Document:

Sonice Automotive, Inc. Incentive Compensation Plan, Amended and Restated

 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 extent that the Participant was entitled to exercise such Option as of the date of termination, but only within such period of time ending on the
earlier of (1) 60 days following such Termination of Service or (2) the expiration of the term of the Option as set forth in the Award Agreement. 
 (ii) Involuntary Termination Without Cause. In the event that a Participant incurs a Termination of Service that constitutes an Involuntary Termination Without Cause, the Participant may exercise an Option to
the extent that the Participant was entitled to exercise such Option as of the date of termination, but only within such period of time ending on the earlier of (1) 90 days following such Termination of Service or (2) the expiration of the
term of the Option as set forth in the Award Agreement. 
 (iii) Disability. In the event that a Participant incurs a
Termination of Service as a result of the Participant’s Disability, the Participant may exercise an Option to the extent that the Participant was entitled to exercise such Option as of the date of termination, but only within such period of
time ending on the earlier of (1) one year following such Termination of Service or (2) the expiration of the term of the Option as set forth in the Award Agreement. 
 (iv) Death. In the event that a Participant’s Termination of Service is caused by the Participant’s death, or in the
event of the Participant’s death following the Participant’s Termination of Service but during the exercise period following termination described in subparagraph (i), (ii) or (iii) above, as applicable, then an Option may be
exercised to the extent the Participant was entitled to exercise such Option as of the date of death by the person or persons to whom the Participant’s rights to exercise the Option passed by will or the laws of descent and distribution (or by
the executor or administrator of the Participant’s estate), but only within the period ending on the earlier of (1) one year following the date of death or (2) the expiration of the term of the Option as set forth in the Award
Agreement. 

 (f) ISO Limitation. To the extent that the aggregate Fair Market Value (determined
as of the date of grant) of the shares of Common Stock with respect to which a Participant’s ISOs are exercisable for the first time during any calendar year (under all plans of the Company and its Subsidiaries) exceeds $100,000 or such other
applicable limitation set forth in Section 422 of the Code, such ISOs shall be treated as NSOs. The determination of which ISOs shall be treated as NSOs generally shall be based on the order in which such ISOs were granted and shall be made in
accordance with applicable rules and regulations under the Code. 
 (g) Payment. Options shall be exercised by the
delivery of a written notice of exercise to the Company in the manner prescribed by the Company (or its delegate), specifying the number of shares of Common Stock with respect to which the Option is to be exercised, accompanied by the aggregate
Option Price for the shares of Common Stock. The aggregate Option Price shall be payable to the Company in full in cash or cash equivalents acceptable to the Company, or if approved by the Committee, by tendering previously acquired shares of Common
Stock (or delivering a certification of ownership of such shares) having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the shares of Common Stock either were purchased on the open market or
have been held by the Participant for a period of at least six months (unless such six-month period is waived by the Committee)), a combination of the foregoing, or by any other means which the Company determines to be consistent with the
Plan’s purpose and applicable law (including the tendering of Awards having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, as determined by the Committee). 
 (h) Transfer Restrictions. Except as otherwise set forth herein, Options may not be sold, transferred, pledged, assigned,
alienated, hypothecated or disposed of in any manner other than by will or the laws of descent and distribution, and Options shall be exercisable during the Participant’s lifetime only by the Participant (or, to the extent permitted by
applicable law, the Participant’s guardian or legal representative in the event of the Participant’s legal incapacity). Notwithstanding the foregoing, the Committee, in its absolute discretion, may permit a Participant to transfer NSOs, in
whole or in part, for no consideration to (1) one or more Family Members; (2) a trust in which Family Members have more than 50% of the beneficial interest; (3) a foundation in which Family Members (or the Participant) control the
management of assets; or (4) any other entity in which Family Members (or the Participant) own more than 50% of the voting interests; provided, that such transfer is permitted under applicable tax laws and Rule 16b-3 of the Exchange Act as in
effect from time to time. In all cases, the Committee must be notified in advance in writing of the terms of any proposed transfer to a permitted transferee and such transfers may occur only with the consent of and subject to the rules and
conditions imposed by the Committee. The transferred NSOs shall continue to be subject to the same terms and conditions in the hands of the transferee as were applicable immediately prior to the transfer (including the provisions of the Plan and
Award Agreement relating to the expiration or termination of the NSOs). The NSOs shall be exercisable by the permitted transferee only to the extent and for the periods specified herein and in any applicable Award Agreement. 
 (i) No Stockholder Rights. No Participant shall have any rights as a stockholder with respect to shares of Common Stock subject to
the Participant’s Option until the issuance of such shares to the Participant pursuant to the exercise of such Option. 
 ARTICLE 7. STOCK
APPRECIATION RIGHTS 
 7.1 Grants of SARs. Subject to the provisions of the Plan, the Committee may grant SARs upon the following
terms and conditions: 
 (a) Award Agreement. Each grant of a SAR 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 SAR pertains, the term of the SAR, the conditions upon which the SAR shall become vested and exercisable, and such additional terms
and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine. The Committee may grant SARs in tandem with or independently from Options. 
 (b) Initial Value of SARs. The Committee shall assign an initial value to each SAR, provided that the initial value may not be less
than the aggregate Fair Market Value on the date of grant of the shares of Common Stock to which the SAR pertains. 
 (c)
Exercise of SARs. A SAR 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. Notwithstanding the foregoing, in the
case of a SAR that is granted in tandem with an Option, the SAR may be exercised only with respect to 

