executive holds or as may be assigned to him from time to time at the direction of
the Company’s Board of Directors. During the Employment Period, the Executive’s employment
shall be full time and the Executive shall perform his duties honestly, diligently,
competently, in good faith and in what he believes to be the best interests of the Company and
shall use his best efforts to promote the interests of the Company.




(c) Base Salary. In consideration for the Executive’s services hereunder and the
restrictive covenants contained herein, the Executive shall be paid a base salary during the
Employment Period at an annual rate of $1,150,000 (the “Salary”). The Salary will be payable
in accordance with the Company’s customary payroll practices and will be subject to annual
review and adjustment by the Compensation Committee (the “Committee”) of the Company’s Board
of Directors (or the Executive Compensation Subcommittee, as applicable); provided,
however, that the Salary shall not be reduced during the Employment Period.




(d) Bonus. During the Employment Period, the Executive shall participate in the
Company’s Senior Executive Incentive Bonus Plan (the “Plan”), or any successor or substitute
to the Plan, at such target award levels and upon such terms and conditions as are determined
in the discretion of the Committee (or the Executive Compensation Subcommittee, as
applicable); provided, however, that the target award level for annual
incentive bonuses under the Plan, or any successor or substitute to the Plan, will be no less
than the existing target award level of 133 1/3% of the Executive’s Salary at such time. A
portion of the Executive’s annual bonus will be deferred in accordance with the existing
3-year deferred bonus program for the Executive adopted by the Executive Compensation
Subcommittee in 2007. Upon expiration of the 3-year deferred bonus program at the end of 2009,
a new 3-year deferred bonus program similar to the current program will be established for the
Executive.




(e) Benefits. During the Employment Period, the Executive shall be entitled to
(i) participate in any retirement plans, insurance programs and other fringe benefit plans and
programs as are from time to time established and maintained for the benefit of executives of
the Company, subject to the provisions of such plans and programs, (ii) participate in the
CEO/President Car Policy and the Director Vehicle Allowance Program (or successor programs)
pursuant to which the Executive is entitled to the use of a vehicle selected by the Executive
and an annual vehicle allowance, and (iii) use of the Company’s corporate aircraft for
personal travel for up to 70 hours per year (provided that the value of such travel
will be included in the Executive’s annual income subject to tax in accordance with the
applicable regulations of the Internal Revenue Service and Company policy).




(f) Expenses. In addition to the compensation and benefits described above, the
Executive shall be reimbursed for all out-of-pocket expenses reasonably incurred by him on
behalf of or in connection with the business of the Company during the Employment Period, upon
delivery of receipts and pursuant to the reimbursement standards and guidelines of the
Company.




(g) Stock Options. The Executive shall be entitled to participate in any annual
stock option grants during the Employment Period (or other broad-based stock option grants
that include senior executives of the Company) at an appropriate level as determined by the
Committee (or the Executive Compensation Subcommittee, as applicable).




2. Termination.




(a) Cause, Death and Disability. At any time during the Employment Period, the
Company shall have the right to terminate the Employment Period and to discharge the Executive
for “Cause” (as defined below). Upon any such termination by the Company for Cause, the
Executive or his legal representatives shall be entitled to that portion of the Salary
prorated through the date of termination, and the Company shall have no further obligations
hereunder. Termination for Cause shall mean termination because of: (i) the Executive’s breach
of his covenants contained in this Agreement; (ii) the Executive’s failure or refusal to
perform the duties and responsibilities required to be performed by the Executive under the
terms of this Agreement; (iii) the Executive willfully engaging in illegal conduct or gross
misconduct in the performance of his duties hereunder (provided, that no act or
failure to act shall be deemed “willful” if done, or omitted to be done, in good faith and
with the reasonable belief that such action or omission was in the best interests of the
Company); (iv) the Executive’s commission of an act of fraud or dishonesty affecting the
Company or the commission of an act constituting a felony; or (v) Executive’s violation of
Company policies in any material respect. The Company acknowledges that the Executive may
resign or otherwise terminate the Employment Period and his employment with the Company
without Good Reason (as defined below), provided that (a) the Company shall have no
further obligations hereunder from and after the end of the Employment Period in such event
and (b) Executive shall provide reasonable written notice to the Company (in no event less
than twenty (20) business days) of such resignation or termination, shall provide a reasonable
transition of his duties and responsibilities with the Company and shall coordinate with the
Company as to the public communication of the resignation or termination in order to ensure an
orderly transition.




