EXHIBIT 10.17
WESTERN REFINING
LONG-TERM INCENTIVE PLAN

 

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WESTERN REFINING
LONG-TERM INCENTIVE PLAN
Table of Contents

         
ARTICLE I. INTRODUCTION
    1  
Section 1.01 Purpose
    1  
Section 1.02 Definitions
    1  
Section 1.03 Shares Subject to this Plan-Limitations-Adjustments
    5  
Section 1.04 Administration of this Plan
    6  
Section 1.05 Granting of Awards to Participants
    6  
Section 1.06 Leave of Absence
    7  
Section 1.07 Term of Plan
    7  
Section 1.08 Amendment and Discontinuance of this Plan
    7  
ARTICLE II. NON-QUALIFIED OPTIONS
    7  
Section 2.01 Eligibility
    7  
Section 2.02 Exercise Price
    7  
Section 2.03 Terms and Conditions of Non-Qualified Options
    8  
Section 2.04 Option Repricing
    10  
Section 2.05 Vesting
    10  
ARTICLE III. INCENTIVE OPTIONS
    10  
Section 3.01 Eligibility
    10  
Section 3.02 Exercise Price
    10  
Section 3.03 Dollar Limitation
    10  
Section 3.04 10% Stockholder
    11  
Section 3.05 Incentive Options Not Transferable
    11  
Section 3.06 Compliance with Code Section 422
    11  
Section 3.07 Limitations on Exercise
    11  
ARTICLE IV. PURCHASED STOCK
    11  
Section 4.01 Eligibility
    11  
Section 4.02 Purchase Price
    11  
Section 4.03 Payment of Purchase Price
    11  
ARTICLE V. BONUS STOCK
    11  

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ARTICLE VI. STOCK APPRECIATION RIGHTS AND RESTRICTED STOCK UNIT
    12  
Section 6.01 Stock Appreciation Rights
    12  
Section 6.02 Restricted Stock Units
    12  
ARTICLE VII. RESTRICTED STOCK
    13  
Section 7.01 Eligibility
    13  
Section 7.02 Restrictions, Restricted Period and Vesting
    13  
Section 7.03 Forfeiture of Restricted Stock
    14  
Section 7.04 Delivery of Shares of Common Stock
    14  
ARTICLE VIII. PERFORMANCE AWARDS
    14  
Section 8.01 Performance Awards
    14  
Section 8.02 Performance Goals
    14  
ARTICLE IX. OTHER STOCK OR PERFORMANCE-BASED AWARDS
    16  
ARTICLE X. CERTAIN PROVISIONS APPLICABLE TO ALL AWARDS
    17  
Section 10.01 Vesting and Other General Provisions
    17  
Section 10.02 Stand-Alone, Additional, Tandem and Substitute Awards
    17  
Section 10.03 Term of Awards
    17  
Section 10.04 Form and Timing of Payment under Awards; Deferrals
    18  
Section 10.05 Vested and Unvested Awards
    18  
Section 10.06 Exemptions from Section 16(b) Liability
    19  
Section 10.07 Securities Requirements
    19  
Section 10.08 Transferability
    19  
Section 10.09 Rights as a Stockholder
    20  
Section 10.10 Listing and Registration of Shares of Common Stock
    20  
Section 10.11 Termination of Employment, Death and Disability
    20  
Section 10.12 Change in Control
    21  
ARTICLE XI. WITHHOLDING FOR TAXES
    22  
ARTICLE XII. MISCELLANEOUS
    22  
Section 12.01 No Rights to Awards or Uniformity Among Awards
    22  
Section 12.02 Conflicts with Plan
    23  
Section 12.03 No Right to Employment
    23  
Section 12.04 Governing Law
    23  
Section 12.05 Gender, Tense and Headings
    23  

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Section 12.06 Severability
    23  
Section 12.07 Other Laws
    23  
Section 12.08 Stockholder Agreements
    23  
Section 12.09 Funding
    23  
Section 12.10 No Guarantee of Tax Consequences
    24  

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WESTERN REFINING
LONG-TERM INCENTIVE PLAN
ARTICLE I.
INTRODUCTION
Section 1.01 Purpose. This Western Refining Long-Term Incentive Plan (as the
same may be amended from time to time, this “Plan”) is intended to promote the
interests of Western Refining, Inc., a Delaware corporation (the “Company”), and
its stockholders by encouraging Employees, Consultants and Non-Employee
Directors of the Company or its Affiliates (as defined below) to acquire or
increase their equity interests in the Company, thereby giving them an added
incentive to work toward the continued growth and success of the Company. The
Board of Directors of the Company (the “Board”) also contemplates that through
this Plan, the Company and its Affiliates will be better able to compete for the
services of the individuals needed for the continued growth and success of the
Company. The Plan provides for payment of various forms of incentive
compensation, and accordingly, is not intended to be a plan that is subject to
the Employee Retirement Income Security Act of 1974, as amended, and shall be
administered accordingly.
Section 1.02 Definitions. As used in this Plan, the following terms shall have
the meanings set forth below:
     “Affiliate” means (i) any entity in which the Company, directly or
indirectly, owns 50% or more of the combined voting power, as determined by the
Committee, (ii) any “parent corporation” of the Company (as defined in section
424(e) of the Code), (iii) any “subsidiary corporation” of any such parent
corporation (as defined in section 424(f) of the Code) of the Company and
(iv) any trades or businesses, whether or not incorporated which are members of
a controlled group or are under common control (as defined in Sections 414(b) or
(c) of the Code) with the Company.
     “Awards” means, collectively, Options, Purchased Stock, Bonus Stock, Stock
Appreciation Rights, Restricted Stock Unit, Restricted Stock, Performance
Awards, or Other Stock or Performance-Based Awards.
     “Board” has the meaning set forth in Section 1.01 of this Plan.
     “Bonus Stock” means Common Stock described in Article V of this Plan.
     “Change of Control” shall be deemed to have occurred upon any of the
following events:

  (a)   any “person” (as defined in Section 3(a)(9) of the Exchange Act, and as
modified in Section 13(d) and 14(d) of the Exchange Act) other than (i) the
Company or any of its subsidiaries, (ii) any employee benefit plan of the
Company or any of its subsidiaries, (iii) any Affiliate, (iv) a company owned,
directly or indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company, (v) an underwriter temporarily
holding securities pursuant to an offering of such securities or (vi) those
“persons” who beneficially