 
the shares of Common Stock for which its related Option is then exercisable. The exercise of either an Option or a SAR that are granted in tandem shall
result in the termination of the other to the extent of the number of shares of Common Stock with respect to which such Option or SAR is exercised. 
 (d) Term of SARs. The term of a SAR granted independently from an Option shall be determined by the Committee, but in no event shall such a SAR be exercisable more than ten years from the date of its grant. A
SAR granted in tandem with an Option shall have the same term as the Option to which it relates. 
 (e) Termination of
Service. In the event that a Participant incurs a Termination of Service, the Participant’s SARs shall terminate in accordance with the provisions specified in Article 6 with respect to Options. 
 (f) Payment of SAR Value. Upon the exercise of a SAR, a Participant shall be entitled to receive (i) the excess of the Fair
Market Value on the date of exercise of the shares of Common Stock with respect to which the SAR is being exercised, over (ii) the initial value of the SAR on the date of grant, as determined in accordance with Section 7.1(b) above.
Notwithstanding the foregoing, the Committee may specify in an Award Agreement that the amount payable upon the exercise of a SAR shall not exceed a designated amount. At the Committee’s discretion, the amount payable as a result of the
exercise of a SAR may be settled in cash, shares of Common Stock of equivalent value, or a combination of cash and Common Stock. A fractional share of Common Stock shall not be deliverable upon the exercise of a SAR, but a cash payment shall be made
in lieu thereof. 
 (g) Nontransferability. Except as otherwise set forth herein, SARs granted under the Plan may not
be sold, transferred, pledged, assigned, alienated, hypothecated or disposed of in any manner other than by will or the laws of descent and distribution, and SARs shall be exercisable during the Participant’s lifetime only by the Participant
(or, to the extent permitted by applicable law, the Participant’s guardian or legal representative in the event of the Participant’s legal incapacity). Notwithstanding the foregoing, the Committee, in its absolute discretion, may permit a
Participant to transfer SARs, in whole or in part, for no consideration to (i) one or more Family Members; (ii) a trust in which Family Members have more than 50% of the beneficial interest; (iii) a foundation in which Family Members
(or the Participant) control the management of assets; or (iv) any other entity in which Family Members (or the Participant) own more than 50% of the voting interests; provided, that such transfer is permitted under applicable tax laws and Rule
16b-3 of the Exchange Act as in effect from time to time. In all cases, the Committee must be notified in advance in writing of the terms of any proposed transfer to a permitted transferee and such transfers may occur only with the consent of and
subject to the rules and conditions imposed by the Committee. The transferred SARs shall continue to be subject to the same terms and conditions in the hands of the transferee as were applicable immediately prior to the transfer (including the
provisions of the Plan and Award Agreement relating to the expiration or termination of the SARs). The SARs shall be exercisable by the permitted transferee only to the extent and for the periods specified herein and in any applicable Award
Agreement. 
 (h) No Stockholder Rights. No Participant shall have any rights as a stockholder of the Company with
respect to shares of Common Stock subject to a SAR until the issuance of shares (if any) to the Participant pursuant to the exercise of such SAR. 
 ARTICLE 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS 
 8.1 Grants of Restricted Stock and Restricted Stock Units.
Subject to the provisions of the Plan, the Committee may grant Restricted Stock and/or Restricted Stock Units upon the following terms and conditions: 
 (a) Award Agreement. Each grant of Restricted Stock or Restricted Stock Units 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 Restricted Stock granted or with respect to which the Restricted Stock Units are granted, the Restricted Period, the conditions upon or the time at which the Restricted Period shall lapse, and such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall determine. 
 (b) Purchase Price. The Committee
shall determine the purchase price, if any, to be paid for each share of Restricted Stock or each Restricted Stock Unit, subject to such minimum consideration as may be required by applicable law. 
 (c) Nontransferability. Except as otherwise set forth in the Award Agreement, shares of Restricted Stock and Restricted Stock Units
may not be sold, transferred, pledged, assigned, alienated, hypothecated or disposed of in any manner until the end of the Restricted Period applicable to such shares and the satisfaction of any and all other conditions prescribed by the Committee.

