Exhibit 10.4
SONIC AUTOMOTIVE,
INC.
2004 STOCK INCENTIVE
PLAN
AMENDED AND RESTATED AS OF
FEBRUARY 11, 2009
ARTICLE 1. PURPOSE AND EFFECTIVE
DATE
1.1 Purposes of the Plan .
Sonic Automotive, Inc. (the “Company”) has established
this Sonic Automotive, Inc. 2004 Stock Incentive Plan (the
“Plan”) to promote the interests of the Company and its
stockholders. The purposes of the Plan are to provide key employees
and consultants providing services to the Company and its
Subsidiaries with incentives to contribute to the Company’s
performance and growth, to offer such persons stock ownership in
the Company or other compensation that aligns their interests with
those of the Company’s stockholders and to enhance the
Company’s ability to attract, reward and retain such persons
upon whose efforts the Company’s success and future growth
depends.
1.2 Original Effective Date .
The Plan was initially adopted by the Board of Directors on
February 19, 2004 and effective as of such date, subject to
the requisite approval of the Company’s stockholders at the
2004 Annual Meeting of Stockholders which was obtained on
April 22, 2004 . Awards could be granted prior to the
initial stockholder approval of the Plan, provided that all such
Awards must have been subject to stockholder approval of the Plan.
This means that no Option or SAR could be exercised prior to such
approval, and all Awards were subject to forfeiture if such
approval was not obtained.
1.3 Restatement Effective
Dates . The Plan was previously amended and restated effective
as of February 13, 2007, subject to the requisite approval of
the Company’s stockholders at the 2007 Annual Meeting of
Stockholders which was obtained on April 19, 2007. The Plan
was subsequently amended and restated effective as of
December 3, 2008, provided that the amendments to
Section 10.1(b) in such amendment and restatement of the Plan
shall be subject to the requisite approval of the Company’s
stockholders at the 2009 Annual Meeting of Stockholders. This
amendment and restatement is a continuation of the Plan and shall
be effective as of February 11, 2009, provided that this
amendment and restatement of the Plan shall be subject to the
requisite approval of the Company’s stockholders at the 2009
Annual Meeting of Stockholders.
ARTICLE 2.
DEFINITIONS
2.1 Definitions . As used in
the Plan, the following capitalized terms shall have the meanings
set forth below:
(a) “Award” means,
individually or collectively, a grant under this Plan of Incentive
Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance
Awards or Stock Awards.
(b) “Award Agreement”
means an agreement between the Company and a Participant, setting
forth the terms and conditions applicable to an Award granted to
the Participant under this Plan. The Award Agreement may be in such
form as the Committee shall determine, including a master agreement
with respect to all or any types of Awards supplemented by an Award
notice issued by the Company.
(c) “Board” or
“Board of Directors” means the Board of Directors of
the Company.
(d) “Cause” means,
except to the extent the applicable Award Agreement provides
otherwise or incorporates a different definition of
“Cause,” any act, action or series of acts or actions
or any omission, omissions, or series of omissions which result in,
or which have the effect of resulting in, (i) the commission
by the Participant of a crime involving moral turpitude, which
crime has a material adverse impact on the Company or a Subsidiary
or which is intended to result in the personal enrichment of the
Participant at the expense of the Company or a Subsidiary;
(ii) the Participant’s material violation of his
responsibilities, or the Participant’s gross negligence or
willful misconduct; or (iii) the continuous and willful
failure by the Participant to follow the reasonable directives of
the Board of Directors. In any event, the existence of
“Cause” shall determined by the Committee.
(e) “Change in Control”
means, except to the extent the applicable Award Agreement provides
otherwise or incorporates a different definition of “Change
in Control,” any merger or consolidation in which the Company
is not the surviving corporation and which results in the holders
of the outstanding voting securities of the Company (determined
immediately prior to such merger or consolidation) owning less than
a majority of the outstanding voting securities of
the surviving corporation
(determined immediately following such merger or consolidation), or
any sale or transfer by the Company of all or substantially all of
its assets or any tender offer or exchange offer for, or the
acquisition, directly or indirectly, by any person or group of, all
or a majority of the then-outstanding voting securities of the
Company. Notwithstanding the foregoing and unless otherwise
provided by the Committee, to the extent necessary to comply with
Section 409A of the Code, the foregoing events shall
constitute a Change in Control with respect to an Award that is
subject to Section 409A of the Code only to the extent that
such events also constitute a “change in control event”
within the meaning of Section 409A of the Code.