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      own securities of the Company on the date that this Plan is adopted by the
Board (a “Person”), becomes the “beneficial owner” (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of securities of the Company
representing more than 50% of the shares of voting stock of the Company then
outstanding; other than in connection with an initial public offering; provided,
however, that a Change of Control shall not occur pursuant to this clause (a) if
(i) at such time as such Person acquires or gains such ownership or control, any
person (or immediate transferee of such person) who directly or indirectly
beneficially owns, as of the date that this Plan is adopted by the Board, a
percentage ownership of the combined voting power of the outstanding Common
Stock of the Company that is greater than such Person or (2) as a result of any
transaction entered into in connection with the initial public offering of the
Common Stock;     (b)   the consummation of any merger, organization, business
combination or consolidation of the Company or one of its subsidiaries with or
into any other entity, other than a merger, reorganization, business combination
or consolidation, which would result in the holders of the voting securities of
the Company outstanding immediately prior thereto holding securities which
represent immediately after such merger, reorganization, business combination or
consolidation more than 50% of the combined voting power of the voting
securities of the Company or the surviving company or the parent of such
surviving company; provided, however that a Change of Control shall not occur
pursuant to this clause (b) as a result of any transaction entered into in
connection with the initial public offering of the Common Stock;     (c)   the
consummation of a sale or disposition by the Company of all or substantially all
of the Company’s assets, other than a sale or disposition if the holders of the
voting securities of the Company outstanding immediately prior thereto hold
securities immediately thereafter which represent more than 50% of the combined
voting power of the voting securities of the acquiror, or parent of the
acquiror, of such assets;     (d)   the stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company; or     (e)  
individuals who, as of the Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
Effective Date whose election to the Board was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an election contest with respect to the election or
removal of directors or other solicitation of proxies or consents by or on
behalf of a person other than the Board.

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     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations thereunder.
     “Committee” means a committee appointed by the Board, which shall consist
of not less than two (2) independent members of the Board, each of whom shall
qualify as a “non-employee director” (as that term is defined in Rule 16b-3 of
the General Rules and Regulations under the Exchange Act) appointed by and
serving at the pleasure of the Board to administer this Plan or, if none, the
independent members of the Board; provided, however, that with respect to any
Award granted to a Covered Employee which is intended to be “performance-based
compensation” as described in Section 162(m)(4)(C) of the Code, the Committee
shall consist solely of two (2) or more “outside directors” as described in
Section 162(m)(4)(C)(i) of the Code.
     “Common Stock” means the common stock, $0.01 par value per share, of the
Company.
     “Company” has the meaning set forth in Section 1.01 of this Plan.
     “Consultant” means any individual, other than a Director or an Employee,
who renders consulting or advisory services to the Company or an Affiliate,
provided that such services are not in connection with the offer or sale of
securities in a capital-raising transaction.
     “Covered Employee” shall mean any of the Chief Executive Officer of the
Company and the four highest paid officers of the Company other than the Chief
Executive Officer, as described in Section 162(m)(3) of the Code.
     “Director” means an individual who is a member of the Board.
     “Disability” means the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expect to result in death or can be expected to last for
a continuous period of not less than 12 months or is, by reason of a medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last of continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than
3 months under an accident health plan covering employees of the Company.
     “Effective Date” means, with respect to this Plan, the date that this Plan
is (a) adopted by the Board and (b) approved by stockholders of the Company,
provided that such stockholder approval occurs not more than one (1) year prior
to or after the date of such adoption by the Board.
     “Employee” means any employee of the Company or an Affiliate.
     “Employment” includes any period in which a Participant is an Employee.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Fair Market Value” or “FMV Per Share” means, with respect to shares of
Common Stock if traded on a securities exchange the average of the highest and
lowest sales price (or, if applicable, the highest and lowest reported bid
price) of a share of Common Stock on the

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applicable date as reported in The Wall Street Journal (or other reporting
service approved by the Committee), or if a grant is made effective as of the
initial public offering of Common Stock of the Company, at the initial public
offering price. If such shares are not publicly traded at the time a
determination of its fair market value is required to be made hereunder, the
determination of fair market value shall be made in good faith by the Committee
using any fair and reasonable means selected in the Committee’s discretion.
     “Full Value Awards” shall mean any Award other than Options or Stock
Appreciation Rights.
     “Incentive Option” means any Option that satisfies the requirements of Code
Section 422 and is granted pursuant to Article III of this Plan.
     “Incumbent Board” has the meaning set forth in paragraph (e) of the
definition of “Change of Control” under this Section 1.02.
     “Non-Employee Director” means a Director who is neither an Employee nor a
Consultant.
     “Non-Qualified Option” means an Option not intended to satisfy the
requirements of Code Section 422 that is granted pursuant to Article II of this
Plan.
     “Option” means an option to acquire Common Stock granted pursuant to the
provisions of this Plan and includes either an Incentive Option or a
Non-Qualified Option, or both, as applicable.
     “Option Expiration Date” means, with respect to an Option, the date
determined by the Committee, which shall not be more than ten (10) years after
the date of grant of such Option.
     “Optionee” means a Participant who has received or will receive an Option.
     “Other Stock or Performance-Based Award” means an award granted pursuant to
Article IX of this Plan that is not otherwise specifically provided for, the
value of which is based in whole or in part upon the value of a share of Common
Stock.
     “Participant” means any Non-Employee Director, Employee or Consultant
granted an Award under this Plan.
     “Performance Award” means an Award granted pursuant to Article III of this
Plan, that, if earned, shall be payable in shares of Common Stock, cash or any
combination thereof as determined by the Committee.
     “Plan” has the meaning set forth in Section 1.01 of this Plan.
     “Purchased Stock” means a right to purchase Common Stock granted pursuant
to Article IV of this Plan.

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     “Restricted Period” means, with respect to an Award, the period established
by the Committee during which such Award either remains subject to forfeiture or
is not exercisable by the Participant.
     “Restricted Stock” means one or more shares of Common Stock, prior to the
lapse of restrictions thereon, granted under Article VII of this Plan.
     “Restricted Stock Unit” means an Award, granted pursuant to Article VI of
this Plan, of the right to receive (a) shares of Common Stock issued at the end
of a Restricted Period, (b) the Fair Market Value of shares of Common Stock paid
in cash at the end of a Restricted Period or (c) a combination of shares of
Common Stock and cash, as determined by the Committee, paid at the end of a
Restricted Period.
     “Securities Act” means the Securities Act of 1933, as amended.
     “Spread” has the meaning set forth in Section 6.01(a) of this Plan.
     “Stock Appreciation Rights” means an Award granted pursuant to Article VI
of this Plan.
Section 1.03 Shares Subject to this Plan-Limitations-Adjustments.

