Document:

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EXHIBIT 4.1

ADVANCED NEUROMODULATION SYSTEMS, INC.

2002 STOCK OPTION PLAN

     1.     Purpose of the Plan. This Plan shall be known as the Advanced
Neuromodulation Systems, Inc. 2002 Stock Option Plan. The purposes of the Plan
are (i) to attract and retain the best available advisory directors,
consultants and non-executive employees, and (ii) to provide incentives to such
advisory directors, consultants and non-executive employees to promote the
success of the business of Advanced Neuromodulation Systems, Inc. and its
subsidiaries.

     2.     Definitions. As used herein, the following definitions shall apply:

               (a) “Advisory Director” means a person that the Corporation designates as
a member of the Corporation’s Advisory Board of Directors.

               (b) “Board” means the Board of Directors of the Corporation.

               (b) “Common Stock” means the Common Stock, $.05 par value per share, of
the Corporation. Except as otherwise provided herein, all Common Stock issued
pursuant to the Plan shall have the same rights as all other issued and
outstanding shares of Common Stock, including but not limited to voting rights,
the right to dividends, if declared and paid, and the right to pro rata
distributions of the Corporation’s assets in the event of liquidation.

               (c) “Committee” means the committee described in Section 18(a) that
administers the Plan.

               (d) “Consultant” means a consultant engaged by the Corporation to render
consulting services to the Corporation.

               (d) “Corporation” means Advanced Neuromodulation Systems, Inc., a Texas
corporation.

               (e) “Date of Grant” means the date on which an Option is granted pursuant
to this Plan or, if the Committee so determines, the date specified by the
Committee as the date the award is to be effective.

               (f) “Employee” means any employee of the Corporation or one of its
Subsidiaries, but excluding any “executive officer” (as defined in Rule 3b-7
promulgated pursuant to the Exchange Act) or director of the Corporation or one
of its Subsidiaries.

               (g) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

               (h) “Fair Market Value” means the closing sale price (or average of the
quoted closing bid and asked prices if there is no closing sale price reported)
of the Common

 

 

Stock on the trading day immediately prior to the date specified as reported by
The Nasdaq Stock Market or by the principal national stock exchange on which
the Common Stock is then listed. If there is no reported price information for
the Common Stock, the Fair Market Value will be determined by the Committee, in
its sole discretion. In making such determination, the Committee may, but shall
not be obligated to, commission and rely upon an independent appraisal of the
Common Stock.

               (i) “Option” means a stock option granted pursuant to Section 6 of this
Plan.

               (j) “Optionee” means any Employee, Advisory Director, or Consultant who
receives an Option.

               (k) “Participant” means any Employee, Advisory Director, or Consultant who
receives an Option.

               (l) “Plan” means the Advanced Neuromodulation Systems, Inc. 2002 Stock
Option Plan, as amended from time to time.

               (m) “Rule 16b-3” means Rule 16b-3 of the rules and regulations under the
Exchange Act, as Rule 16b-3 may be amended from time to time, and any successor
provisions to Rule 16b-3 under the Exchange Act.

               (n) “Subsidiary” means any now existing or hereinafter organized or
acquired company of which more than fifty percent (50%) of the issued and
outstanding voting stock is owned or controlled directly or indirectly by the
Corporation or through one or more Subsidiaries of the Corporation.

     3.     Term of Plan. The Plan has been adopted by the Board effective as of June 5,
2002. Any Options granted under the Plan will be “nonqualified stock options”
under the Internal Revenue Code of 1986, as amended from time to time, and will
not be “incentive stock options” under the Code. The Plan shall continue in
effect until terminated pursuant to Section 18(a).

