Document:

1997 Stock Option Plan Amended and Restated as of May 8,2002

  Exhibit 10.14
 SONIC AUTOMOTIVE,
INC.
1997 STOCK OPTION PLAN
 Amended and Restated as of May 8, 2002
 1.        Purposes of Plan.  The purposes of the Plan, which shall be known
as the Sonic Automotive, Inc. 1997 Stock Option Plan and is hereinafter referred to as the “Plan”, are (i) to provide incentives for key employees, directors, consultants and other individuals providing services to Sonic Automotive, Inc.
(the “Company”) and its subsidiaries and other related entities (each of which is referred to herein as a “Subsidiary”) by encouraging their ownership of the Class A Common Stock, $.01 par value per share, of the Company (the
“Stock”) and (ii) to aid the Company in retaining such key employees, directors, consultants and other individuals upon whose efforts the Company’s success and future growth depends, and attracting other such employees, directors,
consultants and other individuals.
 2.        Administration.  The Plan shall be administered by a committee of the Board of Directors of the Company or subcommittee thereof (the “Committee”). The Committee shall be appointed from time to
time by the Board of Directors of the Company (the “Board of Directors”) and shall consist of not fewer than two of its members. In the event that no such Committee exists or is appointed, then the powers to be exercised by the Committee
hereunder shall be exercised by the Board of Directors.
 For purposes of administration, the Committee, subject to the terms of the Plan, shall have plenary
authority to establish such rules and regulations, to make such determinations and interpretations, and to take such other administrative actions, as it deems necessary or advisable. All determinations and interpretations made by the Committee shall
be final, conclusive and binding on all persons, including those granted options hereunder (“Optionees”) and their legal representatives and beneficiaries.
 Notwithstanding any other provisions of the Plan, the Committee may impose such conditions on any options as may be required to satisfy the requirements of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Act”) or
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
 The Committee shall hold its meetings at such times and places as it
may determine. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all members shall be as effective as
if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary (who need not be a member of the Committee). No member of the Committee shall be liable for any act or omission with respect to his
service on the Committee, if he acts in good faith and in a manner he reasonably believes to be in or not opposed to the best interests of the Company.
 3.        Stock Available for Options.   There shall be available for options under the Plan a total of Eight Million
(8,000,000) shares of Stock, subject to any adjustments which may be made pursuant to Section 5(f) hereof. Shares of Stock used for purposes of the Plan may be either authorized and unissued shares, or previously issued shares held in the treasury
of the Company, or both. Shares of Stock covered by options which have terminated or expired prior to exercise, or which have been tendered as payment
  
 
 

  upon exercise of other options pursuant to Section 5(c), shall be available for further option grants hereunder.
 4.        Eligibility.   Options under the Plan may be granted to key
employees of the Company or any Subsidiary, including officers or directors of the Company or any Subsidiary, and to consultants and other individuals providing services to the Company or any Subsidiary. On and after June 5, 2000, options may no
longer be granted under this Plan to “non-employee directors” within the meaning of Rule 16b-3 of the Act. Options may be granted to eligible persons whether or not they hold or have held options previously granted under the Plan or
otherwise granted or assumed by the Company; provided, however, that the maximum number of shares of Stock with respect to which options may be granted under the Plan to any person during any calendar year shall be 500,000 shares of Stock (subject
to adjustment in the same manner as provided in Section 5(f) with respect to shares of Stock subject to options then outstanding). In selecting recipients for options, the Committee may take into consideration any factors it may deem relevant,
including its estimate of the individual’s present and potential contributions to the success of the Company and its Subsidiaries. Service as a director, officer or consultant of or to the Company or any Subsidiary shall be considered
employment for purposes of the Plan (and the period of such service shall be considered the period of employment for purposes of Section 5(d) of the Plan); provided, however, that incentive stock options may be granted under the Plan only to an
individual who is an “employee” (as such term is used in Section 422 of the Code) of the Company or a Subsidiary which constitutes a “subsidiary corporation” within the meaning of Section 424(f) of the Code.
 5.        Terms and Conditions of Options.   The
Committee shall, in its discretion, prescribe the terms and conditions of the options to be granted hereunder, which terms and conditions need not be the same in each case, subject to the following:
 (a)       Option Price.   The price at which each share of Stock may be purchased upon exercise of an option granted under the Plan shall be determined by the Committee in its discretion, but shall not be less than the fair market value per share of Stock on the date
of grant of the option. In the case of any option intended to be an incentive stock option granted to an individual owning (directly or by attribution as provided in Section 424(d) of the Code), on the date of grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company or any Subsidiary (which individual shall hereinafter be referred to as a “10% Stockholder”), the price at which each share of Stock may be purchased upon exercise
of the option shall not be less than 110% of the fair market value per share of Stock on the date of grant of the option. The date of the grant of an option shall be the date specified by the Committee in its grant of the option. Except as otherwise
provided in Section 5(f) of this Plan, the option price of an outstanding option under this Plan may not be repriced. Notwithstanding the foregoing, an option may be granted with an exercise price lower than that set forth above if such option is
granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.
 For purposes of this Section 5(a), “fair market value” shall mean the last sale price regular way on the last trading day prior to the date of option grant, or, in case no sales take place on such date, the average of the closing
high bid and low asked prices regular way, in either case on the principal national securities exchange on which the Stock is listed or admitted to trading, or if the Stock is not listed or admitted to trading on any national securities exchange,
the last sale price reported on the National Market System of the National Association of Securities Dealers Automated Quotation system (“NASDAQ”) on such date, or the average of the closing high bid and low asked prices of the Stock in
the over-the-counter market reported on NASDAQ on such date, as furnished to the Committee by any New York
  
 
 