In addition, in the event that during the Employment Period the Executive (i) dies, the
Employment Period shall automatically terminate, or (ii) is unable to perform his duties and
responsibilities as provided herein due to his physical or mental disability or sickness (a)
for more than ninety (90) days (whether or not consecutive) during any period of twelve (12)
consecutive months or (b) reasonably expected to extend for greater than three (3) months, the
Company may at its election terminate the Employment Period and Executive’s employment. In the
case of clause (i) or clause (ii) above, the Company shall have no further
obligations hereunder from and after such termination date and the Executive’s rights with
respect to any employee stock options held by him shall be as set forth in the applicable
stock option plan.




(b) Without Cause by the Company or by Executive for Good Reason. At any time
during the Employment Period, the Company shall have the right to terminate the Employment
Period and to discharge the Executive without Cause effective upon delivery of written notice
to the Executive. At any time during the Employment Period, the Executive shall have the right
to terminate the Employment Period for Good Reason if, after delivery of written notice to the
Company, the Company has not cured the circumstances constituting “Good Reason” within ten
(10) business days. Upon such termination of the Employment Period by the Company without
Cause or by the Executive for Good Reason, as long as the Executive is in compliance with the
provisions of Paragraphs 3 and 4 below and within thirty (30) days of termination of
Executive’s employment the Executive executes a reasonable and mutually acceptable severance
agreement with the Company that includes a release of the Company and a covenant of reasonable
cooperation on matters Executive is involved with pertaining to the Company (a “Severance
Agreement”), the Executive will be entitled to an amount equal to (i) the sum of the
Executive’s then-current Salary plus annual bonus awarded to the Executive in the calendar
year prior to such termination of the Executive’s employment plus (ii) the pro rata
portion (based on the portion of the calendar year actually served by the Executive) of the
annual bonus to which the Executive would have been entitled had the Executive not been
terminated, to the extent applicable performance targets are met. Payment of the amount due
under clause (i) above will be made by the Company within thirty (30) days following
termination of the Executive. Payment of the amount due under clause (ii) above will
be made by the Company at the same time as annual bonuses are paid to the Company’s
bonus-eligible employees for the year in which the Executive is terminated.




In addition, upon such termination of the Employment Period by the Company without Cause or by
the Executive for Good Reason, as long as the Executive is in compliance with the provisions
of Paragraphs 3 and 4 below and the Executive executes a Severance Agreement within thirty
(30) days of termination of Executive’s employment: (1) the Executive and his dependents will
be entitled to continue to participate in the Company’s group health and welfare benefit plans
(as such plans are in effect at such time) for a period of 18 months following such
termination at the same cost to the Executive as such benefits were provided prior to such
termination (or the Company will procure and pay for comparable benefits during such time
period); (2) all vested employee stock options held by the Executive as of such termination
will survive and be exercisable for the remainder of their initial 10-year term (at which time
such stock options, if not exercised, will terminate and be void); and (3) all unvested
employee stock options held by the Executive will immediately vest on such termination and
will survive and be exercisable for one year following such termination (at which time such
stock options, if not exercised, will terminate and be void). At all times during the
Employment Period, the foregoing provisions of this paragraph shall govern in the event of any
conflict between such provisions and the provisions of any stock option agreement to which the
Executive is a party or the provisions of any stock option plan pursuant to which the
Executive’s employee stock options were granted.