 (d) Other Restrictions. The Committee may impose such conditions and restrictions
on the grant or vesting of Restricted Stock and Restricted Stock Units as it determines, including but not limited to restrictions based upon the occurrence of a specific event, continued service for a period of time or other time-based
restrictions, or the achievement of financial or other business objectives (including the Performance Goals described in Section 10.1(b)). The Committee may provide that such restrictions may lapse separately or in combination at such time or
times and with respect to all shares of Restricted Stock and Restricted Stock Units or in installments or otherwise as the Committee may deem appropriate. 
 (e) Settlement of Restricted Stock Units. After the expiration of the Restricted Period and all conditions and restrictions applicable to Restricted Stock Units have been satisfied or lapsed, the Participant
shall be entitled to receive the then Fair Market Value of the shares of Common Stock with respect to which the Restricted Stock Units were granted. Such amount shall be paid in cash, shares of Common Stock (which shares of Common Stock themselves
may be shares of Restricted Stock) or a combination thereof as specified by the Committee. 
 (f) Section 83(b)
Election. If a Participant makes an election pursuant to Section 83(b) of the Code with respect to Restricted Stock, the Participant shall be required to promptly file a copy of such election with the Company as required under
Section 83(b) of the Code. 
 (g) Termination of Service. Notwithstanding anything herein to the contrary and
except as otherwise determined by the Committee, in the event of the Participant’s Termination of Service prior to the expiration of the Restricted Period, all shares of Restricted Stock and Restricted Stock Units with respect to which the
applicable restrictions have not yet lapsed shall be forfeited. 
 (h) Stockholder Rights. 
 (i) Restricted Stock. Except to the extent otherwise provided by the Committee, a Participant that has been granted Restricted
Stock shall have the rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to receive dividends, if and when declared by the Board of Directors, provided, that the
Committee may require that any cash dividends shall be automatically reinvested in additional shares of Restricted Stock. 
 (ii) Restricted Stock Units. A Participant shall have no voting or other stockholder rights or ownership interest in shares of Common Stock with respect to which Restricted Stock Units are granted. Notwithstanding the foregoing, the
Committee may, in its discretion, provide in an Award Agreement that, if the Board of Directors declares a dividend with respect to the Common Stock, Participants shall receive dividend equivalents with respect to their Restricted Stock Units.
Subject to Section 409A of the Code, the Committee may determine the form, time of payment and other terms of such dividend equivalents, which may include cash or Restricted Stock Units. 
 (iii) Adjustments and Dividends Subject to Plan. With respect to any shares of Restricted Stock or Restricted Stock Units received
as a result of adjustments under Section 4.3 hereof and also any shares of Common Stock, Restricted Stock or Restricted Stock Units that result from dividends declared on the Common Stock, the Participant shall have the same rights and
privileges, and be subject to the same restrictions, as are set forth in this Article 8 except to the extent the Committee otherwise determines. 
 (i) Issuance of Restricted Stock. A grant of Restricted Stock may be evidenced in such manner as the Committee shall deem appropriate, including without limitation, book-entry registration or the issuance of a
stock certificate (or certificates) representing the number of shares of Restricted Stock granted to the Participant, containing such legends as the Committee deems appropriate and held in custody by the Company or on its behalf, in which case the
grant of Restricted Stock shall be accompanied by appropriate stop-transfer instructions to the transfer agent for the Common Stock, until (1) the expiration or termination of the Restricted Period for such shares of Restricted Stock and the
satisfaction of any and all other conditions prescribed by the Committee or (2) the forfeiture of such shares of Restricted Stock. The Committee may require a Participant to deliver to the Company a stock power, endorsed in blank, relating to
the shares of Restricted Stock to be held in custody by or for the Company. 