  Stock Exchange member selected from time to time by the Committee for such purpose. If there is no bid or asked price reported on any
such date, the fair market value shall be determined by the Committee in accordance with the regulations promulgated under Section 2031 of the Code, or by any other appropriate method selected by the Committee.
 (b)       Option Period.    The period for exercise of an option shall be determined by the Committee in its discretion but in no event shall the exercise period be more than ten years from the date of grant,
or in the case of an option intended to be an incentive stock option granted to a 10% Stockholder, more than five years from the date of grant. Options may, in the discretion of the Committee, be made exercisable in installments during the option
period. Any shares not purchased on any applicable installment date may be purchased thereafter at any time before the expiration of the option period, subject to Section 5(d) below.
 (c)       Exercise of Options.   In
order to exercise an option, the Optionee shall deliver to the Company written notice specifying the number of shares of Stock to be purchased, together with full payment of the purchase price therefor; provided that, for the purpose of assisting an
Optionee to exercise an option, the Company may make loans to the Optionee or guarantee loans made by third parties to the Optionee, on such terms and conditions as the Board of Directors may authorize. The purchase price may be paid in (i) cash (or
a certified or bank cashier’s check payable to the order of the Company); (ii) shares of Stock owned by the Optionee, (iii) nonstatutory options granted under the Plan and held by the Optionee (provided, however, that the purchase price of
Stock acquired under an incentive stock option may not be paid in options); or (iv) any combination of the foregoing methods. Shares of Stock tendered in payment on the exercise of an option shall be valued at their fair market value determined as
described in Section 5(a) above, provided that the date of determination shall be the date of exercise. The fair market value of options tendered in payment upon exercise of other options shall be the fair market value of the underlying Stock,
determined as aforesaid, less the total exercise price of the options. In addition, at the request of the Optionee, and subject to applicable laws and regulations, the Company may (but shall not be required to) cooperate in a “cashless
exercise” of an option (i.e., the assignment to the Company of the proceeds from a sale of Stock acquired upon exercise of the option or from the proceeds of a loan from a brokerage firm). If the Optionee so requests, shares of Stock purchased
upon exercise of an option may be issued in the name of the Optionee or another person. An Optionee shall have none of the rights of a stockholder until the shares of Stock are issued to him.
 (d)       Effect of Termination of Employment.
 (i)        An option may not be exercised after the Optionee has ceased to be in the employ of the
Company or any Subsidiary for any reason other than the Optionee’s death, Disability or Involuntary Termination Without Cause. A cessation of employment, for purposes of incentive stock options only, shall be deemed to occur on the ninety-first
day of a leave of absence unless the Optionee’s reemployment rights are guaranteed by law or by contract. “Cause” shall mean 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 of a crime by the Optionee involving moral turpitude, which crime has a material adverse impact on the Company or any Subsidiary or which is intended to result in the personal
enrichment of the Optionee at the expense of the Company or one of its Subsidiaries, (ii) a material violation of the Optionee’s responsibilities, or the Optionee’s gross negligence or willful misconduct, or (iii) the continuous, willful
failure of the person in question to follow the reasonable directives of the Board of Directors. “Disability” shall mean the inability or failure of a person to
 
 

  perform those duties for the Company or any Subsidiary traditionally assigned to and performed by such person because of the
person’s then-existing physical or mental condition, impairment or incapacity. The fact of disability shall be determined by the Committee, which may consider such evidence as it considers desirable under the circumstances, the determination of
which shall be final and binding upon all parties. “Involuntary Termination Without Cause” shall mean either (i) the dismissal of, or the request for the resignation of, a person, by 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 Cause; or (ii) the dismissal of, or
the request for the resignation of, a person, by a duly constituted corporate officer of the Company or any Subsidiary, or by the Board, for any reason other than for Cause.
 (ii)       During the three months after the date of the Optionee’s Involuntary Termination Without Cause, the Optionee
shall have the right to exercise the options granted under the Plan, but only to the extent the options were exercisable on the date of the cessation of the Optionee’s employment.
 (iii)     During the twelve months after the Optionee’s employment with the Company or any Subsidiary ceases as a result of the
Optionee’s Disability, the Optionee shall have the right to exercise the options granted under the Plan, but only to the extent the options were exercisable on the date of the cessation of the Optionee’s employment.
 (iv)      In the event of the death of the Optionee while employed or, in the event of the
death of the Optionee after cessation of employment described in subparagraph (ii) or (iii), above, but within the three-month or twelve-month period described in subparagraph (ii) or (iii), above, the options granted under the Plan shall be
exercisable until the expiration of twelve months following the Optionee’s death, but only to the extent the option was exercisable on the date of the cessation of the Optionee’s employment. During such extended period, the option may be
exercised by the person or persons to whom the deceased Optionee’s rights under the Option Agreement shall pass by will or by the laws of descent and distribution. The provisions of this subparagraph (iv) shall apply to any outstanding options
which are incentive stock options to the extent permitted by Sections 421 and 422(d) of the Code and such outstanding options in excess thereof shall, immediately upon the death of the Optionee, be treated for all purposes of the Plan as
nonstatutory stock options and shall be exercisable as such as provided in this subparagraph (iv).
 In no event shall any option be
exercisable beyond the applicable exercise period determined pursuant to Section 5(b) of the Plan. Nothing in the Plan or in any option granted pursuant to the Plan (in the absence of an express provision to the contrary) shall confer on any
individual any right to continue in the employ of the Company or any Subsidiary or interfere in any way with the right of the Company or Subsidiary to terminate his employment at any time.
 (e)       Nontransferability of Options.  Except as otherwise set forth herein, during
the lifetime of an Optionee, options held by such Optionee shall be exercisable only by him, and no option shall be transferable other than by will or the laws of descent and distribution. Notwithstanding the foregoing, the Committee, in its
absolute discretion, may grant nonstatutory stock options that may be transferred without consideration, in whole or in part, by the Optionee to (i) the Optionee’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 Optionee’s household (other than a
tenant or employee) (“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 Optionee) control the management of assets; or (iv) any other
entity in which Family Members (or the Optionee) own more than 50% of the voting interests. 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 transferee and the transferred options shall continue to be subject to the same terms and conditions as were applicable immediately prior to the
transfer. The provisions of the Plan, including, but not limited to, those set forth in Section 5(b) and (d), shall continue to apply with respect to the Optionee and the option shall be exercisable by the transferee only to the extent and for the
periods specified herein and in any applicable option agreement. To the extent required by applicable law, the Optionee shall remain subject to withholding taxes upon exercise of any transferred option by the transferee.
 (f)       Adjustments for Change in Stock Subject to Plan.
   In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering or any other
change in the corporate structure or shares of the Company, unless the Committee should determine otherwise, corresponding adjustments automatically shall be made to the number and kind of shares available for issuance under this Plan, the number
and kind of shares covered by outstanding options under this Plan, and the exercise price per share for outstanding options. In addition, the Committee may make such other adjustments as it determines to be equitable.
 (g)       Acceleration of Exercisability of Options Upon Occurrence of Certain
Events.   In connection with 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, all outstanding options under the Plan shall become exercisable in full, notwithstanding any other provision of the Plan or of any outstanding options granted thereunder, on and after (i) the
fifteenth day prior to the effective date of such merger, consolidation, sale, transfer or acquisition or (ii) the date of commencement of such tender offer or exchange offer, as the case may be. The provisions of the foregoing sentence shall apply
to any outstanding options which are incentive stock options to the extent permitted by Section 422(d) of the Code and such outstanding options in excess thereof shall, immediately upon the occurrence of the event described in clause (i) or (ii) of
the foregoing sentence, be treated for all purposes of the Plan as nonstatutory stock options and shall be immediately exercisable as such as provided in the foregoing sentence. Notwithstanding the foregoing, in no event shall any option be
exercisable after the date of termination of the exercise period of such option determined pursuant to Sections 5(b) and 5(d).
 (h)       Registration, Listing and Qualification of Shares of Stock.   
Each option shall be subject to the requirement that if at any time the Board of Directors shall determine that the registration, listing or qualification of shares of Stock covered thereby upon any securities exchange or
under any federal or state law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such option or the purchase of shares of Stock thereunder, no such
option may be exercised unless and until such registration, listing, qualification, consent or approval shall have been
 
