AutoNation 1998 Annual Report Download - page 92

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Stock which shall mean either the closing price of a share of the Stock on the
business day prior to the date the option is granted or,with respect to annual
grants of stock options commencing with the year 2000, the average of the
closing price of a share of the Stock on the first three business days of the
year as reported on The New York Stock Exchange, absent manifest error, or at a
price otherwise fixed by the Board or by the Committee in good faith as the fair
market value and stated in an option agreement with the Optionee (the "Option
Price") PROVIDED, HOWEVER, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), the Option Price of an Option that is intended to be an
Incentive Stock Option shall be not less than 110 percent of the fair market
value of a share of Stock at the time such Option is granted.
3
4
10. TERM AND EXERCISE OF OPTIONS
(a) OPTION PERIOD. Each Option granted under the Plan shall terminate
and all rights to purchase shares thereunder shall cease upon the expiration of
ten years from the date such Option is granted, or on such date prior thereto as
may be fixed by the Board and stated in the Option Agreement relating to such
Option; PROVIDED, HOWEVER, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), an Option granted to such Optionee that is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.
(b) VESTING AND LIMITATIONS ON EXERCISE. Except as otherwise provided
herein, each Option shall become exercisable with respect to 25% of the total
number of shares subject to the Option on the date that is 12 months after the
date of its grant (the "Vesting Date") and with respect to an additional 25% of
the number of such shares on each of the next three succeeding anniversaries of
the Vesting Date; provided, however, that the Board may in its discretion
provide that an Option may be exercised, in whole or in part, at any time and
from time to time, over a period commencing on or after the date of grant and
ending upon the expiration or termination of the Option, as the Board shall
determine and set forth in the Option Agreement relating to such Option. Without
limiting the foregoing, the Board, subject to the terms and conditions of the
Plan, may in its sole discretion provide that an Option may be exercised
immediately upon grant or that it may not be exercised in whole or in part for
any period or periods of time during which such Option is outstanding; pROVIDED,
HOWEVER, that any vesting requirement or other such limitation on the exercise
of an Option may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the date of grant of such
Option, so as to accelerate the time at which the Option may be exercised.
(c) METHOD OF EXERCISE. An Option that is exercisable hereunder may be
exercised by delivery to Republic on any business day, at its principal office,
addressed to the attention of the Stock Option Administrator, of written notice
of exercise, which notice shall specify the number of shares with respect to
which the Option is being exercised, and shall be accompanied by payment in full
of the Option Price of the shares for which the Option is being exercised,
except as provided below. The minimum number of shares of Stock with respect to
which an Option may be exercised, in whole or in part, at any time shall be the
lesser of 100 shares or the maximum number of shares available for purchase
under the Option at the time of exercise. Payment of the Option Price for the
shares of Stock purchased pursuant to the exercise of an Option shall be made
(i) in cash or in cash equivalents; (ii) through the tender to Republic of