  (a)   Plan and Award Limitations. The maximum number of shares of Common Stock
that may be issued under this Plan shall be 5,000,000 shares. With respect to
any Award of Options, Stock Appreciation Rights or any other Award to any
Employee that is intended to be a Performance Award under Article VIII, the
maximum number of shares of Common Stock issued or reserved for issuance plus
the maximum number of shares underlying or equal in Fair Market Value to the
cash received under any such Award that may be granted to any one Participant in
any one calendar year shall not exceed 1,000,000. The maximum number of shares
of Common Stock issued or reserved for issuance, plus the maximum number of
shares underlying or equal in Fair Market Value as of the date of grant of any
Award to Non-Employee Directors with respect to any one-year term of such
Non-Employee Director shall not exceed 200,000. The maximum number of shares of
Common Stock that may be issued under this Plan pursuant to Incentive Options
shall be 3,000,000 shares. The above limitations shall be subject to adjustment
as provided in Sections 1.03(b) and (c) below.     (b)   Adjustment of
Limitations. In the event that at any time after the Effective Date the
outstanding shares of Common Stock are changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of a
merger, consolidation, recapitalization, reclassification, stock split, stock
dividend, combination of shares or the like, the aggregate number and class of
securities available, and each of the limitations on Awards set forth above
shall be ratably adjusted by the Committee. Upon the occurrence of any of the
events described in the immediately preceding sentence, in order to ensure that
after such event the shares of Common Stock subject to this Plan and each
Participant’s proportionate interest remain substantially as before the
occurrence of such event, the Committee shall, in such manner as it may deem
equitable, adjust (a) the

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      number of shares of Common Stock with respect to which Awards may be
granted, (b) the number of shares of Common Stock subject to outstanding Awards
and (c) the grant or exercise price with respect to an Award. Such adjustment in
an outstanding Option shall be made (i) without change in the total price
applicable to the Option or any unexercised portion of the Option (except for
any change in the aggregate price resulting from rounding-off of share
quantities or prices) and (ii) with any necessary corresponding adjustment in
exercise price per share. The Committee’s determinations shall be final, binding
and conclusive with respect to the Company and all other interested persons.    
(c)   Share Counting and Forfeitures. In the event the number of shares to be
delivered upon the exercise or payment of any Award granted under this Plan is
reduced for any reason other than the withholding of shares for the payment of
taxes or exercise price, or in the event any Award (or portion thereof) granted
under this Plan can no longer under any circumstances be exercised or paid, the
number of shares no longer subject to such Award shall thereupon be released
from such Award and shall thereafter be available under this Plan for the grant
of additional Awards. Shares that cease to be subject to an Award because of the
exercise of the Award, or the vesting of a Restricted Stock Award or similar
Award, shall no longer be subject to or available for any further grant under
this Plan. Shares issued pursuant to this Plan (x) may be treasury shares,
authorized but unissued shares or, if applicable, shares acquired in the open
market and (y) shall be fully paid and nonassessable. No fractional shares shall
be issued under this Plan. Payment for any fractional shares that would
otherwise be issuable hereunder in the absence of the immediately preceding
sentence shall be made in cash.

Section 1.04 Administration of this Plan. The Plan shall be administered by the
Committee. Subject to the provisions of this Plan, the Committee shall
(i) interpret this Plan and all Awards under this Plan, (ii) make, amend and
rescind such rules as it deems necessary for the proper administration of this
Plan, (iii) make all other determinations necessary or advisable for the
administration of this Plan and (iv) correct any defect or supply any omission
or reconcile any inconsistency in this Plan or in any Award under this Plan in
the manner and to the extent that the Committee deems desirable to effectuate
this Plan. Any action taken or determination made by the Committee pursuant to
this or any other provision of this Plan shall be final, binding and conclusive
on all affected persons, including, without limitation, the Company, any
Affiliate, any grantee, holder or beneficiary of an Award, any stockholder and
any Employee, Consultant or Non-Employee Director. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to this Plan or any Award granted hereunder, and the members of the
Board and the Committee shall be entitled to indemnification and reimbursement
by the Company and its Affiliates in respect of any claim, loss, damage or
expense (including legal fees) arising therefrom to the fullest extent permitted
by law.
Section 1.05 Granting of Awards to Participants. The Committee shall have the
authority to grant, prior to the expiration date of this Plan, Awards to such
Employees, Consultants and Non-Employee Directors as may be selected by it,
subject to the terms and conditions set forth in this Plan. In selecting the
persons to receive Awards, including the type and size of the Award,

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the Committee may consider the contribution that the recipient has made and/or
may make to the growth of the Company or its Affiliates and any other factors
that it may deem relevant. No member of the Committee shall vote or act upon any
matter relating solely to himself. Grants of Awards to members of the Committee
must be ratified by the Board. In no event shall any Employee, Consultant or
Non-Employee Director, nor his legal representatives, heirs, legatees or
distributees have any right to participate in this Plan, except to such extent,
if any, as permitted under this Plan and as the Committee may determine.
Section 1.06 Leave of Absence. If an employee is on military, sick leave or
other bona fide leave of absence, such person shall be considered an “Employee”
for purposes of an outstanding Award during the period of such leave, provided
that it does not exceed ninety (90) days (or such longer period as may be
determined by the Committee in its sole discretion), or, if longer, so long as
the person’s right to reemployment is guaranteed either by statute or by
contract. If the period of leave exceeds ninety (90) days (or such longer period
as may be determined by the Committee in its sole discretion), the employment
relationship shall be deemed to have terminated on the ninety-first (91st) day
(or the first (1st) day immediately following any period of leave in excess of
ninety (90) days as approved by the Committee) of such leave, unless the
person’s right to reemployment is guaranteed by statute or contract.
Section 1.07 Term of Plan. If not sooner terminated under the provisions of
Section 1.08, this Plan shall terminate upon, and no further Awards shall be
made after, the tenth (10th) anniversary of the Effective Date.
Section 1.08 Amendment and Discontinuance of this Plan. The Board may amend,
suspend or terminate this Plan at any time without prior notice to or consent of
any person; provided, however, that subject to Section 10.12, no amendment,
suspension or termination of this Plan may, without the consent of the holder of
an Award, terminate such Award or adversely affect such person’s rights with
respect to such Award in any material respect; and provided further that no
amendment shall be effective prior to its approval by the stockholders of the
Company, to the extent such approval is required by applicable legal
requirements or the requirements of any securities market or exchange on which
the Company’s stock is then listed. Notwithstanding the foregoing, the Board may
amend this Plan in such manner as it deems necessary in order to permit Awards
to meet the requirements of the Code or other applicable laws, or to prevent
adverse tax consequences to the Participants.
ARTICLE II.
NON-QUALIFIED OPTIONS
Section 2.01 Eligibility. The Committee may grant Non-Qualified Options to
purchase shares of Common Stock to any Employee, Consultant or Non-Employee
Director. Each Non-Qualified Option granted under this Plan shall be evidenced
by a written agreement between the Company and the individual to whom such
Non-Qualified Option is granted in such form as the Committee shall provide.
Section 2.02 Exercise Price. The exercise price to be paid for each share of
Common Stock deliverable upon exercise of each Non-Qualified Option granted
under this Article II shall not be less than one hundred percent (100%) of the
FMV Per Share on the date of grant of such