 

  effected or obtained free of any conditions not acceptable to the Board of Directors. The Company may require that any person exercising
an option shall 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.
 (i)        Other Terms and Conditions.   The Committee may impose such other terms and conditions, not inconsistent with the terms hereof, on the grant or exercise of options, as it deems advisable.
 (j)        Reload Options.   If
upon the exercise of an option granted under the Plan (the “Original Option”) the Optionee pays the purchase price for the Original Option pursuant to Section 5(c) in whole or in part in shares of Stock owned by the Optionee for at least
six months, the Company shall grant to the Optionee on the date of such exercise an additional option under the Plan (the “Reload Option”) to purchase that number of shares of Stock equal to the number of shares of Stock so held for at
least six months transferred to the Company in payment of the purchase price in the exercise of the Original Option. The price at which each share of Stock covered by the Reload Option may be purchased shall be the market value per share of Stock
(as specified in Section 5(c)) on the date of exercise of the Original Option. The Reload Option shall not be exercisable until one year after the date the Reload Option is granted or after the expiration date of the Original Option. Upon the
payment of the purchase price for a Reload Option granted hereunder in whole or in part in shares of Stock held for more than six months pursuant to Section 5(c), the Optionee is entitled to receive a further Reload Option in accordance with this
Section 5(j). Shares of Stock covered by a Reload Option shall not reduce the number of shares of Stock available under the Plan pursuant to Section 3.
 6.        Additional Provisions Applicable to Incentive Stock Options.   The Committee may, in its discretion, grant
options under the Plan which constitute “incentive stock options” within the meaning of Section 422 of the Code to eligible employees of the Company and its “subsidiary corporations” within the meaning of Section 424(f) of the
Code, provided, however, that the aggregate market value of the Stock (determined as of the date the incentive stock option is granted) with respect to which incentive stock options are exercisable for the first time by the Optionee during any
calendar year shall not exceed $100,000 or such other limitation set forth in Section 422(d) of the Code.
 7.        Effectiveness of Plan.   The Plan became effective when it was adopted and approved by the Board of Directors and the stockholders
of the Company on October 9, 1997. The Plan was amended and restated effective as of December 3, 1998, again amended and restated effective as of June 8, 1999 and again amended and restated as of June 5, 2000; provided, however, that the amendments
to Section 5(e) contained in the June 8, 1999 restatement also shall apply to all outstanding nonstatutory stock options under the Plan as of June 8, 1999. This amendment and restatement of the Plan shall be effective as of May 8, 2002, subject to
approval by the stockholders of the Company at the 2002 Annual Meeting of Stockholders.
 8.        Amendment and Termination.   The Board of Directors may at any time amend the Plan or the terms of any option outstanding under
the Plan; provided, however, that, except as contemplated in Section 5(f), the Board of Directors shall not, without approval by a majority of the votes cast by the stockholders of the Company at a meeting of stockholders at which a proposal to
amend the Plan is voted upon, (i) increase the maximum number of shares of Stock for which options may be granted under the Plan, or (ii) except as otherwise provided in the Plan, amend the requirements as to the class of employees eligible to
receive options. The Board of Directors may terminate the Plan at any time. Unless the Plan shall theretofore have been terminated, the Plan shall terminate, and no option shall be granted hereunder after, October 9, 2007. No amendment or
termination of the Plan or any option outstanding under the
  
 
 

  Plan may, without the consent of an Optionee, adversely affect the rights of such Optionee under any option held by such Optionee.
 9.        Withholding.  It shall be a condition to the
obligation of the Company to issue shares of Stock upon exercise of an option that the Optionee (or any beneficiary or person entitled to act under Section 5(d) hereof) remit to the Company, or make arrangements satisfactory to the Company to pay
through payroll withholding or otherwise, such amount as may be requested by the Company to meet any federal, state or local tax withholding obligations with respect to such exercise. If the amount requested is not paid, the Company may refuse to
issue such shares of Stock.
 10.      Other 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 grant or assume options for
proper corporate purposes other than under the Plan with respect to any employee or other person, firm, corporation or association.Employee Stock Purchase Plan Amended and Restated as of May 8, 2002

  Exhibit 10.15
 SONIC AUTOMOTIVE,
INC.
 EMPLOYEE STOCK PURCHASE PLAN
 AMENDED AND
RESTATED
 AS OF
 MAY 8, 2002
 
 