 ARTICLE 9. STOCK AWARDS 
 The Committee may grant other types of Stock Awards that involve the issuance of shares of Common Stock or that are denominated or valued by reference to shares of Common Stock, including but not limited to the grant
of shares of Common Stock or the right to acquire or purchase shares of Common Stock. Stock Awards 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 Stock Award pertains, the form in which the Stock Award shall be paid and such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine. 
 ARTICLE 10. PERFORMANCE AWARDS 
 10.1 Performance
Awards. Subject to the terms of the Plan (including the share limit in Section 4.2), the Committee may designate an Award of Restricted Stock or Restricted Stock Units or a Stock Award as a Performance Award based upon a determination that
the Participant is or may become a Named Executive Officer and the Committee wishes such Awards to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code. Performance Awards shall be contingent upon
the attainment of one or more Performance Goals. The provisions of this Article 10 shall control to the extent inconsistent with Articles 8 and 9 and such Performance Awards shall be subject to the following terms and conditions: 
 (a) Award Agreement. Each grant of a Performance Award 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 Performance Award pertains, the Performance Goals applicable to such Performance Award, the length of the Performance Period, and such additional terms
and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine. 
 (b) Performance
Goals. The Committee shall establish one or more Performance Goals for the Participant that are objectively determinable (i.e., such that a third party with knowledge of the relevant facts could determine whether the goals have been met). Such
Performance Goals must be established in writing by the Committee within ninety (90) days after the beginning of the Performance Period (or, if earlier, by the date on which 25% of the Performance Period has elapsed) or within such other time
period prescribed by Section 162(m) of the Code; provided, that achievement of the Performance Goals must be substantially uncertain at the time they are established. Such Performance Goals shall be based on one or more of the following, as
determined in the sole discretion of the Committee: stock price; market share; earnings per share (basic or diluted); net earnings; operating or other earnings; gross or net profits; revenues; financial return ratios; stockholder return; cash flow
measures (including operating cash flow, free cash flow, and cash flow return on investment); cash position; return on equity; return on investment; debt rating; sales (including Company-wide sales and dealership sales); expense reduction levels;
debt levels (including borrowing capacity); return on assets (gross or net); debt to equity ratio; debt to capitalization ratio; consummation of debt offerings; consummation of equity offerings; growth in assets, sales, or market share; customer
satisfaction; reducing, retiring or refinancing all or a portion of the Company’s long-term or short-term public or private debt or similar financial obligations (including the attainment of a certain level of reduction in such debt); share
count reduction; gross or operating margins; contractual compliance (including maintaining compliance with financial and other covenants, obtaining waivers of non-compliance, or obtaining amendments of contractual covenants); or strategic business
objectives based on meeting specified revenue goals, market penetration goals, geographic business expansion goals, cost targets, or goals relating to acquisitions or divestitures. Performance Goals may be based on the performance of the Company,
based on the Participant’s division, business unit or employing Subsidiary, based on the performance of one or more divisions, business units or Subsidiaries, based on the performance of the Company and its Subsidiaries as a whole, or based on
any combination of the foregoing. Performance Goals also may be expressed by reference to the Participant’s individual performance with respect to any of the foregoing criteria. 
 Performance Goals may be expressed in such form as the Committee shall determine, including either in absolute or relative terms (including, but not by
way of limitation, by relative comparison to a pre-established target, to previous years or to other companies or other external measures), in percentages, in terms of growth over time or otherwise, provided that the Performance Goals meet the
requirements hereunder. Performance Goals need not be based upon an increase or positive result under one of the above criteria and could include, for example, maintaining the status quo or the limitation of economic losses (measured in such case by
reference to the specific criteria). When establishing the Performance Goals, the Committee may specify that the Performance Goals shall be determined either before or after 