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Non-Qualified Option. The exercise price for each Non-Qualified Option granted
under this Article II shall be subject to adjustment as provided in
Section 2.03(e) of this Plan.
Section 2.03 Terms and Conditions of Non-Qualified Options. Non-Qualified
Options shall be in such form as the Committee may from time to time approve,
shall be subject to the following terms and conditions and may contain such
additional terms and conditions (including, but not limited to conditions of
vesting or exercise of the Options), not inconsistent with the Plan, as the
Committee shall deem desirable:

  (a)   Option Period and Conditions and Limitations on Exercise. No
Non-Qualified Option shall be exercisable later than the Option Expiration Date.
To the extent not prohibited by other provisions of this Plan, each
Non-Qualified Option shall be exercisable at such time or times as the
Committee, in its discretion, may determine at the time such Non-Qualified
Option is granted.     (b)   Manner of Exercise. In order to exercise a
Non-Qualified Option, the person or persons entitled to exercise such
Non-Qualified Option shall deliver to the Company payment in full for (i) the
shares being purchased and (ii) unless other arrangements have been made with
the Committee, any required withholding taxes. The payment of the exercise price
for each Non-Qualified Option shall either be (x) in cash or by check payable
and acceptable to the Company, (y) with the consent of the Committee, which
consent may be granted or withheld in the Committee’s sole discretion, by
tendering to the Company shares of Common Stock having an aggregate Fair Market
Value as of the date of exercise equal to an amount not greater than the
exercise price for the shares with respect to which the Non-Qualified Option is
being exercised and by paying any remaining amount of the exercise price as
provided in (x) above; or (z) with the consent of the Committee, which may be
granted or withheld in the Committee’s sole discretion, and upon compliance with
such instructions as the Committee may specify, at the person’s written request,
the Company may deliver certificates for the shares of Common Stock for which
the Non-Qualified Option is being exercised to a broker for sale on behalf of
the person, provided that the person has irrevocably instructed such broker to
remit directly to the Company on the person’s behalf from the proceeds of such
sale the full amount of the exercise price, plus all required withholding taxes.
In the event that the person elects to make payment as allowed under clause
(y) above, the Committee may, upon confirming that the Optionee owns the number
of shares being tendered, authorize the issuance of a new certificate for the
number of shares being acquired pursuant to the exercise of the Non-Qualified
Option, less the number of shares being tendered upon the exercise and return to
the person (or not require surrender of) the certificate for the shares being
tendered upon the exercise. If the Committee so requires, such person or persons
shall also deliver a written representation that all shares being purchased are
being acquired for investment and not with a view to, or for resale in
connection with, any distribution of such shares.     (c)   Alternative Payment
for Stock. Subject to the consent of the Committee, which may be granted or
withheld in the Committee’s sole discretion and at the election

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      of the Participant, payment of the exercise price or withholding may be
made, in whole or in part, with shares of Common Stock with respect to which the
Option is being exercised. If payment is to be made in such manner, then the
Participant shall deliver to the Company a notice of exercise as to the number
of shares of Common Stock to be issued to the Participant as well as the number
of shares of Common Stock to be retained by the Company in payment. In such
case, the notice of exercise shall include (A) a statement (i) directing the
Company to retain the number of shares from the exercise of the Options the Fair
Market Value (as of the date of delivery of such notice) of which is equal to
the portion of the exercise price and/or withholding with respect to which the
Participant intends to make payment, and (ii) confirming the aggregate number of
shares to be delivered to the Participant; and (B) such additional payment in
cash or shares as shall be necessary, when added to the consideration paid with
shares subject to the Option, to pay the exercise price and withholding in full
for all such shares. If the Company is required to withhold on account of any
federal, state or local tax imposed as a result of an exercise of an Option with
previously issued stock or by retention of optioned shares under this Section,
the Common Stock surrendered or retained shall include an additional number of
shares whose Fair Market Value equals the amount thus required to be withheld at
the applicable minimum statutory rate.     (d)   Proceeds. The proceeds received
from the sale of shares of Common Stock pursuant to exercise of Non-Qualified
Options exercised under this Plan will be used for general corporate purposes.  
  (e)   Non-Qualified Options not Transferable. Except as provided below, no
Non-Qualified Option granted hereunder shall be transferable other than by
(i) will or by the laws of descent and distribution or (ii) pursuant to a
domestic relations order, and during the lifetime of the Participant to whom any
such Non-Qualified Option is granted, it shall be exercisable only by the
Participant (or his guardian). Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of, or to subject to execution, attachment or
similar process, any Non-Qualified Option granted hereunder, or any right
thereunder, contrary to the provisions hereof, shall be void and ineffective,
shall give no right to the purported transferee and shall, at the sole
discretion of the Committee, result in forfeiture of the Non-Qualified Option
with respect to the shares involved in such attempt.     (f)   Adjustment of
Non-Qualified Options. In the event that at any time after the Effective Date
the outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of merger, consolidation, recapitalization, reclassification, stock split, stock
dividend, combination of shares or the like, the Committee shall make
appropriate and equitable adjustments to all Non-Qualified Options then
outstanding as provided in Section 1.03.