  SONIC AUTOMOTIVE, INC.
EMPLOYEE STOCK PURCHASE PLAN

AMENDED AND
RESTATED
AS OF
MAY 8, 2002
 TABLE OF CONTENTS
  

	  
 	  
 	  
 	 Page
 
	  
 	  
 	  
 	  
 
	 
ARTICLE I. PURPOSE; EFFECTIVE DATE; DEFINITIONS; CONSTRUCTION
 	 1
 
	  
 	 1.1
 	 
Purpose of Plan; Effective Date
 	 1
 
	  
 	 1.2
 	 
Definitions
 	 1
 
	  
 	  
 	 (a)    “
Account”
 	 1
 
	  
 	  
 	 (b)    “
Base Pay”
 	 1
 
	  
 	  
 	 (c)    “
Board of Directors”
 	 1
 
	  
 	  
 	 (d)    “
Business Day”
 	 1
 
	  
 	  
 	 (e)    “
Cause”
 	 1
 
	  
 	  
 	 (f)    “
Code”
 	 2
 
	  
 	  
 	 (g)   “
Committee”
 	 2
 
	  
 	  
 	 (h)   “
Company”
 	 2
 
	  
 	  
 	 (i)    “
Company Stock”
 	 2
 
	  
 	  
 	 (j)    “
Contributions”
 	 2
 
	  
 	  
 	 (k)   “
Employee”
 	 2
 
	  
 	  
 	 (l)    “
Employer”
 	 2
 
	  
 	  
 	 (m)  “
Exercise Date”
 	 2
 
	  
 	  
 	 (n)   “
Grant Date”
 	 2
 
	  
 	  
 	 (o)   “
Option”
 	 2
 
	  
 	  
 	 (p)   “
Participant”
 	 2
 
	  
 	  
 	 (q)   “
Plan”
 	 2
 
	  
 	 1.3
 	 
Construction
 	 3
 
	  
 	  
 	  
 	  
 
	 
ARTICLE II. ADMINISTRATION
 	 3
 
	  
 	 2.1
 	 
Appointment and Procedures of Committee
 	 3
 
	  
 	 2.2
 	 
Authority of Committee
 	 3
 
	  
 	  
 	  
 	  
 
	 
ARTICLE III. PARTICIPATION
 	 3
 
	  
 	 3.1
 	 
Eligibility to Participate
 	 3
 
	  
 	 3.2
 	 
Restrictions on Participation
 	 4
 
	  
 	 3.3
 	 
Leave of Absence
 	 4
 
	  
 	  
 	  
 	  
 
	 
ARTICLE IV. CONTRIBUTIONS
 	 4
 
	  
 	 4.1
 	 
Payroll Deductions
 	 4
 
	  
 	 4.2
 	 
Direct Payment
 	 5
 

  
 
 

   

	  
 	 4.3
 	 
Leave of Absence
 	 5
 
	  
 	 4.4
 	 
Contributions to Accounts
 	 5
 
	  
 	 4.5
 	 
Withdrawal of Contributions from Plan
 	 5
 
	  
 	 4.6
 	 
Termination of Employment
 	 6
 
	  
 	  
 	  
 	  
 
	 
ARTICLE V. OPTIONS
 	 6
 
	  
 	 5.1
 	 
Company Stock Available for Options
 	 6
 
	  
 	 5.2
 	 
Granting of Options
 	 6
 
	  
 	 5.3
 	 
Option Price
 	 6
 
	  
 	 5.4
 	 
Option Period
 	 7
 
	  
 	 5.5
 	 
Exercise of Options
 	 7
 
	  
 	  
 	 (a)    
Automatic Exercise
 	 7
 
	  
 	  
 	 (b)    
Nontransferability of Options
 	 7
 
	  
 	  
 	 (c)    
Effect of Termination of Employment
 	 7
 
	  
 	  
 	          (i)    
Termination of Employment Related to Cause
 	 7
 
	  
 	  
 	          (ii)    
Termination of Employment Due to Death
 	 7
 
	  
 	  
 	          (iii)    
Other Termination of Employment
 	 8
 
	  
 	  
 	 (d)    
Leave of Absence
 	 8
 
	  
 	  
 	 (e)    
Delivery of Stock
 	 9
 
	  
 	  
 	 (f)    
Acceleration of Exercisability of Options Upon Occurrence of Certain Events
 	 9
 
	  
 	  
 	 (g)    
Registration, Listing and Qualification of Shares of Stock
 	 9
 
	  
 	  
 	  
 	  
 
	 
ARTICLE VI. MISCELLANEOUS
 	 9
 
	  
 	 6.1
 	 
Adjustments Upon Changes in Capitalization
 	 9
 
	  
 	 6.2
 	 
Approval of Shareholders
 	 10
 
	  
 	 6.3
 	 
Amendment, Suspension and Termination
 	 10
 
	  
 	 6.4
 	 
Intent to Comply With Code Section 423
 	 10
 
	  
 	 6.5
 	 
Equal Rights and Privileges
 	 10
 
	  
 	 6.6
 	 
Use of Funds
 	 10
 
	  
 	 6.7
 	 
Withholding
 	 10
 
	  
 	 6.8
 	 
Effect of Plan
 	 11
 
	  
 	 6.9
 	 
No Employment Rights
 	 11
 
	  
 	 6.10
 	 
Governing Law
 	 11
 
	  
 	 6.11
 	 
Other Actions
 	 11
 

 
 
 