     4.     Shares Subject to the Plan. Except as otherwise provided in Section 17
hereof, the aggregate number of shares of Common Stock issuable upon the
exercise of Options pursuant to this Plan shall be 225,000 shares; provided,
however, that on January 1 of each year (commencing on January 1, 2003), the
aggregate number of shares of Common Stock then issuable upon the exercise of
Options shall be increased by the same percentage that the total number of
issued and outstanding shares of Common Stock increased from the preceding
January 1 to the following December 31 (if such percentage is positive). For
example, if the total number of issued and outstanding shares of Common Stock
on January 1, 2002 were 5,000,000, the total number of issued and outstanding
shares of the Corporation on December 31, 2002 were 5,500,000, and the
aggregate number of shares of Common Stock then issuable upon the exercise of
Options pursuant to this Plan were 180,000, the aggregate number of shares of
Common Stock issuable under the Plan effective January 1, 2003 would be 198,000
(a 10% increase). Shares issuable upon the exercise of Options may either be
authorized but unissued shares or treasury

 

 

shares. The Corporation shall, during the term of this Plan, reserve and keep
available a number of shares of Common Stock sufficient to satisfy the
requirements of the Plan. If an Option should expire or become unexercisable
for any reason without having been exercised in full, then the shares that were
subject thereto shall, unless the Plan shall have terminated, become
immediately available for the grant of additional Options under this Plan,
subject to the limitations and adjustments set forth above. In addition, for
purposes of calculating the aggregate number of shares that may be issued under
this Plan, only the net shares issued (including the shares, if any, withheld
for tax withholding requirements) shall be counted when shares of Common Stock
are used as full or partial payment for shares issued upon exercise of a
Option. Shares tendered by a Participant as payment for shares issued upon such
exercise shall be available for reissuance under the Plan.

     5.     Eligibility. Options may be granted under Section 6 of the Plan to such
Employees, Consultants and Advisory Directors of the Corporation or its
Subsidiaries as may be determined by the Committee. Subject to the limitations
and qualifications set forth in this Plan, the Committee shall also determine
the number of Options to be granted, the number of shares subject to each
Option grant, the exercise price or prices of each Option, the vesting and
exercise period of each Option, whether an Option may be exercised as to less
than all of the Common Stock subject thereto, and such other terms and
conditions of each Option as are consistent with the provisions of this Plan.

     6.     Grant of Options. Except as provided in Section 18(c), the Committee shall
determine the number of shares of Common Stock to be offered from time to time
pursuant to Options granted hereunder and shall grant Options under the Plan.
No member of the Committee shall be eligible to receive Options. The grant of
Options shall be evidenced by Option agreements containing such terms and
provisions as are approved by the Committee and executed on behalf of the
Corporation by an appropriate officer.

     7.     Time of Grant of Options. The date of grant of an Option under the Plan
shall be the date on which the Committee awards the Option or, if the Committee
so determines, the date specified by the Committee as the date the award is to
be effective. Notice of the grant shall be given to each Participant to whom an
Option is granted promptly after the date of such grant.

     8.     Price. The exercise price for each share of Common Stock subject to an
Option (the “Exercise Price”) granted pursuant to Section 6 of the Plan shall
be determined by the Committee at the Date of Grant.

     9.     Vesting. Subject to Section 11 of this Plan, each Option award under the
Plan shall vest or be subject to forfeiture in accordance with the provisions
set forth in the applicable Option agreement. The Committee may, but shall not
be required to, permit acceleration of vesting or termination of forfeiture
provisions upon any sale of the Corporation or similar transaction. A
Participant’s Option agreement may contain such additional provisions with
respect to vesting as the Committee may specify.

     10.     Exercise. A Participant may pay the Exercise Price of the shares of Common
Stock as to which an Option is being exercised by the delivery of (a) cash, (b)
check, (c) at the

 

 