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  (g)   Listing and Registration of Shares. Each Non-Qualified Option shall be
subject to the requirement that if at any time the Committee determines, in its
discretion, that the listing, registration or qualification of the shares
subject to such Non-Qualified Option under any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
issuance or purchase of shares thereunder, such Non-Qualified Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained and the same shall have
been free of any conditions not acceptable to the Committee.

Section 2.04 Option Repricing. The Committee, solely with the consent of
stockholders, may grant to holders of outstanding Non-Qualified Options, in
exchange for the surrender and cancellation of such Non-Qualified Options, new
Non-Qualified Options having exercise prices lower (or higher with any required
consent) than the exercise price provided in the Non-Qualified Options so
surrendered and canceled and containing such other terms and conditions as the
Committee may deem appropriate.
Section 2.05 Vesting. See Section 10.11 of this Plan for provisions on vesting
in connection with termination of Employment or service. Also, see Section 10.12
of this Plan relating to vesting in connection with a Change of Control.
ARTICLE III.
INCENTIVE OPTIONS
     The terms specified in this Article III shall be applicable to all
Incentive Options. Except as modified by the provisions of this Article III, all
of the provisions of Article II shall be applicable to Incentive Options.
Options which are specifically designated as Non-Qualified Options shall not be
subject to the terms of this Article III.
Section 3.01 Eligibility. Incentive Options may only be granted to Employees of
a “corporation” within the meaning of Code
section 7701(a)(3).
Section 3.02 Exercise Price. Subject to Section 3.4, the exercise price per
share shall not be less than one hundred percent (100%) of the FMV Per Share on
the date of grant of the Incentive Option.
Section 3.03 Dollar Limitation. The aggregate Fair Market Value (determined as
of the respective date or dates of grant) of shares of Common Stock for which
one or more Options granted to any Employee under this Plan (or any other option
plan of the Company or any Affiliate which is a parent or subsidiary as defined
in Code Sections 424(e) or (f), as applicable) may for the first time become
exercisable as Incentive Options during any one (1) calendar year shall not
exceed the sum of $100,000. To the extent the Employee holds two (2) or more
such Options which become exercisable for the first time in the same calendar
year, the foregoing limitation on the exercisability of such Options as
Incentive Options shall be applied on the basis of the order in which such
Options are granted.

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Section 3.04 10% Stockholder. If any Employee to whom an Incentive Option is
granted owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any “parent corporation”
of the Company (as defined in Section 424(e) of the Code) or any “subsidiary
corporation” of the Company (as defined in Section 424(f) of the Code), then the
exercise price per share under such Incentive Option shall not be less than one
hundred ten percent (110%) of the FMV Per Share on the date of grant, and the
Option term shall not exceed five (5) years measured from the date of grant. For
purposes of the immediately preceding sentence, the attribution rules under
Section 424(d) of the Code shall apply for purposes of determining an Employee’s
ownership.
Section 3.05 Incentive Options Not Transferable. No Incentive Option granted
hereunder (a) shall be transferable other than by will or by the laws of descent
and distribution and (b) except as permitted in regulations or other guidance
issued under Section 422 of the Code, shall be exercisable during the Optionee’s
lifetime by any person other than the Optionee (or his guardian).
Section 3.06 Compliance with Code Section 422. All Options that are intended to
be Incentive Options described in Code Section 422 shall be designated as such
in the Option grant and in all respects shall be issued in compliance with Code
Section 422.
Section 3.07 Limitations on Exercise. No Incentive Option shall be exercisable
more than three (3) months after the Optionee ceases to be an Employee for any
reason other than death or Disability, or more than one (1) year after the
Optionee ceases to be an Employee due to death or Disability.
ARTICLE IV.
PURCHASED STOCK
Section 4.01 Eligibility. The Committee shall have the authority to sell shares
of Common Stock to such Employees, Consultants and Non-Employee Directors as may
be selected by it, on such terms and conditions as it may establish, subject to
the further provisions of this Article IV. Each issuance of Common Stock under
this Article IV shall be evidenced by an agreement, which shall be subject to
applicable provisions of this Plan and to such other provisions not inconsistent
with this Plan as the Committee may approve for the particular sale transaction.
Section 4.02 Purchase Price. The price per share of Common Stock to be purchased
by a Participant under this Article IV shall be determined in the sole
discretion of the Committee, and may be less than, but shall not be greater than
the FMV Per Share at the time of purchase.
Section 4.03 Payment of Purchase Price. Payment of the purchase price of
Purchased Stock under this Article IV shall be made in full in cash.
ARTICLE V.
BONUS STOCK
     The Committee may, from time to time and subject to the provisions of this
Plan, grant shares of Bonus Stock to Employees, Consultants and Non-Employee
Directors. Such grants of Bonus Stock shall be in consideration of performance
of services by the Participant without

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additional consideration, except as may be required by the Committee or pursuant
to Section 10.01. Bonus Stock shall be shares of Common Stock that are not
subject to a Restricted Period under Article VII.
ARTICLE VI.
STOCK APPRECIATION RIGHTS AND RESTRICTED STOCK UNIT
Section 6.01 Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Employees, Consultants and Non-Employee Directors
on the following terms and conditions:

  (a)   Right to Payment. A Stock Appreciation Right shall confer on the
Participant to whom it is granted, upon exercise thereof, a right to receive
shares of Common Stock, the value of which is equal to the excess of (i) the FMV
Per Share on the date of exercise over (ii) the FMV per share on the date of
grant (such excess, the “Spread”) with respect to a specified number of shares
of Common Stock. Notwithstanding the foregoing, the Committee may provide, in
its sole discretion, that the Spread covered by a Stock Appreciation Right may
not exceed a specified amount.     (b)   Terms. The Committee shall determine at
the date of grant the time or times at which and the circumstances under which a
Stock Appreciation Right may be exercised in whole or in part (including based
on achievement of performance goals and/or future service requirements), the
method of exercise, whether or not a Stock Appreciation Right shall be in tandem
or in combination with any other Award and any other terms and conditions of any
Stock Appreciation Right.

