AutoNation 1998 Annual Report Download - page 93

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shares of Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their fair market
value (determined in the manner described in Section 9 above) on the date of
exercise; (iii) by delivering a written direction to Republic that the Option be
exercised pursuant to a "cashless" exercise/sale procedure (pursuant to which
funds to pay for exercise of the Option are delivered to Republic by a broker
upon receipt of stock certificates from Republic) or a cashless exercise/loan
procedure (pursuant to which the optionees would obtain a margin loan from a
broker to fund the exercise) through a licensed broker acceptable to Republic
whereby the stock certificate or certificates for the shares of Stock for which
the Option is exercised will be delivered to such broker as the agent for the
individual exercising the Option and the broker will deliver to Republic cash
(or cash equivalents acceptable to Republic) equal to the Option Price for the
shares of Stock purchased pursuant to the exercise of the Option plus the amount
(if any) of federal and other taxes that Republic, may, in its judgment, be
required to withhold with respect to the exercise
4
5
of the Option; (iv) to the extent permitted by applicable law and under the
terms of the Option Agreement with respect to such Option, by the delivery of a
promissory note of the Optionee to Republic on such terms as shall be set out in
such Option Agreement; or (v) by a combination of the methods described in (i),
(ii), (iii) and (iv). The Optionee must also satisfy any tax obligations through
delivery of cash, Stock or withholding of shares of Stock by the Company.
Payment in full of the Option Price need not accompany the written notice of
exercise if the Option is exercised pursuant to the cashless exercise/sale
procedure described above. An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Promptly after the exercise of an Option, the individual exercising the Option
shall be entitled to the issuance of a Stock certificate or certificates
evidencing his ownership of such shares. A separate Stock certificate or
certificates shall be issued for any shares purchased pursuant to the exercise
of an Option that is intended to be an Incentive Stock Option, which certificate
or certificates shall not include any shares that were purchased pursuant to the
exercise of an Option 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) RESTRICTIONS ON TRANSFER OF STOCK. If an Option is exercised before
the date that is six months from the later of (i) the date of grant of the
Option or (ii) the date of shareholder approval of the Plan and the sale of
stock acquired pursuant to such exercise would subject the individual exercising
the Option to liability under Section 16 of the Exchange Act, then such
certificate or certificates shall bear a legend restricting the transfer of the
Stock covered thereby until the expiration of six months from the later of the
date specified in clause (i) above or the date specified in clause (ii) above.
(e) 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 Republic or a Subsidiary or Affiliate at the time of
such Change in Control shall have the right to require Republic 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 over (y) the Option Price times