 
taxes and shall be adjusted to exclude items such as (i) asset write-downs or impairment charges; (ii) the effect of unusual or extraordinary
charges or income items or other events, including acquisitions or dispositions of businesses or assets, restructurings, discontinued operations, reductions in force, refinancing/restructuring of short term and/or long term debt, or other
extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to
stockholders for the applicable year; (iii) litigation or claim expenses, judgments or settlements, or (iv) changes in accounting principles or tax laws or other laws or provisions affecting reported results. The Performance Goals
established by the Committee may be (but need not be) particular to a Participant and/or different each Performance Period. 
 The Committee
also may establish subjective Performance Goals for Participants, provided that for Named Executive Officers, the subjective Performance Goals may be used only to reduce, and not increase, the Performance Award otherwise payable under the Plan. The
Committee can establish other performance measures for Awards granted to Participants that are not intended to qualify under the performance-based compensation provisions of Section 162(m) of the Code. 
 (c) Payment. Prior to the vesting, settlement, payment or delivery, as the case may be, of a Performance Award, the Committee shall
certify in writing the extent to which the applicable Performance Goals and any other material terms of the Performance Award have been achieved or exceeded for the applicable Performance Period. In no event may the Committee waive achievement of
the Performance Goal requirements for a Named Executive Officer except in its discretion in the case of the death or Disability of the Participant or as otherwise provided in Article 11 with respect to a Change in Control. Notwithstanding anything
herein to the contrary, the maximum cash payment that may be paid during a calendar year to a Participant pursuant to a Performance Award shall be $2,000,000. 
 (d) Code Section 162(m). The Committee shall have the power to impose such other restrictions on Performance Awards as it may
deem necessary or appropriate to ensure that such Performance Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m) of the Code. 
 ARTICLE 11. CHANGE IN CONTROL 
 11.1 Impact on
Options, SARs and Stock Awards. Notwithstanding any other provision of the Plan, all outstanding Options, SARs and Stock Awards (other than Stock Awards that have been designated as Performance Awards) shall become fully vested and exercisable
on and after (a) the date of consummation of a tender offer or exchange offer that constitutes a Change in Control or (b) the third business day prior to the effective date of any other Change in Control. 
 11.2 Impact on Restricted Stock and Restricted Stock Units. Notwithstanding any other provision of the Plan, all Awards of Restricted Stock and
Restricted Stock Units (other than those that have been designated as Performance Awards) shall be deemed vested, all restrictions shall be deemed lapsed, all terms and conditions shall be deemed satisfied and the Restricted Period with respect
thereto shall be deemed to have ended as of (a) the date of consummation of a tender offer or exchange offer that constitutes a Change in Control or (b) the third business day prior to the effective date of any other Change in Control.

 11.3 Performance Awards. All Performance Awards earned and outstanding as of the date of the Change in Control shall be payable in
full within 30 days following the Change in Control. Any remaining Performance Awards shall be accelerated and deemed to have been fully earned as of the date of the Change in Control, with a pro rata settlement of the Performance Award to be made
within 30 days following the Change in Control based upon an assumed achievement of the applicable Performance Goals and the length of time within the Performance Period that has elapsed prior to the Change in Control. 
 ARTICLE 12. AMENDMENT, SUSPENSION AND TERMINATION 
 12.1 Amendment, Suspension and Termination of Plan. The Board may at any time, and from time to time, amend, suspend or terminate the Plan in whole or in part; provided, that no amendment, suspension or termination shall be effective
unless approved by the stockholders of the Company (a) to the extent stockholder approval is necessary to satisfy the applicable requirements of the Code (including, but not limited to, Sections 162(m) and 422 thereof), the Exchange Act or Rule
16b-3 thereunder, any New York Stock Exchange, Nasdaq or securities exchange listing requirements or any other law or regulation; (b) if such amendment is intended to allow the Option Price of outstanding Options to be reduced by repricing

 
or replacing such Options; or (c) to the extent the Board determines, in its discretion, that stockholder approval is desirable even if such stockholder
approval is not expressly required by the Plan or applicable law or regulation. Unless sooner terminated by the Board, the Plan shall terminate ten years from the date the Plan is adopted by the Board. No further Awards may be granted after the
termination of the Plan, but the Plan shall remain effective with respect to any outstanding Awards previously granted. No amendment, suspension or termination of the Plan shall adversely affect in any material way the rights of a Participant under
any outstanding Award without the Participant’s consent. 
 12.2 Amendment of Awards. Subject to Section 12.1 above, the
Committee may at any time amend the terms of an Award previously granted to a Participant, but no such amendment shall adversely affect in any material way the rights of the Participant without the Participant’s consent except as otherwise
provided in the Plan or the Award Agreement. 
 12.3 Section 409A and Compliance Amendments. Notwithstanding any other provision
of the Plan to the contrary, the Board may amend the Plan and/or the Committee may amend any outstanding Award in any respect it deems necessary or advisable to comply with applicable law without obtaining a Participant’s consent, including but
not limited to reforming (including on a retroactive basis, if permissible and applicable) any terms of an outstanding Award to comply with or meet an exemption from Section 409A of the Code. 
 ARTICLE 13. WITHHOLDING 
 13.1 Tax Withholding in
General. The Company shall have the power and the right to deduct or withhold from cash payments or other property to be paid to the Participant, or require a Participant to remit to the Company or a Subsidiary, an amount sufficient to satisfy
federal, state and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event arising in connection with an Award under this Plan. The Company shall not be required to issue any
shares of Common Stock or settle any Awards payable hereunder until such withholding requirements have been satisfied. 
 13.2 Share
Withholding and Remittance. With respect to withholding required upon the exercise of Options, or upon any other taxable event arising as a result of Awards granted hereunder which are to be paid in the form of shares of Common Stock, the
Company may withhold from an Award, or the Participant may remit, subject to applicable law (including Rule 16b-3 under the Exchange Act), shares of Common Stock having a Fair Market Value on the date the tax is to be determined of no more than the
minimum statutory total tax which could be imposed on the transaction. All such elections shall be made in accordance with procedures established by the Committee and/or the Company. Notwithstanding the foregoing, the Committee and/or the Company
shall have the right to restrict a Participant’s ability to satisfy tax obligations through share withholding as they may deem necessary or appropriate. 
 ARTICLE 14. GENERAL PROVISIONS 
 14.1 Restrictions on Stock Ownership/Legends. The Committee, in its discretion, may
establish guidelines applicable to the ownership of any shares of Common Stock acquired pursuant to the exercise of an Option or SAR or in connection with any other Award under this Plan as it may deem desirable or advisable, including, but not
limited to, time-based or other restrictions on transferability regardless of whether or not the Participant is otherwise vested in such Common Stock. All stock certificates representing shares of Common Stock issued pursuant to this Plan shall be
subject to such stock transfer orders and other restrictions as the Committee may deem advisable and the Committee may cause any such certificates to have legends affixed thereto to make appropriate references to any applicable restrictions.