“Good Reason” shall mean the occurrence of any of the following: (i) a material change by
the Company in the Executive’s duties or responsibilities which would cause Executive’s
position with the Company to become of materially and substantially less responsibility and
importance than those associated with his duties or responsibilities as of the date hereof; or
(ii) a material breach of this Agreement by the Company, which breach is not cured within ten
(10) days after written notice thereof is received by the Company.




(c) Upon termination of the Employment Period hereunder, at the Company’s request the
Executive shall resign from the Company’s Board of Directors.




(d) Notwithstanding anything to the contrary in this Agreement, to the extent required in
order to avoid accelerated taxation and/or tax penalties under Section 409A of the Internal
Revenue Code of 1986, as amended, amounts that would otherwise be payable and benefits that
would otherwise be provided pursuant to this Agreement (including payments pursuant to the
3-year deferred bonus program referred to in Paragraph 1(d) above and cash severance payable
under Paragraph 2(b) above) during the six-month period immediately following the Executive’s
termination of employment shall instead be paid on the first business day after the date that
is six months following the Executive’s “separation from service” within the meaning of
Section 409A. 



3. Restrictive Covenants. The Executive hereby acknowledges that the Company is as of
the date hereof engaged primarily in the sale, leasing, financing and servicing of new and used
vehicles, as well as the provision of related services and products, such as the sale of parts and
accessories, extended service contracts, aftermarket automotive products and collision repair
services (the “Auto Business”). The Executive further acknowledges that: (i) the Company may engage
in additional related businesses or in separate and distinct businesses from time to time, (ii) the
Company currently engages in its businesses by means of traditional retail establishments, the
Internet and otherwise and the Company may in the future engage in its businesses by alternative
means, and (iii) the Executive’s position with the Company is such that he will be privy to
specific trade secrets, confidential information, confidential business lists, confidential
records, customer goodwill, specialized training and employees, any or all of which have great and
competitive value to the Company.



The Executive hereby agrees that, for a period of one (1) year following the termination of
the Executive’s employment with the Company (by the Company or the Executive for any reason), the
Executive shall not, directly or indirectly, anywhere in the United States (or in any other
geographic area outside the United States where the Company conducts business at any time during
Executive’s employment with the Company):




(a) participate or engage in or own an interest in, directly or indirectly, any
individual proprietorship, partnership, corporation, joint venture, trust or other form of
business entity, whether as an individual proprietor, partner, joint venturer, officer,
director, member, employee, consultant, independent contractor, stockholder, lender, landlord,
finder, agent, broker, trustee, or in any manner whatsoever (except for an ownership interest
not exceeding 1% of a publicly-traded entity), if such entity or its affiliates is engaged,
directly or indirectly, in the Auto Business or any other business of the type and character
engaged in or competitive with any business conducted by the Company at any time during the
Executive’s employment by the Company on or after the date hereof;




(b) employ, or knowingly permit any company or business directly or indirectly controlled
by him to employ, any person who was employed by the Company or any subsidiary or affiliate of
the Company at or within the prior six (6) months, or in any manner seek to induce any such
person to leave his or her employment (including, without limitation, for or on behalf of a
subsequent employer of the Executive);




(c) solicit any customers to patronize any business directly or indirectly in competition
with the businesses conducted by the Company or any subsidiary or affiliate of the Company at
any time during the Executive’s relationship with the Company; or




(d) request or advise any Person who is a customer or vendor of the Company or any
subsidiary or affiliate of the Company or its successors to withdraw, curtail or cancel any
such customer’s or vendor’s business with any such entity.



4. Confidentiality. The Executive acknowledges that he previously entered into, and
will continue to abide by, the Employee Confidentiality Agreement dated July 24, 2002. The
Executive hereby also agrees that, without the prior approval of the Company, he shall not at any
time during his employment with the Company and for a period of five (5) years thereafter: (1) give
any interviews or speeches, write any books or articles, make any public statements (whether
through the press, at automobile trade conferences or meetings or through similar media), or make
any disparaging or negative statements: (x) concerning the Company or any of its businesses or
reputation or the personal or business reputations of its directors, officers, shareholders or
employees, (y) concerning any matter he has participated in while an employee of the Company, or
(z) in relation to any matter concerning the Company or any of its businesses occurring after the
Employment Period; or (2) in any way impede, disrupt or interfere with the contracts, agreements,
understandings, communications or relationships of the Company with any third party.