Section 6.02 Restricted Stock Units. The Committee is authorized to grant
Restricted Stock Units to Employees, Consultants and Non-Employee Directors,
which are rights to receive a specified number of shares of Common Stock or the
Fair Market Value of such Common Stock in cash at the end of a specified
deferral period, subject to the following terms and conditions:

  (a)   Award and Restrictions. Satisfaction of a Restricted Stock Unit shall
occur upon expiration of the deferral period specified for such Restricted Stock
Units by the Committee or, if permitted by the Committee, as elected by the
Participant; provided that such election by the Participant shall be made in the
calendar year before services are performed and is irrevocable. In addition,
Restricted Stock Units shall be subject to such restrictions (which may include
a risk of forfeiture), if any, as the Committee may impose in its sole
discretion, which restrictions may lapse at the expiration of the deferral
period or at earlier specified times (including times based on achievement of
performance goals and/or future service requirements), separately or in
combination, as the Committee may determine in its sole discretion to be
appropriate or advisable for any Award.     (b)   Forfeiture. Except as
otherwise determined by the Committee or as may be set forth in any Award,
employment or other agreement pertaining to a Restricted Stock Units, upon
termination of Employment or services during the applicable

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      deferral period or portion thereof to which forfeiture conditions apply,
all Restricted Stock Units that are at that time subject to forfeiture shall be
forfeited; provided, however, that the Committee may provide, by rule or
regulation or in any Award agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Restricted Stock Units
shall be waived in whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases which it determines
appropriate or advisable waive in whole or in part the forfeiture of Restricted
Stock Units.     (c)   Performance Goals. To the extent the Committee determines
that any Award granted pursuant to this Article VI shall constitute
performance-based compensation for purposes of Section 162(m) of the Code, the
grant or settlement of the Award shall, in the Committee’s discretion, be
subject to the achievement of performance goals determined and applied in a
manner consistent with Section 8.02.

ARTICLE VII.
RESTRICTED STOCK
Section 7.01 Eligibility. All Employees, Consultants and Non-Employee Directors
shall be eligible for grants of Restricted Stock.
Section 7.02 Restrictions, Restricted Period and Vesting.

  (a)   The Restricted Stock shall be subject to such forfeiture restrictions
(including, without limitation, limitations that qualify as a “substantial risk
of forfeiture” within the meaning given to that term under Section 83 of the
Code) and restrictions on transfer by the Participant and repurchase by the
Company as the Committee, in its sole discretion, shall determine. Prior to the
lapse of such restrictions, the Participant shall not be permitted to transfer
such shares. The Company shall have the right to repurchase or recover such
shares for the amount of cash paid therefor, if any, if (i) the Participant’s
Employment from or services to the Company or an Affiliate is terminated by the
Company or the Participant prior to the lapse of such restrictions or (ii) the
Restricted Stock is forfeited by the Participant pursuant to the terms of the
Award.     (b)   Vesting. See Section 10.11 of this Plan for provisions on
vesting in connection with termination of Employment or service. Also, see
Section 10.12 of this Plan relating to vesting in connection with a Change of
Control.     (c)   Immediate Transfer Without Immediate Delivery of Restricted
Stock. Each certificate representing Restricted Stock awarded under this Plan
shall be registered in the name of the Participant and, during the Restricted
Period, shall be left on deposit with the Company, or in trust or escrow
pursuant to an agreement satisfactory to the Committee, along with a stock power
endorsed in blank until such time as the restrictions on transfer have lapsed.
The grantee of Restricted Stock shall have all the rights of a stockholder with
respect to such

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      shares including the right to vote and the right to receive dividends or
other distributions paid or made with respect to such shares; provided, however,
that the Committee may in the Award restrict the Participant’s right to
dividends until the restrictions on the Restricted Stock lapse. Any certificate
or certificates representing shares of Restricted Stock shall bear a legend
substantially similar to the following:         The shares represented by this
certificate have been issued pursuant to the terms of the Western Refining
Long-Term Incentive Plan and may not be sold, pledged, transferred, assigned or
otherwise encumbered in any manner except as is set forth in the terms of such
award dated ___, 200___.

Section 7.03 Forfeiture of Restricted Stock. If, for any reason, the
restrictions imposed by the Committee upon Restricted Stock are not satisfied at
the end of the Restricted Period, any Restricted Stock remaining subject to such
restrictions shall thereupon be forfeited by the Participant and reacquired by
the Company.
Section 7.04 Delivery of Shares of Common Stock. Pursuant to Section 10.05 of
this Plan and subject to the withholding requirements of Article XI of this
Plan, at the expiration of the Restricted Period, a stock certificate evidencing
the Restricted Stock (to the nearest full share) with respect to which the
Restricted Period has expired shall be delivered without charge to the
Participant, or his personal representative, free of all restrictions under this
Plan.
ARTICLE VIII.
PERFORMANCE AWARDS
Section 8.01 Performance Awards. The Committee may grant Performance Awards to
Employees, Consultants or Non-employee Directors based on performance criteria
measured over a period of not less than six (6) months and not more than ten
(10) years. The Committee may use such business criteria and other measures of
performance as it may deem appropriate in establishing any performance
conditions, and may exercise its discretion to increase the amounts payable
under any Award subject to performance conditions, except as limited under
Section 8.02 in the case of a Performance Award which is intended to meet the
requirements of Section 162(m) of the Code.
Section 8.02 Performance Goals. The grant and/or settlement of a Performance
Award shall be contingent upon terms set forth in this Section 8.02.

  (a)   General. The performance goals for Performance Awards shall consist of
one or more business criteria and a targeted level or levels of performance with
respect to each of such criteria, as specified by the Committee. In the case of
any Award granted to an Employee, which is intended to meet the requirements of
the performance-based exception of Section 162(m) of the Code, performance goals
shall be designed to be objective and shall otherwise meet the requirements of
Section 162(m) of the Code and regulations thereunder (including Treasury
Regulations sec. 1.162-27 and successor regulations thereto), including the