Corporation’s option, by the delivery of shares of Common Stock having a Fair
Market Value on the date immediately preceding the exercise date equal to the
Exercise Price and have been held by the Optionee at least six (6) months prior
to the date of exercise, or (d) at the Corporation’s option, any other
consideration that the Corporation determines is consistent with the Plan’s
purpose and applicable law. If the shares to be purchased are covered by an
effective registration statement under the Securities Act of 1933, as amended,
any Option granted under the Plan may be exercised by a broker-dealer acting on
behalf of an Optionee if (i) the broker-dealer has received from the Optionee
or the Corporation a fully- and duly-endorsed agreement evidencing such Option,
together with instructions signed by the Optionee requesting the Corporation to
deliver the shares of Common Stock subject to such Option to the broker-dealer
on behalf of the Optionee and specifying the account into which such shares
should be deposited, (ii) adequate provision has been made with respect to the
payment of any withholding taxes due upon such exercise, and (iii) the
broker-dealer and the Optionee have otherwise complied with Section 220.3(e)(4)
of Regulation T, 12 CFR Part 220, or any successor provision.

     11.     [Reserved.]

     12.     Option Financing. Upon the exercise of any Option granted under the Plan,
the Corporation may, but shall not be required to, make financing available to
the Participant for the purchase of shares of Common Stock pursuant to such
Option on such terms as the Board or the Committee may specify.

     13.     Withholding of Taxes. The Committee shall make such provisions and take
such steps as it may deem necessary or appropriate for the withholding of any
taxes that the Corporation is required by any law or regulation of any
governmental authority to withhold in connection with any Option including, but
not limited to, (a) withholding the issuance of all or any portion of the
shares of Common Stock subject to such Option until the Participant reimburses
the Corporation for the amount it is required to withhold with respect to such
taxes, (b) withholding any portion of such issuance in an amount sufficient to
reimburse the Corporation for the amount of taxes it is required to withhold,
(c) allowing the Participant to deliver Common Stock as payment for the amount
the Corporation is required to withhold for taxes or (d) taking any other
action reasonably required to satisfy the Corporation’s withholding obligation.

     14.     Conditions Upon Issuance of Shares.

               (a) The Corporation shall not be obligated to sell or issue any shares
upon the exercise of any Option granted under the Plan unless the issuance and
delivery of shares comply with all provisions of applicable federal and state
securities laws and the requirements of The Nasdaq Stock Market or any stock
exchange upon which shares of the Common Stock may then be listed.

               (b) As a condition to the exercise of an Option, the Corporation may
require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of applicable federal and state securities laws.

 

 

                (c) The Corporation shall not be liable for refusing to sell or issue any
shares covered by any Option if the Corporation cannot obtain authority from
the appropriate regulatory bodies deemed by the Corporation to be necessary to
sell or issue such shares in compliance with all applicable federal and state
securities laws and the requirements of The Nasdaq Stock Market or any stock
exchange upon which shares of the Common Stock may then be listed. In addition,
the Corporation shall have no obligation to any Participant, express or
implied, to list, register or otherwise qualify the shares of Common Stock
covered by any Option.

               (d) No Participant will be, or will be deemed to be, a holder of any
Common Stock subject to an Option unless and until such Participant has
exercised his or her Option and paid the purchase price for the subject shares
of Common Stock.

     15.     Restrictions on Transfer.

               (a) Options issued pursuant to the Plan shall be nontransferable except by
will or the laws of descent and distribution, and may only be exercisable
during the Participant’s lifetime only by the Participant.

               (b) Shares of Common Stock issued pursuant to the Plan may be subject to
restrictions on transfer under applicable federal and state securities laws.
The Committee may impose such additional restrictions on the ownership and
transfer of shares of Common Stock issued pursuant to the Plan as it deems
desirable; any such restrictions shall be set forth in any Option agreement
entered into hereunder.

     16.     Modification of Plan and Options.

               (a) The Committee may from time to time and at any time alter, amend,
suspend, discontinue or terminate this Plan.

               (b) At any time and from time to time, the Committee may execute an
instrument providing for modification, extension or renewal of any outstanding
Option, provided that no such modification, extension or renewal shall impair
the Option without the consent of the holder of the Option.