  SONIC AUTOMOTIVE, INC.
EMPLOYEE STOCK PURCHASE PLAN

AMENDED AND
RESTATED
AS OF
MAY 8, 2002
 
ARTICLE I.  PURPOSE; EFFECTIVE DATE; DEFINITIONS; CONSTRUCTION
 1.1               
Purpose of Plan; Effective Date.  The purpose of the Plan, which shall be known as the Sonic Automotive, Inc. Employee Stock Purchase Plan (the “Plan”), is to provide
employees of Sonic Automotive, Inc. (the “Company”) and its participating subsidiaries, within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”) (which hereinafter shall be referred to
collectively with the Company as the “Employer”), an opportunity to acquire a proprietary interest in the Company through the purchase of the Class A Common Stock, $.01 par value per share, of the Company. This Plan is intended to qualify
as an “employee stock purchase plan” within the meaning of Section 423 of the Code. 
 The Plan became effective when it was adopted and approved by
the Board of Directors and the shareholders of the Company on October 9, 1997. The Plan was subsequently amended and restated as of December 3, 1998, again amended and restated as of June 8, 1999, and again amended and restated as of June 5, 2000.
The Company hereby amends and restates the Plan as of May 8, 2002 as set forth herein.
 1.2               
Definitions.  Throughout this Plan, the following terms shall have the meanings indicated:
 (a)         “
Account” shall mean a memorandum account maintained to record each Participant’s Contributions pending purchase of Company Stock.
 (b)        “
Base Pay” shall mean the Participant’s regular cash compensation (excluding overtime pay, bonuses, shift premiums, commissions, fringe benefits, other special payments and imputed income) determined without reduction
for Contributions made under this Plan or contributions to any Code Section 401(k) or Section 125 Plan.
 (c)         “
Board of Directors” shall mean the Board of Directors of the Company.
 (d)        “
Business Day” shall mean any day other than a Saturday, Sunday or holiday.
 (e)         “
Cause” shall mean any act, action or series of acts or actions or any omission, omissions or series of omissions which, in the opinion of the Committee, result in, or which have the effect of resulting in, (i) the
commission of a crime by the Participant involving moral turpitude, which crime has a material adverse impact on the Employer, (ii) gross negligence or willful misconduct which is continuous and results in
 
 

  material damage to the Employer, or (iii) the continuous, willful failure of the person in question to follow the reasonable directives of the
Employer.
 (f)         “
Code” shall mean the Internal Revenue Code of 1986, as amended, any successor revenue laws of the United States, and the rules and regulations promulgated thereunder.
 (g)        “
Committee” shall mean the committee of directors of the Company appointed by the Board of Directors in accordance with Section 2.1 to administer this Plan, or in the event that no such committee exists or is appointed,
“Committee” shall mean the Board of Directors.
 (h)        “
Company” shall mean Sonic Automotive, Inc., a corporation organized and existing under the laws of the State of Delaware.
 (i)         “
Company Stock” shall mean the Class A Common Stock, $.01 par value per share, of the Company.
 (j)         “
Contributions” shall mean the after-tax payroll deductions or other permissible contributions made by Participants to the Plan pursuant to Article IV.
 (k)        “
Employee” shall mean any person who (i) is employed on a full-time or part-time basis by a participating Employer, (ii) is regularly scheduled to work more than twenty hours per week for a participating Employer, and
(iii) is customarily employed more than five months in any calendar year by a participating Employer. Independent contractors and outside directors shall not be included in the definition of Employee for purposes of this Plan.
 (l)         “
Employer” shall mean the Company and any of its present or future subsidiaries (within the meaning of Section 424(f) of the Code) which the Committee may designate from time to time as participating Employers under this
Plan.
 (m)       “
Exercise Date” shall mean the last Business Day of March, June, September and December on which the principal trading market for Company Stock is open for trading, plus any other interim dates during the year which the
Committee designates as Exercise Dates.
 (n)        “
Grant Date” shall mean (i) initially, January 1, 1998, and (ii) each January 1 thereafter during the term of the Plan.
 (o)        “
Option” shall mean an option to purchase shares of Company Stock granted by the Committee to a Participant pursuant to this Plan.
 (p)        “
Participant” shall mean an Employee participating in this Plan in accordance with Article III.
 (q)        “
Plan” shall mean this Sonic Automotive, Inc. Employee Stock Purchase Plan, as amended from time to time.
 
 

  1.3               
Construction.  The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, unless the context clearly indicates to the contrary. The words
“hereof,” “herein,” “hereunder” and other similar compounds of the word “here” shall mean and refer to the entire Plan and not to any particular provision or Section.
 
ARTICLE II.  ADMINISTRATION
 2.1               
Appointment and Procedures of Committee .  The Plan shall be administered by the Board of Directors or a Committee appointed from time to time by the Board of Directors. The Committee shall
consist of not fewer than two members of the Board of Directors. No member of the Board of Directors who serves on the Committee shall be eligible to participate in the Plan. The Committee shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all members shall be as effective as if it
had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary (who need not be a member of the Committee).
 2.2               
Authority of Committee .  The Committee, subject to the terms of the Plan, shall have plenary authority in its discretion to interpret and construe the Plan (including, without limitation, any
of its terms which are uncertain, doubtful or disputed); to decide all questions of Employee eligibility hereunder; to determine the amount, manner and timing of all Options and purchases of Company Stock hereunder (unless otherwise determined by
the Board of Directors); to establish, amend and rescind rules and regulations pertaining to the administration of the Plan; and to make determinations and interpretations and take such other administrative actions as it deems necessary or advisable
for the administration of this Plan. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. No member of the Committee shall be liable for any act,
determination or omission with respect to his service on the Committee, if he acts in good faith and in a manner he reasonably believes to be in or not opposed to the best interests of the Employer. All expenses of administering this Plan shall be
borne by the Employer.
 
