EX-10.16






Exhibit 10.16




FORM
OF AUTONATION, INC.

STOCK OPTION AGREEMENT




     THIS STOCK OPTION AGREEMENT (this “Agreement”) is entered into as of this                           (the
“Date of Grant”), 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                     .



RECITALS




     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 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.



TERMS OF 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 of this Agreement and the
terms and conditions of the Plan, Optionee is hereby 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 of Grant),
at the exercise price of $           per share. 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.



     4. Vesting. Except as otherwise provided herein or in the Plan, the Option shall vest
in four equal annual installments, 25% on the first anniversary of the Date of Grant, 25% on the
second anniversary of the Date of Grant, 25% on the third anniversary of the Date of Grant, and 25%
on the fourth anniversary of the Date of Grant, subject to continuous employment by Optionee with
the Company as of each such date.



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     5. Termination of Option if Employment is Terminated Due to a Change in Ownership of
Subsidiary or Affiliate or Spin-Off. For purposes 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 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). For purposes of clarification, the Optionee hereby
acknowledges that in the event of a termination of the Optionee’s employment with the Company for
Cause at a time when the Optionee is eligible for Retirement (as such term is defined in the Plan),
both the Option and any other stock options to acquires shares of Company stock previously granted
to the Optionee shall be forfeited and terminate immediately.



     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 in the Company’s records, 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 of 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.



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     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 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: Compensation and Equity Analyst

Telecopy: (954) 769-3852

	 
	 	 
	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 or the Optionee until it is accepted by the Optionee on the BOL System. 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. Method of Option Exercise. To the extent permitted by the Company, the Option may
be exercised by electronic submission of an exercise order on the BOL System in accordance with the
instructions set forth thereon or otherwise in accordance with Section 9(d) of the Plan.



     13. 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 and the last sentence of Paragraph 6 hereof shall govern
notwithstanding any provisions of the Plan.



     14. Integration. Except for the provisions relating to stock options contained in
that certain Restrictive Covenants and Confidentiality Agreement of even date herewith by and
between the Company and Optionee, 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.





	 	 	 	 	 
	By: AUTONATION, INC. 

 	 
	
 	 
	Name:  	 	 
	Title:  	 	 
	 






OPTIONEE:


By accepting the Option on the BOL System,

Optionee agrees to be bound by the terms

of this Stock Option Agreement and agrees

that the Option is subject to the terms

and conditions set forth herein.









 




 




 




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STOCK OPTION AGREEMENT




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 have the meaning given to it in the Plan.




     “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 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.




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