     17.     Effect of Change in Stock Subject to the Plan. In the event that each of
the outstanding shares of Common Stock (other than shares held by dissenting
shareholders) shall be changed into or exchanged for a different number or kind
of shares of stock of the Corporation or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification, split-up,
combination of shares or otherwise), or in the event a stock split or stock
dividend occurs, then the Corporation may either (a) substitute for each share
of Common Stock then subject to Options or available for Options the number and
kind of shares of stock into which each outstanding share of Common Stock
(other than shares held by dissenting shareholders) shall be so changed or
exchanged, or the number of shares of Common Stock as is equitably required in
the event of a stock split or stock dividend, together with an appropriate
adjustment of the Exercise Price, or (b) cancel all such Options as of the
effective date of any merger, consolidation, recapitalization,
reclassification, split-up or combination of shares by giving written notice to
each holder thereof or his personal representatives of its intention to do

 

 

so and by permitting the exercise of all such Options, without regard to
determinations of periods or installments of exercisability during the thirty
(30) day period immediately preceding such effective date. The Committee may,
but shall not be required to, provide additional anti-dilution protection to a
Participant under the terms of the Participant’s Option agreement.

     18.     Administration.

               (a) Notwithstanding anything to the contrary herein, to the extent
necessary to comply with the requirements of Rule 16b-3, the Plan shall be
administered by the Board, or by a committee comprised solely of two or more
Non-Employee Directors appointed by the Board (the group responsible for
administering the Plan is referred to as the “Committee”). Options may be
granted under Section 6 only by majority agreement of the members of the
Committee. Option agreements, in the form as approved by the Committee, and
containing such terms and conditions consistent with the provisions of this
Plan as are determined by the Committee, may be executed on behalf of the
Corporation by the Chairman of the Board, the President or any Vice President
of the Corporation. The Committee shall have complete authority to construe,
interpret and administer the provisions of this Plan and the provisions of the
Option agreements granted hereunder; to prescribe, amend and rescind rules and
regulations pertaining to this Plan; to suspend, discontinue or terminate this
Plan; and to make all other determinations necessary or deemed advisable in the
administration of the Plan. The determinations, interpretations and
constructions made by the Committee shall be final and conclusive. No member of
the Committee shall be liable for any action taken, or failed to be taken, made
in good faith relating to the Plan or any award thereunder, and the members of
the Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense (including
attorneys’ fees) arising therefrom to the fullest extent permitted by law.

               (b) Members of the Committee shall be specified by the Board, and if the
Committee does not consist of the entire Board, the Committee shall consist
solely of Non-Employee Directors. Non-Employee Directors may not possess an
interest in any transaction for which disclosure is required under Section
404(a) of Regulation S-K under the Exchange Act or be engaged in a business
relationship that must be disclosed under Section 404(a).

     19.     Continued Employment or Engagement Not Presumed. Nothing in this Plan or
any document describing it nor the grant of any Option shall give any
Participant the right to continue in the employment or in the role of Advisory
Director or Consultant of the Corporation or affect the right of the
Corporation to terminate the employment, engagement or designation of any such
person with or without cause.

     20.     [Reserved].

     21.     Governing Law. The Plan shall be governed by and construed in accordance
with the laws of State of Texas and the United States, as applicable, without
reference to the conflict of laws provisions thereof.

 

 

     22.     Severability of Provisions. If any provision of this Plan is determined to
be invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect the remaining provisions of the Plan, but
such invalid, illegal or unenforceable provision shall be fully severable, and
the Plan shall be construed and enforced as if such provision had never been
inserted herein.<PAGE>
                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May
14, 2003 by and between AUTONATION, INC. (together with its subsidiaries and
affiliates, the "Company"), and MICHAEL E. MAROONE (the "Executive"), an
individual resident of the State of Florida.