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      requirement that the level or levels of performance targeted by the
Committee are such that the achievement of performance goals is “substantially
uncertain” at the time of grant. The Committee may determine that such
Performance Awards shall be granted and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved
as a condition to the grant and/or settlement of such Performance Awards.
Performance goals may differ among Performance Awards granted to any one
Participant or for Performance Awards granted to different Participants.     (b)
  Business Criteria. With respect to any Performance Award granted to an
Employee which is intended to meet the requirements of the performance-based
exception of Section 162(m) of the Code, one or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
subsidiaries, divisions, businesses, geographical units or individual employees
or service providers of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used by the
Committee in establishing performance goals for Performance Awards granted to a
Participant: (i) earnings per share; (ii) price per share, (iii) revenues;
(iv) cash flow; (v) return on net assets; (vi) return on assets; (vii) return on
investment; (viii) return on equity; (ix) economic value added; (x) gross
margin; (xi) net income; (xii) pretax earnings; (xiii) pretax earnings before
interest, depreciation and amortization; (xiv) pretax operating earnings after
interest expense and before incentives, service fees, and extraordinary or
special items; (xv) operating income; (xvi) total stockholder return;
(xvii) debt reduction; (xviii) safety record; (xix) environmental compliance;
and (xx) budget compliance. Any of the above goals may be determined on an
absolute or relative basis or as compared to the performance of a published or
special index deemed applicable by the Committee including, but not limited to,
the Standard & Poor’s 500 Stock Index or components thereof or a group of
comparable companies.     (c)   Performance Period; Timing for Establishing
Performance Goals. Achievement of performance goals in respect of Performance
Awards shall be measured over a performance period of not less than six
(6) months and not more than ten (10) years, as specified by the Committee.
Performance goals in the case of any Award granted to a Participant shall be
established not later than ninety (90) days after the beginning of any
performance period applicable to such Performance Award, or at such other date
as may be required or permitted for “performance-based compensation” under
Section 162(m) of the Code.     (d)   Settlement of Performance Awards; Other
Terms. After the end of each performance period, the Committee shall determine
the amount, if any, of Performance Awards payable to each Participant based upon
achievement of business criteria over a performance period. The Committee may
not exercise discretion to increase any such amount payable in respect of a
Performance Award that is intended to comply with Section 162(m) of the Code.
The Committee shall specify the circumstances in which such Performance Awards
shall be paid or forfeited in the event of termination of Employment of the

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      Participant prior to the end of a performance period or settlement of
Performance Awards.     (e)   Written Determinations. All determinations by the
Committee as to the establishment of performance goals, the amount of any
Performance Award and the achievement of performance goals relating to
Performance Awards shall be made in a written agreement or other document
covering the Performance Award. The Committee may not delegate any
responsibility relating to such Performance Awards.     (f)   Status of
Performance Awards under Section 162(m) of the Code. It is the intent of the
Company that Performance Awards granted to persons who are designated by the
Committee as likely to be Covered Employees within the meaning of Section 162(m)
of the Code and regulations thereunder (including Treasury Regulations sec.
1.162-27 and successor regulations thereto) shall constitute “performance-based
compensation” within the meaning of Section 162(m) of the Code and regulations
thereunder. Accordingly, the terms of this Section 8.02 shall be interpreted in
a manner consistent with Section 162(m) of the Code and regulations thereunder.
Notwithstanding the foregoing, because the Committee cannot determine with
certainty whether a given Participant will be a Covered Employee with respect to
a fiscal year that has not yet been completed, the term “Covered Employee” as
used herein shall mean any person designated by the Committee, at the time of
grant of a Performance Award, as likely to be a Covered Employee with respect to
that fiscal year. If any provision of this Plan as in effect on the date of
adoption or any agreements relating to Performance Awards that are intended to
comply with Section 162(m) of the Code does not comply or is inconsistent with
the requirements of Section 162(m) of the Code or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.

ARTICLE IX.
OTHER STOCK OR PERFORMANCE-BASED AWARDS
     The Committee is hereby authorized to grant to Employees, Non-Employee
Directors and Consultants, Other Stock or Performance-Based Awards, which shall
consist of a right which (a) is not an Award described in any other Article of
this Plan and (b) is denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, shares of Common Stock
(including, without limitation, units or securities convertible into shares of
Common Stock) or cash as deemed by the Committee to be consistent with the
purposes of this Plan. Subject to the terms of this Plan, the Committee shall
determine the terms and conditions of any such Other Stock or Performance-Based
Awards, which shall be contained in a written agreement or other document
covering such Awards.

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ARTICLE X.
CERTAIN PROVISIONS APPLICABLE TO ALL AWARDS
Section 10.01 Vesting and Other General Provisions. Awards shall be evidenced by
a written agreement or other document and may be granted on the terms and
conditions set forth herein. In addition, the Committee may impose on any Award
or the exercise thereof, such additional terms and conditions, not inconsistent
with the provisions of this Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of Employment
by the Participant and terms permitting a Participant to make elections relating
to his or her Award which are not inconsistent with the Plan. The terms,
conditions and/or restrictions contained in an Award may differ from the terms,
conditions and restrictions contained in any other Award. The Committee may
amend an Award; provided, however, that, subject to Section 10.12, no amendment
of an Award may, without the consent of the holder of the Award, adversely
affect such person’s rights with respect to such Award in any material respect.
Notwithstanding the foregoing, the Committee may amend any Award without the
consent of the holder if the Committee deems it necessary to avoid adverse tax
consequences to the holder under Code Section 409A. The Committee shall retain
full power and discretion to accelerate or waive, at any time, any term or
condition of an Award that is not mandatory under this Plan; provided, however,
that, subject to Section 10.12, the Committee shall not have discretion to
accelerate or waive any term or condition of an Award (i) if such discretion
would cause the Award to have adverse tax consequences to the Participant under
409A, or (ii) if the Award is intended to qualify as “performance-based
compensation” for purposes of Section 162(m) of the Code and such discretion
would cause the Award not to so qualify. Except in cases in which the Committee
is authorized to require other forms of consideration under this Plan, or to the
extent other forms of consideration must be paid to satisfy the requirements of
the Delaware Corporation Law, no consideration other than services may be
required for the grant of any Award.
Section 10.02 Stand-Alone, Additional, Tandem and Substitute Awards. Subject to
Section 2.04 of this Plan, Awards granted under this Plan may, in the discretion
of the Committee, be granted either alone or in addition to, in tandem with, or
in substitution or exchange for, any other Award or any award granted under
another plan of the Company, any Affiliate or any business entity to be acquired
by the Company or an Affiliate, or any other right of a Participant to receive
payment from the Company or any Affiliate. Such additional, tandem and
substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award, the Committee shall require the
surrender of such other Award for cancellation in consideration for the grant of
the new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any Affiliate. Any such action contemplated under this Section 10.02 shall be
effective only to the extent that such action will not cause (a) the holder of
the Award to lose the protection of Section 16(b) of the Exchange Act and rules
and regulations promulgated thereunder or (b) any Award that is designed to
qualify payments thereunder as performance-based compensation as defined in
Section 162(m) of the Code to fail to qualify as such performance-based
compensation.
Section 10.03 Term of Awards. The term or Restricted Period of each Award that
is an Option, Stock Appreciation Right, Restricted Stock Unit or Restricted
Stock shall be for such period as