 14.2 Deferrals. Subject to Section 14.10, the Committee may require or permit a Participant to defer receipt of the delivery
of shares of Common Stock or other payments pursuant to Awards under the Plan that otherwise would be due to such Participant. Subject to Section 14.10, any deferral elections shall be subject to such terms, conditions, rules and procedures as
the Committee shall determine. 
 14.3 No Employment Rights. Nothing in the Plan or any Award Agreement shall confer upon any
Participant any right to continue in the employ or service of the Company or a Subsidiary nor interfere with or limit in any way the right of the Company or a Subsidiary to terminate any Participant’s employment by, or performance of services
for, the Company or Subsidiary at any time for any reason. 

 14.4 No Participation Rights. No person shall have the right to be selected to receive an Award
under this Plan and there is no requirement for uniformity of treatment among Participants. 
 14.5 No Trust or Fund Created. To the
extent that any person acquires a right to receive Common Stock or cash payments under the Plan, such right shall be only contractual in nature unsecured by any assets of the Company or a Subsidiary. Neither the Company nor any Subsidiary shall be
required to segregate any specific funds, assets or other property from its general assets with respect to any Awards under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between the Company or any Subsidiary, on the one hand, and any Participant or other person, on the other hand. Participants shall have no rights under the Plan other than as unsecured general
creditors of the Company or the applicable Subsidiary. 
 14.6 Restrictions on Transferability. Except as otherwise provided herein or
in an Award Agreement, no Award or any shares of Common Stock subject to an Award which have not been issued, or as to which any applicable restrictions have not lapsed, may be sold, transferred, pledged, assigned, alienated, hypothecated or
disposed of in any manner. Any attempt to transfer an Award or such shares of Common Stock in violation of the Plan or an Award Agreement shall relieve the Company and its Subsidiaries from any obligations to the Participant thereunder. 

14.7 Requirements of Law. The granting of Awards and the issuance of shares of Common Stock under the Plan shall be subject to all applicable
laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. With respect to Participants who are subject to Section 16 of the Exchange Act, this Plan is intended to comply
with all provisions of Rule 16b-3 or any successor rule under the Exchange Act, unless determined otherwise by the Committee. 
 14.8
Approvals and Listing. The Company shall not be required to grant, issue or settle any Awards or issue any certificate or certificates for shares of Common Stock under the Plan prior to (a) obtaining any required approval from the
stockholders of the Company; (b) obtaining any approval from any governmental agency which the Company shall, in its discretion, determine to be necessary or advisable; (c) the admission of such shares of Common Stock to listing on any
national securities exchange on which the Company’s Common Stock may be listed; and (d) the completion of any registration or other qualification of such shares of Common Stock under any state or federal law or ruling or regulation of any
governmental or regulatory body which the Company shall, in its sole discretion, determine to be necessary or advisable. The Company may require that any recipient of an Award make such representations and agreements and furnish such information as
it deems appropriate to assure compliance with the foregoing or any other applicable legal requirement. Notwithstanding the foregoing, the Company shall not be obligated at any time to file or maintain a registration statement under the Securities
Act of 1933, as amended, or to effect similar compliance under any applicable state laws with respect to the Common Stock that may be issued pursuant to this Plan. 
 14.9 Compliance with Code Section 162(m). It is intended that the Plan comply fully with and meet all of the requirements of Section 162(m) of the Code with respect to Options and SARs granted
hereunder. At all times when the Committee determines that compliance with the performance-based compensation exception under Section 162(m) of the Code is required or desired, all Performance Awards granted under this Plan also shall comply
with the requirements of Section 162(m) of the Code, and the Plan must be resubmitted to the stockholders of the Company as necessary to enable Performance Awards to qualify as performance-based compensation thereunder (which rules currently
require that the stockholders reapprove the Plan no later than the first stockholders meeting that occurs in the fifth year following the year in which the stockholders previously approved the Plan). In addition, in the event that changes are made
to Section 162(m) of the Code to permit greater flexibility with respect to any Award or Awards under the Plan, the Committee may make any adjustments it deems appropriate. The Committee may, in its discretion, determine that it is advisable to
grant Awards that shall not qualify as “performance-based compensation” and may grant Awards without satisfying the requirements of Section 162(m) of the Code. 
 14.10 Compliance with Code Section 409A. It is generally intended that the Plan and all Awards hereunder either comply with or meet the
requirements for an exemption from Section 409A of the Code and the Plan shall be operated and administered accordingly. No Award (or modification thereof) shall provide for a deferral of compensation (within the meaning of Section 409A of
the Code) that does not comply with Section 409A of the Code and the Award Agreement shall incorporate the terms and conditions required by Section 409A of the Code, unless the Committee, at the time of grant (or modification, as the case
may be), provides that the Award is not intended to comply with Section 409A of the Code. 