ARTICLE III.  PARTICIPATION
 3.1               
Eligibility to Participate.  Subject to the restrictions of Section 3.2 below, any Employee employed on the date of the closing of the Company’s initial public offering shall be eligible
to participate in this Plan as of the initial Grant Date under the Plan (provided that the Employee is still employed on such Grant Date). Each other Employee shall be eligible to participate in the Plan with respect to a Grant Date if, as of such
Grant Date, the Employee has completed a year of service with the Employer (provided that the Employee is still employed on such Grant Date). 
 Effective for
Grant Dates on or after January 1, 2003 (or such later date as may be specified by the Committee), if an Employee has previously elected to become a
 
 

  Participant with respect to a Grant Date and annual offering under Section 5.2 of the Plan, but fails to return an enrollment/election form on or before the
specified due date for any subsequent Grant Date and annual offering for which the Employee is eligible, then that Employee shall be deemed to have made the same participation election (including his payroll deduction and/or direct payment
contribution elections under Sections 4.1 and 4.2) as was in effect for him as of the last Exercise Date of the immediately preceding annual offering (or, if applicable, as of the Exercise Date during that immediately preceding annual offering as of
which the Employee had purchased all shares of Company Stock subject to his Option). Such participation election (including his payroll deduction and/or direct payment contribution elections under Sections 4.1 and/or 4.2) shall remain in effect
unless and until the Employee changes or revokes such participation election (and/or his payroll deduction and/or direct payment contribution elections under Sections 4.1 and 4.2) in writing by filing the proper forms in accordance with the terms of
the Plan.
 For purposes of eligibility to participate in this Plan, the following service shall be recognized: (a) service with an entity prior to the
acquisition by the Company, or one of its subsidiaries, of a controlling interest in or substantially all of the assets of such entity, and (b) service with an affiliate of the Company which directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with, the Company.
 3.2               
Restrictions on Participation.  Notwithstanding the foregoing Section 3.1, no Employee shall be eligible to participate in the Plan if such Employee owns or holds options to purchase (or upon
participation in this Plan would own or hold options to purchase) stock possessing an aggregate of 5% or more of the total combined voting power or value of all classes of stock of the Company or any other Employer (as determined in accordance with
the rules of Section 424(d) of the Code relating to attribution of stock ownership).
 3.3               
Leave of Absence.  For purposes of participation in the Plan, an Employee on a leave of absence shall be deemed to continue to be an Employee for the first ninety days of such leave of absence
and such Employee’s employment shall be deemed to have terminated at the close of business on the ninetieth day of such leave of absence unless such Employee shall have returned to regular full-time or part-time employment prior to the close of
business on such ninetieth day (or unless the Employee’s reemployment is guaranteed by statute or contract). Termination by the Company of any Employee’s leave of absence, other than termination of such leave of absence on return to
regular full-time or part-time employment, shall terminate an Employee’s employment for all purposes of the Plan.
 
ARTICLE IV.  CONTRIBUTIONS
 4.1               
Payroll Deductions.  By written election, made and filed with the Committee pursuant to the Committee’s rules and procedures, a Participant may elect to designate a whole percentage
between one percent and ten percent (or such higher or lower percentage as may be allowed by the Committee’s rules and procedures) of his
 
 

  Base Pay to be deferred by payroll deduction as a Contribution to the Plan. Payroll deductions shall commence as soon as administratively practicable
following the filing of such written election with the Committee. The Committee in its discretion may develop additional rules and procedures regarding payroll deduction elections.
 A Participant may change or revoke his payroll deduction amount by filing, on such forms and in accordance with such rules and procedures as the Committee in its discretion may prescribe, a revised written election with
the Committee. Such modification or revocation shall take effect as soon as administratively practicable after the Committee’s receipt of such revised election. Notwithstanding the foregoing, a Participant may change his payroll deduction
election only once each calendar quarter, or as otherwise specifically allowed by the Committee’s rules and procedures. If payroll deductions are discontinued, payroll deductions may not be resumed by the Participant until the payroll period
which begins on or after the next Exercise Date, or as otherwise specifically allowed by the Committee’s rules and procedures. Under no circumstances may a Participant’s payroll deduction election be made, modified or revoked
retroactively.
 4.2               
Direct Payment.  In accordance with such rules and procedures as the Committee may prescribe in its discretion and in lieu of payroll deductions pursuant to Section 4.1, a Participant may
elect to make Contributions by direct cash payment (including by check, subject to the Committee’s rules and procedures) to the Plan rather than by payroll deduction. Such direct payments must be received by the Plan at least ten Business Days
prior to an Exercise Date in order for such payments to be applied in the exercise of an Option for the purchase of Company Stock on such Exercise Date.
 4.3               
Leave of Absence.  If a Participant is on a leave of absence, such Participant shall have the right to elect to (a) withdraw from the Plan and receive a distribution of the balance in his
Account pursuant to Section 4.5, (b) discontinue Contributions to the Plan but remain a Participant in the Plan, or (c) subject to Section 3.3(c), remain a Participant in the Plan during such leave of absence, authorizing deductions to be made from
payments by the Company to the Participant during such leave of absence, or making direct cash payments to the Plan pursuant to Section 4.2.
 4.4               
Contributions to Accounts.  A memorandum Account shall be established by the Committee for each Participant for the purpose of accounting for Contributions. Contributions shall be credited to
Accounts as soon as administratively practicable following payroll withholding or receipt of other permissible direct cash payment. Amounts credited to Accounts will not accrue interest.
 4.5               
Withdrawal of Contributions from Plan.  Prior to the end of a calendar quarter, a Participant may elect to withdraw the Contributions credited to his Account for that quarter by filing written
notice thereof with the Committee on such forms and in accordance with such procedures as the Committee may prescribe. The Participant’s Contributions shall be distributed to him as soon as administratively practicable after the
Committee’s receipt of his notice of withdrawal and, if applicable, no further payroll deductions shall be made from his Base Pay.
 
 

  4.6               
Termination of Employment.  Upon termination of a Participant’s employment for any reason, such Participant may no longer make Contributions to the Plan or be granted Options under the
Plan. A Participant’s right, if any, to exercise any unexpired Option he holds as of his termination of employment shall be determined in accordance with Section 5.5(c).
 
