AutoNation 2006 Annual Report Download - page 103

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that is not an Incentive Stock Option. An individual holding or exercising an Option shall have none of the rights of a shareholder until the shares of Stock
covered thereby are fully paid and issued to him and, except as provided in Section 18 below, no adjustment shall be made for dividends or other rights for
which the record date is prior to the date of such issuance.
(d) CHANGE IN CONTROL. In the event of a Change in Control (as defined below), except as the Board shall otherwise provide in an Option Agreement
with respect to an Option granted under the Plan, all outstanding Options shall become immediately exercisable in full, without regard to any limitation on
exercise imposed pursuant to Section 10(b) above, and, unless waived in advance of such Change in Control by the Board, each Optionee who is a director,
an employee or a consultant of the Company or a Subsidiary or Affiliate at the time of such Change in Control shall have the right to require the Company to
pay, in cancellation of such Option, an amount equal to the product of (i) the excess of (x) the fair market value per share of the Stock (which shall mean the
closing price as of the trading day preceding the day of the Change in Control) over (y) the Option Price times (ii) the number of shares of Stock specified by
the Optionee in a written notice to the Company prior to the Change in Control (up to the full number of shares of Stock then subject to such Option). For
purposes of the Plan, a “Change in Control” shall be deemed to occur if any person shall (a) acquire direct or indirect beneficial ownership of more than 50%
of the total combined voting power with respect to the election of directors of the issued and outstanding stock of the Company (except that no Change in
Control shall be deemed to have occurred if the persons who were stockholders of the Company immediately before such acquisition own all or substantially
all of the voting stock or other interests of such person immediately after such transaction), or (b) have the power (whether as a result of stock ownership,
revocable or irrevocable proxies, contract or otherwise) or ability to elect or cause the election of directors consisting at the time of such election of a majority of
the Board. A “person” for this purpose shall mean any person, corporation, partnership, joint venture or other entity or any group (as such term is defined for
purposes of Section 13(d) of the Exchange Act) and a person shall be deemed to be a beneficial owner as that term is used in Rule 13d-3 under the Exchange
Act. The amount payable under this
Section 10(e) shall be remitted by the Company in cash or by certified or bank check, reduced by applicable tax withholding.
(e) Notwithstanding any other provision of the Plan, no Option granted to an Optionee under the Plan shall be exercisable in whole or in part prior to the
date the Plan is approved by the stockholders of the Company as provided in Section 5 above.
6