 
Notwithstanding anything in the Plan to the contrary, the Committee may amend or vary the terms of Awards under the Plan in order to conform such terms to
the requirements of Section 409A of the Code. To the extent an Award does not provide for a deferral of compensation (within the meaning of Section 409A of the Code), but may be deferred under a nonqualified deferred compensation plan
established by the Company, the terms of such nonqualified deferred compensation plan shall govern such deferral, and to the extent necessary, are incorporated herein by reference. Notwithstanding any other provisions of the Plan or any Award
Agreement, the Company does not guarantee to any Participant (or any other person with an interest in an Award) that the Plan or any Award hereunder complies with or is exempt from Section 409A of the Code, and shall not have any liability to
or indemnify or hold harmless any individual with respect to any tax consequences that arise from any such failure to comply with or meet an exemption under Section 409A of the Code. 
 14.11 Other Corporate Actions. Nothing contained in the Plan shall be construed to limit the authority of the Company to exercise its corporate
rights and powers, including, but not by way of limitation, the right of the Company to adopt other compensation arrangements (including an arrangement not intended to be performance-based compensation under Section 162(m) of the Code) or the
right of the Company to authorize any adjustment, reclassification, reorganization, or other change in its capital or business structure, any merger or consolidation of the Company, the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its business or assets. 
 14.12 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein shall also include the feminine, and the plural shall include the singular and the singular shall include the plural. 
 14.13 Severability. The invalidity or unenforceability of any particular provision of this Plan shall not affect the other provisions hereof, and the Committee may elect in its discretion to construe such
invalid or unenforceable provision in a manner which conforms to applicable law or as if such provision was omitted. 
 14.14 Governing
Law. To the extent not preempted by federal law, the Plan, and all Award Agreements hereunder, shall be construed in accordance with and governed by the laws of the State of North Carolina (excluding the principles of conflict of law thereof).Employment Offer Letter

 Exhibit 10.1 
 

 
  

					
		 		 	William H. Williams
		 		 	President and CEO

 June 24, 2009 
 Mr. Edward F. Dunlap 
  
 Dear Ed: 
 I am delighted to offer you employment with Harry & David as Senior Vice President/Chief Financial Officer, reporting to me. This letter sets forth the details
of our offer, as follows: 
  

	 	•	 	 The starting date of your employment will be, by mutual agreement, in late July or early August 2009. 

  

	 	•	 	 Annualized base salary will be $390,000, which is $16,250 per bi-monthly pay period (less applicable withholding). Future pay actions are contingent upon individual
performance, external market competitiveness, and internal equity. 

  

	 	•	 	 You are also eligible to receive a sign-on bonus totaling $115,000. The first portion of the sign-on bonus in the amount of $50,000 (gross) will be payable August
2009. This bonus is contingent upon your continued employment for a minimum of twelve months from your date of hire. If you chose to resign your position within your first twelve months of employment, the full sign-on bonus, net of taxes, would be
payable to the Company. The second portion of the sign-on bonus in the amount of $65,000 (gross) is contingent upon the purchase of a house or condominium in the Rogue Valley within 12 months of your date of employment. 

 

	 	•	 	 You are eligible for a Management Bonus commencing with Fiscal Year 2010, which begins June 28, 2009. The bonus award opportunity ranges from 0 percent to 100
percent of annual base salary, with a target of 50 percent. Awards are based on adjusted EBITDA of Harry & David and upon an assessment of your individual performance. Bonus awards are typically paid out in August following the completion
of the fiscal year. 