5. Acknowledgments of the Parties. The parties agree and acknowledge that the
restrictions contained in Paragraphs 3 and 4 are reasonable in scope and duration and are necessary
to protect the Company. If any provision of Paragraphs 3 or 4 as applied to any party or to any
circumstance is adjudged by a court to be invalid or unenforceable, the same shall in no way affect
any other circumstances or the validity or enforceability of any other provisions of this
Agreement. If any such provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of such provision and/or
to delete specific words or phrases and in its reduced form, such provision shall then be
enforceable and shall be enforced. The Executive agrees and acknowledges that the breach of
Paragraph 3 or 4 will cause irreparable injury to the Company, and upon breach of any provision of
such Paragraphs, the Company shall be entitled to injunctive relief, specific performance or other
equitable relief, provided, however, that such remedies shall in no way limit any
other remedies which the Company may have (including, without limitation, the right to seek
monetary damages).



6. Notices. All notices requests, demands, claims or other communications hereunder
shall be in writing and shall be deemed given if delivered by certified or registered mail (first
class postage pre-paid), hand delivery, guaranteed overnight delivery or facsimile transmission, if
such transmission is confirmed by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers (or to such other
addresses or telecopy numbers which such party shall designate in writing to the other parties):




To the Company:




AutoNation, Inc.


110 S.E. 6th Street, 29th Floor


Fort Lauderdale, Florida 33301


Attention: General Counsel


Telecopy: (954) 769-6340




To Executive:




Michael J. Jackson


AutoNation, Inc.


110 S.E. 6th Street, 29th Floor


Fort Lauderdale, Florida 33301


Telecopy: (954) 769-6402



7. Amendment, Waiver, Remedies. This Agreement may not be modified, amended,
supplemented, extended, canceled or discharged, except by written instrument executed by all
parties. No failure to exercise, and no delay in exercising, any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or
other provision, nor shall any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement are in addition to
all other rights and remedies, at law or equity, that they may have against each other.



8. Assignment. This Agreement, and the Executive’s rights and obligations hereunder,
may not be assigned by him. The Company may assign its rights, together with its obligations
hereunder, to any of its affiliates or subsidiaries, or any successor thereto.



9. Severability; Survival; Term. In the event that any provision of this Agreement is
found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable
provision shall be deemed modified so as to be enforceable (or if not subject to modification then
eliminated herefrom) for the purpose of those procedures to the extent necessary to permit the
remaining provisions to be enforced. The provisions of this Agreement (other than Paragraph 1 and,
except for obligations in Paragraph 2 resulting from a termination of the Employment Period,
Paragraph 2) will survive the termination for any reason of the Employment Period and Executive’s
relationship with the Company. If the Employment Period has not been terminated in accordance with
Paragraph 2 of this Agreement prior to September 24, 2010, (i) the respective obligations of the
parties under Paragraphs 1 and 2 hereof shall terminate on September 24, 2010, and (ii) the
provisions of Paragraphs 3-11 under this Agreement shall survive.



10. Counterparts. This Agreement may be signed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one and the same instrument.



11. Governing Law. This Agreement shall be construed in accordance with and governed
for all purposes by the laws of the State of Florida applicable to contracts executed and to be
wholly performed within such State.



12. Agency. Nothing herein shall imply or shall be deemed to imply an agency
relationship between the Executive and the Company.



* * * *




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



AUTONATION, INC., a Delaware corporation



/s/ William C. Crowley

William C. Crowley

Chair, Compensation Committee of the Board of Directors




/s/ Michael J. Jackson


MICHAEL J. JACKSON, individually