                                    RECITALS

         WHEREAS, the Executive currently serves as the President and Chief
Operating Officer of the Company pursuant to an Employment Agreement dated as of
August 1, 2000 (the "Initial Employment Agreement"), which is scheduled to
expire by its terms on December 31, 2003; and

         WHEREAS, the Company and the Executive desire to replace and supersede
the Initial 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, 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 President
and Chief Operating Officer of the Company. The period during which the
Executive shall serve as President and Chief Operating 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 December
31, 2005, unless earlier terminated pursuant to PARAGRAPH 2 of this Agreement.
The parties hereto agree that the Initial 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 office the Executive holds or as may be assigned
to him from time to time at the direction of the Company's Chairman of the Board
and Chief Executive Officer. 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.

<PAGE>

                  (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 at an annual rate of $900,000 in 2003, and commencing during
calendar year 2004 at an annual rate of $1,000,000 (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 of
the Company's Board of Directors; 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 Executive
Compensation Subcommittee (the "Committee"); PROVIDED, HOWEVER, that, for the
2004 Plan year and each Plan year thereafter during the Employment Period, the
target award level for annual incentive bonuses under the Plan, or any successor
or substitute to the Plan, will be no less than 100% of the Executive's Salary
at such time.

                  (e) BENEFITS. During the Employment Period, the Executive
shall be entitled to (i) participate in any retirement plans, insurance programs
and other fringe benefits 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 (iii) use of the Company's corporate aircraft for
personal travel for up to 100 hours per year (PROVIDED that the cost of such
travel will be included in the Executive's annual income subject to tax).

                  (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.

         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

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<PAGE>

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 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

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<PAGE>

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:

                           (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 (it being
         understood that, pursuant to the terms of a certain letter agreement
         dated March 26, 1999, the Company agreed that, upon termination of the
         Executive's employment with the Company, all stock options granted to
         the Executive prior to March 26, 1999 would continue to vest and be
         exercisable through the duration of their original 10-year terms and,
         accordingly, such stock options are not intended to be modified by this
         CLAUSE (2)); 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 CLAUSE
(2) and CLAUSE (3) 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

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<PAGE>

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.

         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

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<PAGE>

                  (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, as a material
inducement to the Company entering into this Agreement, entered into an Employee
Confidentiality Agreement as of the date hereof, a copy of which is attached
hereto as Exhibit "A." 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 interview 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 anyway 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):

                                       6
<PAGE>

                  To the Company:       AutoNation, Inc.
                                        110 S.E. 6th Street, 29th Floor
                                        Fort Lauderdale, Florida 33301
                                        Attention: Chairman of the Board

                  Copy To:              AutoNation, Inc.
                                        110 S.E. 6th Street, 29th Floor
                                        Fort Lauderdale, Florida 33301
                                        Attention: General Counsel
                                        Telecopy: (954) 769-6340

                  To Executive:         Michael E. Maroone
                                        AutoNation, Inc.
                                        110 S.E. 6th Street, 29th Floor
                                        Fort Lauderdale, Florida 33301
                                        Telecopy: (954) 769-4666

         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 in 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 December 31, 2005, (i) the respective

                                       7
<PAGE>

obligations of the parties under Paragraphs 1 and 2 hereof shall terminate on
December 31, 2005, and (ii) the provisions of Paragraphs 3-11 under this
Agreement will 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. SUCCESSOR AGREEMENT. The Company hereby agrees that, in the event
that the Company desires to continue the employment relationship with the
Executive provided herein following the termination of the Employment Period
hereunder, prior to December 31, 2004 the Company shall so notify the Executive
so that the Executive and the Company may negotiate in good faith with respect
to a successor employment agreement that would become effective following
December 31, 2005 (PROVIDED, that neither the Company nor the Executive shall be
legally bound thereby unless and until a definitive successor employment
agreement is executed and delivered by each of the Company and the Executive).

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

                            [SIGNATURE PAGE FOLLOWS]

                                       8
<PAGE>

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

                                AUTONATION, INC., a Delaware corporation

                                By: /s/ MICHAEL J. JACKSON
                                   -------------------------------
                                MICHAEL J. JACKSON,
                                Chairman of the Board

                                /s/ MICHAEL E. MAROONE
                                -----------------------------------
                                MICHAEL E. MAROONE, individually

                                       9

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