  

	 	•	 	 You will be eligible for Long Term Incentive compensation targeted at a FY13 value of $1,200,000 based on Harry & David’s Fiscal Year plans for the
period June 28, 2009, through the end of June 2013. Your stock option grant will be for 8,000 shares at a strike price of $150 per share. The option shall not be exercisable as of the date of the grant. The option shall become exercisable in
respect of 33.3% of the option shares on June 17, 2010 and June 17, 2011 with the remainder vesting June 17, 2012. In the event of a change of control as defined in the Harry & David Holdings, Inc. Non-Qualified Stock Option
Agreement, any unvested options would fully vest. 

 HARRY & DAVID HOLDINGS, INC. • 2500 SOUTH PACIFIC HIGHWAY
• PO BOX 2500 • MEDFORD, OREGON 97501 
 T 541.864.2500 • harryanddavid.com 

 Mr. Edward F. Dunlap 
 June
24, 2009 
  Page
 2
 of 3 
  

	 	•	 	 In the absence of a formal employment agreement and in the event that your employment with Harry & David were to be involuntarily terminated for reasons
other than cause, you will receive (conditioned on your signing a complete release) a payment equivalent to twelve months current base salary. 

  

	 	•	 	 You will be eligible to participate in the Harry and David Flexible Benefits Plan on the first of the month following 90 days of employment. The Flexible Benefits
Plan includes the following coverage, with respect to which you may choose your level of participation: 

  

	 	•	 	 Medical and Dental Insurance 

  

	 	•	 	 Life Insurance Options 

  

	 	•	 	 Disability Insurance 

  

	 	•	 	 Personal Accident Insurance 

  

	 	•	 	 Dependent Life Insurance 

  

	 	•	 	 Before-tax Health Care and Dependent Care Accounts 

  

	 	•	 	 As part of this agreement, Harry & David will reimburse you for COBRA premiums above current cost of coverage you may pay above employee rates for benefit
continuation through your current employer prior to eligibility for Harry and David’s Flexible Benefits Plan. 

  

	 	•	 	 You will be eligible for four weeks of Paid Time Off (PTO) annually. The Company also currently provides 11 paid holidays each year. 

 

	 	•	 	 You will have the opportunity to participate in our 401(k) Plan after completion of 1,000 working hours. You are allowed to contribute up to 95 percent of your
compensation to the Plan subject to a dollar limit imposed under the tax laws (which is $22,000 including $5,500 catch-up contribution for 2009). 

  

	 	•	 	 Relocation assistance will be provided as follows to support your move: 

  

	 	•	 	 Mileage at the Harry & David standard reimbursement rate for driving your personal vehicle from the San Francisco Bay area to the Rogue Valley.

  

	 	•	 	 If required, nominal costs associated with transportation of household goods to the Rogue Valley. 

  

	 	•	 	 Temporary housing in Harry & David corporate housing for up to 90 days following your employment date. Any extension of temporary housing benefits requires
approval and may be taxable. 

 The foregoing is a short summary of the benefits and incentive plans for which you will be eligible. To the
extent the summary is incomplete, or if there is any inconsistency between this summary and the official plan texts, the provisions of the official text will control. Of course, the Company reserves the right to change or terminate any or all of the
benefit and compensation plans at any time. 

 Mr. Edward F. Dunlap 
 June
24, 2009 
  Page
 3
 of 3 
  
 As a condition of
employment, you will be required to sign a non-disclosure agreement, which states, in general, that you will not disclose proprietary information to any person and that for the period of your employment, you will not engage in direct competitive
activity. 
 As you may know, Harry & David employs people on an “at will” basis, which means that either the employee or the Company may
terminate the employment relationship at any time and for any reason. No one may make a contrary arrangement with you. 
 This letter contains the entire
employment agreement between Harry & David and you and may not be amended except by agreement in writing signed by both parties. 
 If you have
questions, please do not hesitate to give me a call. If the offer described above is satisfactory to you, please indicate your acceptance by signing and returning the enclosed copy of this letter to Rudd Johnson in the enclosed envelope. 

Ed, I believe that you will be a major contributor to the Company and will play a key role as a member of the Harry & David executive team. The entire
management team and I are eager for you to join us in exceeding our growth and profit objectives. 
  

	
	Sincerely,
	
	/s/ Bill Williams

 cc: Rudd Johnson 
  

			
	Accepted:	 	
		
	 /s/ Edward F. Dunlap
	 	6/25/09
	Edward F. Dunlap	 	Date

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