(f) “Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any
successor act thereto. Reference to any section of the Code shall
be deemed to include reference to applicable regulations or other
authoritative guidance thereunder, and any amendments or successor
provisions to such section, regulations or guidance.
(g) “Committee” means
(i) the committee appointed by the Board to administer the
Plan or (ii) in the absence of such appointment, the Board
itself. Notwithstanding the foregoing, to the extent required for
Awards to be exempt from Section 16 of the Exchange Act
pursuant to Rule 16b-3, the Committee shall consist of two or more
Directors who are “non-employee directors” within the
meaning of such Rule 16b-3, and to the extent required for Awards
to satisfy the requirements for “performance-based
compensation” within the meaning of Section 162(m) of
the Code, the Committee shall consist of two or more Directors who
are “outside directors” within the meaning of
Section 162(m) of the Code. The Compensation Committee of the
Board of Directors shall constitute the Committee until otherwise
determined by the Board of Directors.
(h) “Common Stock” means
the Class A common stock of the Company, par value $0.01 per
share.
(i) “Company” means
Sonic Automotive, Inc., a Delaware corporation, or any successor
thereto.
(j) “Director” means any
individual who is a member of the Board of Directors of the
Company.
(k) “Disability” means,
except to the extent the applicable Award Agreement provides
otherwise or incorporates a different definition of
“Disability,” a permanent and total disability as
described in Section 22(e)(3) of the Code and determined by
the Committee. Notwithstanding the foregoing and unless otherwise
provided by the Committee, for Awards that are subject to
Section 409A of the Code, Disability shall mean that a
Participant is disabled within the meaning of
Section 409A(a)(2)(C)(i) or (ii) of the Code.
(l) “Employee” means any
employee of the Company or any Subsidiary. Directors who are not
otherwise employed by the Company or a Subsidiary are not
considered Employees under this Plan.
(m) “Exchange Act” means
the Securities Exchange Act of 1934, as amended from time to time,
or any successor act thereto. Reference to any section of (or rule
promulgated under) the Exchange Act shall be deemed to include
reference to applicable rules, regulations or other authoritative
guidance thereunder, and any amendments or successor provisions to
such section, rules, regulations and guidance.
(n) “Fair Market Value”
means, as of a particular date, the value of the Common Stock
determined as follows:
(i) If the Common Stock is traded on
a national or regional securities exchange or on the Nasdaq
National Market System (“Nasdaq”), Fair Market Value
shall be determined on the basis of the closing sale price on the
principal securities exchange on which the Common Stock may then be
traded on the date as of which Fair Market Value is to be
determined or, if there is no such sale on the relevant date, then
on the last previous day on which a sale was reported;
(ii) If the Common Stock is not
listed on any securities exchange or traded on Nasdaq, but
nevertheless is publicly traded and reported on Nasdaq without
closing sale prices for the Common Stock being customarily quoted,
Fair Market Value shall be determined on the basis of the mean
between the closing high bid and low asked quotations in such other
over-the-counter market as reported by Nasdaq on the date as of
which Fair Market Value is to be determined; but, if there are no
bid and asked quotations in the over-the-counter market as reported
by Nasdaq on that date, then the mean between the closing bid and
asked quotations in the over-the-counter market as reported by
Nasdaq on the immediately preceding day such bid and asked prices
were quoted; and
(iii) If the Common Stock is not
publicly traded as described in (i) or (ii) above, Fair
Market Value shall be determined by the Committee in good faith
and, with respect to an Option or SAR intended to be exempt from
Section 409A of the Code, in a manner consistent with
Section 409A of the Code.
(o) “Family Members”
means the Participant’s child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law, including adoptive relationships,
or any person sharing the Participant’s household (other than
a tenant or employee).
(p) “Incentive Stock
Option” or “ISO” means an option to purchase
shares of Common Stock granted under Article 6 which is designated
as an Incentive Stock Option and is intended to meet the
requirements of Section 422 of the Code.
(q) “Involuntary Termination
Without Cause” means the dismissal, or the request for the
resignation, of a Participant by either (i) a court order,
order of any court-appointed liquidator or trustee of the Company,
or the order or request of any creditors’ committee of the
Company constituted under the federal bankruptcy laws, provided
that such order or request contains no specific reference to
actions or omissions that would constitute Cause; or (ii) a
duly authorized corporate officer of the Company or any Subsidiary,
or by the Board, for any reason other than for Cause.