ARTICLE V.  OPTIONS
 5.1               
Company Stock Available for Options.  There shall be available for Options under the Plan an aggregate maximum of Three Million (3,000,000) shares of Company Stock, subject to any adjustments
which may be made pursuant to Section 6.1 of the Plan in connection with changes in capitalization of the Company. Shares of Company Stock used for purposes of the Plan may be either authorized and unissued shares, or previously issued shares held
in the treasury of the Company, or both. Shares of Company Stock covered by Options which have expired prior to exercise shall be available for further Options granted hereunder.
 5.2               
Granting of Options.  The Plan shall be implemented by annual offerings of approximately twelve months duration (except as otherwise provided in Section 5.4). As of each Grant Date, all
eligible Participants shall be granted an Option to purchase shares of Company Stock. The Board of Directors or the Committee shall determine the number of shares of Company Stock available for purchase under each Option to be granted as of such
Grant Date; provided that, the same number of shares must be available under each Option granted as of such Grant Date. No Participant may be granted an Option which permits his rights to purchase stock under this Plan and all other employee stock
purchase plans of the Company or Employer to accrue at a rate which exceeds $25,000 of the fair market value of such stock (determined at the time such Option is granted) for each calendar year in which such Option is outstanding at any
time.
 5.3               
Option Price.  The purchase price per share of Company Stock which may be acquired pursuant to the exercise of all or any portion of an Option granted under this Plan shall be eighty-five
percent of the lesser of (i) the fair market value per share of Company Stock on the applicable Grant Date, and (ii) the fair market value per share of Company Stock on the applicable Exercise Date. For purposes of this Section 5.3, the fair market
value per share of Company Stock shall be the closing price on the last Business Day prior to the date of reference, or in the event that no sales take place on such date, the average of the closing high bid and low asked prices, in either case on
the principal national securities exchange on which the Company Stock is listed or admitted to trading, or if the Company Stock is not listed or admitted to trading on any national securities exchange, the last sale price reported on the National
Market System of the National Association of Securities Dealers Automated Quotation system (“NASDAQ”) on such date, or the average of the closing high bid and low asked prices of the Company Stock in the over-the-counter market reported on
NASDAQ on such date, as furnished to the Committee by any New York Stock Exchange member selected from time to time by the Committee for such purposes. If there is no bid or asked price reported on any such date, the fair market value shall be
determined by the Committee in accordance with the
 
 

  regulations promulgated under Section 2031 of the Code, or by any other appropriate method selected by the Committee.
 5.4               
Option Period.  Each Option granted to a Participant under the Plan shall expire on the earliest of (a) the last Exercise Date of the calendar year in which the Option was granted, (b) the
Participant’s voluntary withdrawal from the Plan following termination of employment, and (c) the date of the Participant’s termination of employment related to Cause, or the Exercise Date immediately following the Participant’s
termination of employment for any reason unrelated to Cause. In no event will the duration of an Option period exceed twenty-seven months (or such other applicable period permitted under Section 423(b)(7) of the Code) from the date on which such
Option is granted.
 5.5               
Exercise of Options.
 (a)    
Automatic Exercise.  Any Option granted to a Participant shall be exercised automatically on each Exercise Date during the calendar year of the Option’s Grant Date in whole or in part
such that the Participant’s accumulated Contributions as of such Exercise Date shall be applied to the purchase of the maximum number of whole shares of Company Stock that his Contributions will allow at the applicable Option price (determined
in accordance with Section 5.3), limited to the number of shares subject to such Option. In the event that the number of shares of Company Stock that may be purchased by all Participants in the Plan exceeds the number of shares then available for
issuance under the Plan, the Committee shall make a pro rata allocation of the available shares in as uniform a manner as it determines to be practicable and equitable. Any remaining Contributions in the Participant’s Account amounting to less
than the Option price of a whole share of Company Stock shall be carried forward and applied on the next Exercise Date; provided that, Contributions remaining after the last Exercise Date of the calendar year may be distributed to the Participant at
his election.
 (b)    
Nontransferability of Options.  During a Participant’s lifetime, Options held by such Participant shall be exercisable only by that Participant. No Option shall be transferable other than
by will or the laws of descent and distribution.
 (c)    
Effect of Termination of Employment.
 (i)         
Termination of Employment Related to Cause.  Upon termination of a Participant’s employment related to Cause, the Participant’s participation in the Plan also shall terminate. Any
unexpired Option he holds will expire as of the date of his termination of employment. Remaining contributions credited to his Account shall be distributed to the Participant as soon as administratively practicable following termination of
employment.
 (ii)        
Termination of Employment Due to Death.  In the event of the death of the Participant while employed, or during the period following his termination of employment for any reason unrelated to
Cause but prior to the next Exercise Date, the Participant’s estate shall have the right to elect by written notice to the
 
 

  Committee prior to the earlier of the expiration of sixty days commencing with the date of the Participant’s death and the Exercise Date next following
the date of the Participant’s death:
 (A)            To withdraw all of the Contributions then credited to the Participant’s Account under the Plan, or
 (B)            To allow any unexercised Option held by the Participant as of the date of his death to be exercised for the purchase of Company Stock on the Exercise
Date next following the date of the Participant’s death in accordance with Section 5.5(a), but only to the extent such Option was exercisable on the date of the Participant’s death, with any remaining Contributions credited to the
Participant’s Account being distributed to the Participant’s estate as soon as administratively practicable after such Exercise Date.
 In the event that no such written
election is timely and properly received by the Committee, all Contributions credited to the Participant’s Account shall be distributed to the Participant’s estate. In no event shall any Option be exercisable beyond the applicable exercise
period specified in Section 5.4 of the Plan.
 (iii)       
Other Termination of Employment.  Upon termination of a Participant’s employment for any reason unrelated to Cause or death, the Participant may at his election:
 (A)            Withdraw from the Plan pursuant to Section 4.5 and request the
return of the remaining Contributions then credited to his Account, or
 (B)            Continue participation in the Plan, subject to the provisions of Section 4.6, until the Exercise Date next following his date of termination of
employment for the limited purpose of allowing any unexpired Option he holds as of his termination of employment to be exercised automatically in accordance with Section 5.5(a) on the Exercise Date next following his termination of employment, but
only to the extent such Option was exercisable on the date of the Participant’s termination of employment, with any remaining Contributions credited to the Participant’s Account being distributed to the Participant as soon as
administratively practicable after such Exercise Date.
 (d)    
Leave of Absence.  A Participant on a leave of absence shall, subject to the election made by such Participant pursuant to Section 4.3 and subject to this Section 5.5(d), continue to be a
Participant in the Plan so long as such Participant is on continuous leave of absence. A Participant who has been on leave of absence for more than ninety days and who therefore is not an Employee for purposes of the Plan (unless the right to
reemployment is guaranteed by statute or contract) shall not be entitled to participate in any offering commencing on any Grant Date following the ninetieth day of such leave of absence. Notwithstanding any other provisions of the Plan, unless a
Participant on a leave of absence returns to eligible regular full-time or part-time employment with the Employer at the earlier of (i) the termination of such leave of
 