(r) “Named Executive
Officer” means a Participant who is considered a
“covered employee” within the meaning of
Section 162(m) of the Code.
(s) “Nonqualified Stock
Option” or “NSO” means an option to purchase
shares of Common Stock granted under Article 6, and which is not
intended or otherwise fails to meet the requirements of
Section 422 of the Code.
(t) “Option” means an
Incentive Stock Option or a Nonqualified Stock Option.
(u) “Option Price” means
the price at which a share of Common Stock may be purchased by a
Participant pursuant to an Option, as determined by the Committee
in accordance with Article 6.
(v) “Participant” means
an Employee or consultant who performs services for the Company or
a Subsidiary who has been granted an Award under the Plan which
Award is outstanding.
(w) “Performance Award”
means an Award granted under Article 10 which is subject to the
attainment of one or more Performance Goals during a Performance
Period, as established by the Committee in its
discretion.
(x) “Performance Goals”
means the criteria and objectives designated by the Committee that
must be met during the Performance Period as a condition of the
Participant’s receipt of a Performance Award, as described in
Section 10.1(b) hereof.
(y) “Performance Period”
means the period designated by the Committee during which the
Performance Goals with respect to a Performance Award will be
measured.
(z) “Plan” means this
Sonic Automotive, Inc. 2004 Stock Incentive Plan, as amended from
time to time.
(aa) “Restricted Period”
means the period beginning on the grant date of an Award of
Restricted Stock and ending on the date the shares of Common Stock
subject to such Award are no longer restricted and subject to
forfeiture.
(bb) “Restricted Stock”
means a share of Common Stock granted in accordance with the terms
of Article 8, which Common Stock is nontransferable and subject to
a substantial risk of forfeiture and such other restrictions as
determined by the Committee.
(cc) “Restricted Stock
Unit” means a non-voting unit of measurement that represents
the contingent right to receive a share of Common Stock (or the
value of a share of Common Stock) in the future granted in
accordance with the terms of Article 8, which right is subject to
such restrictions as determined by the Committee.
(dd) “SAR” means a stock
appreciation right granted pursuant to Article 7.
(ee) “Stock Award” means
an equity-based award granted pursuant to Article 9.
(ff) “Subsidiary” means
a corporation, partnership, limited liability company, joint
venture or other entity in which the Company directly or indirectly
controls more than 50% of the voting power or equity or profits
interests; provided, that for purposes of Incentive Stock Options,
Subsidiary means a “subsidiary corporation” within the
meaning of Section 424(f) of the Code. Unless the Committee
provides otherwise, for purposes of granting Options or SARs, an
entity shall not be considered a Subsidiary if such Options or SARs
would then be considered to provide for a deferral of compensation
within the meaning of Section 409A of the Code.
(gg) “Ten Percent
Stockholder” means a Participant who owns (directly or by
attribution within the meaning of Section 424(d) of the Code)
stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company, any Subsidiary or a parent
of the Company.
(hh) “Termination of
Service” means, except to the extent the applicable Award
Agreement provides otherwise or incorporates a different definition
of “Termination of Service” (and which may instead use
the term “Separation from Service”), the termination of
a Participant’s service with the Company and its Subsidiaries
as an Employee or consultant for any reason other than a change in
the capacity in which the Participant renders service to the
Company or a Subsidiary or a transfer between or among the Company
and its Subsidiaries. Unless otherwise determined by the Committee,
an Employee shall be considered to have incurred a Termination of
Service if his or her employer ceases to be a Subsidiary. All
determinations relating to whether a Participant has incurred a
Termination of Service and the effect thereof shall be made by the
Committee in its discretion, including whether a leave of absence
shall constitute a Termination of Service, subject to applicable
law.
ARTICLE 3.
ADMINISTRATION
3.1 Authority of the
Committee . Subject to the provisions of the Plan, the
Committee shall have full and exclusive power to select the
individuals to whom Awards may from time to time be granted under
the Plan; determine the size and types of Awards; determine the
terms, restrictions and conditions of Awards in a manner consistent
with the Plan (including, but not limited to, the number of shares
of Common Stock subject to an Award; vesting or exercise conditions
applicable to an Award; the duration of an Award; whether an Award
is intended to qualify as a Performance Award; restrictions on
transferability of an Award and any shares of Common Stock issued
thereunder; and other restrictions and covenants upon which a
Participant’s rights to receive, exercise or retain an Award
or cash, Common Stock or other gains related thereto shall be
contingent); construe and interpret the Plan and any agreement or
instrument entered into under the Plan; establish, amend or waive
rules and regulations for the Plan’s administration; delegate
administrative responsibilities under the Plan and (subject to the
provisions of Article 12) amend the terms and conditions of any
outstanding Award to the extent such terms and conditions are
within the discretion of the Committee, including accelerating the
time any Option or SAR may be exercised, waiving restrictions and
conditions on Awards and establishing different terms and
conditions relating to the effect of a Termination of Service. The
Committee also shall have the absolute discretion to make all other
determinations which may be necessary or advisable in the
Committee’s opinion for the administration of the
Plan.
3.2 Award Agreements . Each
Award granted under the Plan shall be evidenced by an Award
Agreement in such form as the Committee shall determine. Each Award
Agreement shall be subject to the applicable terms and conditions
of the Plan and incorporate any other terms and conditions, not
inconsistent with the Plan (except when necessary to comply with
Section 409A or other applicable law), as may be directed by
the Committee. Except to the extent prohibited by applicable law,
the Committee may, but need not, require as a condition of any such
Award Agreement’s effectiveness that the Agreement be signed
by the Participant.
3.3 Decisions Binding . All
determinations, decisions and interpretations made by the Committee
pursuant to the provisions of the Plan and all related resolutions
of the Board shall be final, conclusive and binding on all persons,
including the Company, the Company’s stockholders, and
Participants and their estates and beneficiaries.
3.4 Indemnification . In
addition to such other rights they may have as Directors or members
of the Committee, each person who is or shall have been a member of
the Committee shall be indemnified and held harmless by the Company
against any loss, cost, liability or expense (including settlement
amounts paid with the approval of the Committee) that may be
imposed upon or reasonably incurred by the Committee member in
connection with or resulting from any claim, action, suit or
proceeding in which the member may be a party or otherwise involved
by reason of any action taken or failure to act under or in
connection with the Plan or any Award, except with respect to
matters as to which the Committee member has been grossly negligent
or engaged in willful misconduct or as prohibited by applicable
law; provided, however, that the member shall give the Company an
opportunity, at its own expense, to handle and defend the same
before the member undertakes to handle and defend it on the
member’s own behalf.
ARTICLE 4. STOCK SUBJECT TO THE
PLAN
4.1 Stock Available Under the
Plan . Subject to adjustments as provided in Section 4.3,
the aggregate number of shares of Common Stock that may be issued
pursuant to Awards under the Plan is 5,000,000 shares. The maximum
number of shares of Common Stock that may be issued pursuant to
ISOs under this Plan shall be 5,000,000 shares. Shares of Common
Stock issued under the Plan may be shares of original issuance,
shares held in the treasury of the Company or shares purchased in
the open market or otherwise. Shares of Common Stock covered by
Awards which expire or are forfeited or canceled for any reason or
which are settled in cash shall be available for further Awards
under the Plan.
4.2 Individual Award Limits .
Notwithstanding any provision in the Plan to the contrary, the
following limitations shall apply (subject to adjustment as
provided in Section 4.3):
(a) Individual Option and SAR
Limit . No Participant shall be granted, during any one
calendar year, Options and/or SARs (whether such SARs may be
settled in shares of Common Stock, cash or a combination thereof)
covering in the aggregate more than 500,000 shares of Common
Stock.
(b) Individual Limit on Other
Awards . With respect to any Awards other than Options and
SARs, no Participant shall be granted, during any one calendar
year, such Awards (whether such Awards may be settled in shares of
Common Stock, cash or a combination thereof) consisting of,
covering or relating to in the aggregate more than 250,000 shares
of Common Stock.