 

  absence, or (ii) the day after the ninetieth day of such leave of absence, such Participant’s employment shall be deemed to have terminated for purposes
of the Plan on whichever of such dates first occurs (unless the Participant’s right to reemployment is guaranteed by statute or contract).
 (e)    
Delivery of Stock.  As soon as administratively practicable after each Exercise Date, the Company or the Committee will deliver to each Participant, as applicable, certificates evidencing
shares of Company Stock purchased under this Plan.
 (f)     
Acceleration of Exercisability of Options Upon Occurrence of Certain Events.  In connection with 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, all outstanding Options under the Plan shall become exercisable in full, notwithstanding any other provision of the Plan or of any outstanding Options granted thereunder, on and
after (i) the fifteenth day prior to the effective date of such merger, consolidation, sale, transfer or acquisition or (ii) the date of commencement of such tender offer or exchange offer, as the case may be. Notwithstanding the foregoing, in no
event shall any Option be exercisable after the date of termination of the exercise period of such Option specified in Section 5.4.
 (g)    
Registration, Listing and Qualification of Shares of Stock.  Each Option shall be subject to the requirement that if at any time the Board of Directors shall determine that the registration,
listing or qualification of shares of Company Stock covered thereby upon any securities exchange or under any federal or state law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such option or the purchase of shares of Company Stock thereunder, no such Option may be exercised unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Board of Directors. The Employer may require that any person exercising an Option shall 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.
 
ARTICLE VI.  MISCELLANEOUS
 6.1               
Adjustments Upon Changes in Capitalization.  In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering or
any other change in the corporate structure or shares of the Company, unless the Committee should determine otherwise, corresponding adjustments automatically shall be made to the number and kind of shares of Company Stock available for issuance
under this Plan, the number and kind of shares of Company
 
 

  Stock covered by outstanding Options under this Plan, and the exercise price per share for outstanding Options. In addition, the Committee may make such
other adjustments as it determines to be equitable. Any adjustments made pursuant to this Section 6.1 remain subject to the limitations of Section 423 of the Code (including its $25,000 annual limitations).
 6.2               
Approval of Shareholders.  The original adoption of the Plan was subject to the approval, within twelve months before or after the adoption of the Plan by the Board of Directors, by a majority
of the votes cast thereon by the stockholders of the Company at a meeting of stockholders duly called and held for such purpose or by unanimous written consent of such stockholders, and no Option granted hereunder was exercisable prior to such
approval. Such approval was obtained on October 9, 1997.
 6.3               
Amendment, Suspension and Termination.  The Board of Directors may at any time amend, suspend or terminate this Plan; provided, however, that the Board of Directors shall not increase the
maximum number of shares of Company Stock for which Options may be granted under the Plan except as provided in Section 6.1, without obtaining approval of the stockholders in the manner described in Section 6.2. The Plan will continue until
terminated by the Board of Directors or until all of the shares of Company Stock reserved for issuance under the Plan have been issued, whichever first occurs. No amendment, suspension or termination of the Plan may, without the consent of the
Participants then holding Options to purchase Company Stock, adversely affect the rights of such Participants under such Options.
 6.4               
Intent to Comply With Code Section 423.  It is intended that this Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of this Plan shall
be construed so as to extend and limit participation in a manner consistent with the requirements of that Section of the Code. In the event of an inconsistency between the Plan and Section 423 of the Code, the Plan shall be interpreted in a manner
which complies with the requirements of Section 423 of the Code and the regulations thereunder, without further act or amendment by the Company or the Board of Directors unless otherwise required pursuant to Section 6.3 of this Plan.
 6.5               
Equal Rights and Privileges.  All Participants granted Options under this Plan shall have equal rights and privileges within the meaning of Section 423(b)(5) of the Code and the regulations
thereunder. The provisions applying to one Option granted on a Grant Date must apply in the same manner to all other Options granted on such Grant Date.
 6.6               
Use of Funds.  All Contributions received and held by the Employer under this Plan may be used by the Employer for any corporate purpose and the Employer shall not be obligated to segregate
such Contributions.
 6.7               
Withholding.  An Employee granted Options under this Plan shall be conclusively deemed to have authorized the Company and his Employer to withhold from the salary, commissions or other
compensation of such Employee funds in amounts or property (including Company Stock) in value equal to any federal, state and local
 
 

  income, employment or other withholding taxes applicable to the income recognized by such Employee and attributable to the Options as, when and to the
extent, if any, required by law; provided; however, that, in lieu of the withholding of federal, state and local taxes as herein provided, the Company may require the Participant (or his estate pursuant to Section 5.5(c)(ii)) to pay to the Company,
upon its demand, such amount as may be requested by the Company for the purpose of satisfying taxes, including taxes that may be owed by the Participant due to the disposition of Company Stock by the Participant prior to the expiration of the
holding periods described in Section 423(a) of the Code. If the amount requested is not paid, the Company may refuse to issue the shares of Company Stock attributable to the Option’s exercise.
 6.8               
Effect of Plan.  This Plan shall be binding upon each Participant and his successors, including, without limitation, such Participant’s estate and the executors, administrators or
trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Participant.
 6.9               
No Employment Rights.  Nothing in this Plan or in any Option granted pursuant to the Plan shall be construed as a contract of employment between the Employer and any employee, or as a right of
any employee to continue in the employ of the Employer, or as a limitation of the right of the Employer to discharge any of its employees, with or without cause.
 6.10             
Governing Law.  This Plan and all rights and obligations hereunder shall be construed in accordance with and governed by the laws of the State of North Carolina, except to the extent such laws
are preempted by the laws of the United States.
 6.11             
Other 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 grant or assume options for proper corporate purposes other than under the Plan with respect to any employee or other person, firm, corporation or association.

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