4.3 Adjustments . In the
event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation or similar
transaction or other change in corporate capitalization affecting
the Common Stock, equitable adjustments and/or substitutions, as
applicable, shall be made by the Committee to the maximum number
and kind of shares of Common Stock which may be issued under the
Plan set forth in Section 4.1, the number of shares subject to
the ISO limit in Section 4.1, the number of shares of Common
Stock subject to the Award limits set forth in Section 4.2 and
in the number, kind and price of shares of Common Stock subject to
outstanding Awards granted under the Plan. In addition, the
Committee, in its discretion, shall have the right to make such
similar adjustments as described above in the event of any
corporate transaction to which Section 424(a) of the Code
applies or such other event which in the judgment of the Committee
necessitates an adjustment as may be determined to be appropriate
and equitable by the Committee. Adjustments under this
Section 4.3 shall, to the extent practicable and applicable,
be made in a manner consistent with the requirements of Sections
162(m) and 409A of the Code and, in the case of ISOs,
Section 424(a) of the Code. Notwithstanding the foregoing, the
number of shares of Common Stock subject to any Award shall always
be a whole number and the Committee, in its discretion, shall make
such adjustments as are necessary to eliminate fractional shares
that may result from any adjustments made pursuant hereto. Except
as expressly provided herein, the issuance by the Company of shares
of stock of any class, or securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of Common Stock subject to an outstanding Award.
ARTICLE 5. ELIGIBILITY AND
PARTICIPATION
Awards under the Plan may be granted
to Employees and consultants providing services to the Company or a
Subsidiary (provided such consultants render bona fide services not
in connection with the offer and sale of securities in a
capital-raising transaction) as selected by the Committee. In
determining the individuals to whom such an Award shall be granted
and the terms and conditions of such Award, the Committee may take
into account any factors it deems relevant, including the duties of
the individual, the Committee’s assessment of the
individual’s present and potential contributions to the
success of the Company or its Subsidiaries and such other factors
as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan. Such determinations made by
the Committee under the Plan need not be uniform and may be made
selectively among eligible individuals under the Plan, whether or
not such individuals are similarly situated. Subject to the Award
limits set forth in Section 4.2, a Participant may be granted
more than one Award under the Plan; however, a grant made hereunder
in any one year to a Participant shall neither guarantee nor
preclude a further grant to such Participant in that year or
subsequent years.
ARTICLE 6. STOCK OPTIONS
6.1 Stock Options . Subject
to the provisions of the Plan, the Committee may grant Options upon
the following terms and conditions:
(a) Award Agreement . Each
grant of an Option shall be evidenced by an Award Agreement in such
form as the Committee shall determine. The Award Agreement shall
specify the number of shares of Common Stock to which the Option
pertains, whether the Option is an ISO or a NSO, the Option Price,
the term of the Option, the conditions upon which the Option shall
become vested and exercisable, and such additional terms and
conditions, not inconsistent with the provisions of the Plan, as
the Committee shall determine. ISOs may be granted only to
Employees of the Company or a Subsidiary.
(b) Option Price . The Option
Price per share of Common Stock shall be determined by the
Committee, but shall not be less than the Fair Market Value per
share of Common Stock on the date of grant of the Option. In the
case of an ISO granted to a Ten Percent Stockholder, the Option
Price per share of Common Stock shall not be less than 110% of the
Fair Market Value per share of Common Stock on the date of grant of
the Option. Notwithstanding the foregoing, an Option may be granted
with an Option Price per share of Common Stock less than that set
forth above if such Option is granted pursuant to an assumption of,
or substitution for, another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) Exercise of Options . An
Option shall be exercisable in whole or in part (including periodic
installments) at such time or times, and subject to such
restrictions and conditions, as the Committee shall determine.
Except as otherwise provided in the Award Agreement, the right to
purchase shares of Common Stock under the Option that become
exercisable in periodic installments shall be cumulative so that
such shares of Common Stock (or any part thereof) may be purchased
at any time thereafter until the expiration or termination of the
Option.
(d) Option Term . The term of
an Option shall be determined by the Committee, but in no event
shall an ISO be exercisable more than ten years from the date of
its grant or in the case of any ISO granted to a Ten Percent
Stockholder, more than five years from the date of its
grant.
(e) Termination of Service .
Except to the extent an Option remains exercisable as provided
below or as otherwise set forth in the Award Agreement, an Option
shall immediately terminate upon the Participant’s
Termination of Service with the Company and its Subsidiaries for
any reason.
(i) General Rule . In the
event that a Participant incurs a Termination of Service for any
reason other than Cause, Involuntary Termination Without Cause, or
his death or Disability, the Participant may exercise an Option to
the ex