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may be determined by the Committee; provided, however, that in no event shall
the term of any such Award exceed a period of ten (10) years (or such shorter
terms as may be required in respect of an Incentive Stock Option under
Section 422 of the Code).
Section 10.04 Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of this Plan and any applicable Award agreement, payments to be made by
the Company or an Affiliate upon the exercise of an Option or other Award or
settlement of an Award may be made in a single payment or transfer, in
installments or on a deferred basis. The settlement of any Award may, subject to
any limitations set forth in the Award agreement, be accelerated and cash paid
in lieu of shares in connection with such settlement, in the discretion of the
Committee or upon occurrence of one or more specified events; provided, however,
that such discretion may not be exercised by the Committee if the exercise of
such discretion would result in adverse tax consequences to the Participant
under section 409A of the Code. In the discretion of the Committee, Awards
granted pursuant to Article VIII of this Plan may be payable in cash or shares
to the extent permitted by the terms of the applicable Award agreement and the
Plan. Installment or deferred payments may be required by the Committee (subject
to Section 1.08 of this Plan, including the consent provisions thereof in the
case of any deferral of an outstanding Award not provided for in the original
Award agreement); provided, however, that no deferral shall be required or
permitted by the Committee if such deferral would result in adverse tax
consequences to the Participant under section 409A of the Code. Payments may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of amounts in respect of installment or deferred payments denominated
in shares. Any deferral shall only be allowed as is provided in a separate
deferred compensation plan adopted by the Company. The Plan shall not constitute
an “employee benefit plan” for purposes of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
Section 10.05 Vested and Unvested Awards. After the satisfaction of all of the
terms and conditions set by the Committee with respect to an Award granted to a
Participant pursuant to this Plan, the following shall be delivered to such
Participant: (a) with respect to an Award of Restricted Stock, a certificate,
without the legend set forth in Section 7.02(c), for the number of shares that
are no longer subject to such restrictions, terms and conditions; (b) with
respect to an Award of Restricted Stock Unit, to the extent not paid in cash, a
certificate for the number of shares equal to the number of shares of Common
Stock earned; and (c) with respect to an Award of Stock Appreciation Rights or
Performance Awards, cash and/or a certificate for the number of shares equal in
value to the number of Stock Appreciation Rights or amount of Performance Awards
vested. The number of shares of Common Stock which shall be issuable upon
exercise of a Stock Appreciation Right or earning of a Performance Award shall
be determined by dividing (1) by (2) where (1) is the number of shares of Common
Stock as to which the Stock Appreciation Right is exercised multiplied by the
Spread or the amount of Performance Award that is earned and payable, as
applicable, and (2) is the FMV Per Share of Common Stock on the date of exercise
of the Stock Appreciation Right or the date the Performance Award is earned and
payable, as applicable. Upon termination, resignation or removal of a
Participant under circumstances that do not cause such Participant to become
fully vested, any remaining unvested Options, shares of Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights or Performance Awards, as the
case may be, shall either be forfeited back to the Company or, if

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appropriate under the terms of the Award, shall continue to be subject to the
restrictions, terms and conditions set by the Committee with respect to such
Award.
Section 10.06 Exemptions from Section 16(b) Liability. It is the intent of the
Company that the grant of any Awards to or other transaction by a Participant
who is subject to Section 16 of the Exchange Act shall be exempt from Section
16(b) of the Exchange Act pursuant to an applicable exemption (except for
transactions acknowledged by the Participant in writing to be non-exempt).
Accordingly, if any provision of this Plan or any Award agreement does not
comply with the requirements of Rule 16b-3 as then applicable to any such
transaction, such provision shall be construed or deemed amended to the extent
necessary to conform to the applicable requirements of Rule 16b-3 so that such
Participant shall avoid liability under Section 16(b) of the Exchange Act.
Section 10.07 Securities Requirements. No shares of Common Stock will be issued
or transferred pursuant to an Award unless and until all then-applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction and by any stock
market or exchange upon which the Common Stock may be listed, have been fully
met. As a condition precedent to the issuance of shares pursuant to the grant or
exercise of an Award, the Company may require the grantee to take any reasonable
action to meet such requirements. The Company shall not be obligated to take any
affirmative action in order to cause the issuance or transfer of shares pursuant
to an Award to comply with any law or regulation described in the second
preceding sentence.
Section 10.08 Transferability.

  (a)   Non-Transferable Awards and Options. Except as may be otherwise provided
by the Committee in an Award agreement or otherwise, no Award and no right under
this Plan, contingent or otherwise, other than Purchased Stock, Bonus Stock or
Restricted Stock as to which restrictions have lapsed, will be (i) assignable,
saleable or otherwise transferable by a Participant except by will or by the
laws of descent and distribution or pursuant to a domestic relations order or
(ii) subject to any encumbrance, pledge or charge of any nature. No transfer by
will or by the laws of descent and distribution shall be effective to bind the
Company unless the Committee shall have been furnished with a copy of the
deceased Participant’s will or such other evidence as the Committee may deem
necessary to establish the validity of the transfer. Any attempted transfer in
violation of this Section 10.08(a) shall be void and ineffective for all
purposes.     (b)   Ability to Exercise Rights. Except as otherwise specifically
provided under this Plan, only the Participant or his guardian (if the
Participant becomes Disabled), or in the event of his death, his legal
representative or beneficiary, may exercise Options, receive cash payments and
deliveries of shares or otherwise exercise rights under this Plan. The executor
or administrator of the Participant’s estate, or the person or persons to whom
the Participant’s rights under any Award will pass by will or the laws of
descent and distribution, shall be deemed to be the Participant’s beneficiary or
beneficiaries of the rights of the Participant hereunder and shall be entitled
to exercise such rights as are provided hereunder.

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Section 10.09 Rights as a Stockholder.

  (a)   No Stockholder Rights. Except as otherwise provided in Section 10.09(b),
a Participant who has received a grant of an Award or a transferee of such
Participant shall have no rights as a stockholder with respect to any shares of
Common Stock until such person becomes the holder of record. Except as otherwise
provided in Section 10.09(b), no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued.     (b)   Holder of Restricted Stock. Unless
otherwise approved by the Committee prior to the grant of a Restricted Stock
Award, a Participant who has received a grant of Restricted Stock or a permitted
transferee of such Participant shall not have any rights of a stockholder until
such time as a stock certificate has been issued with respect to all, or a
portion of, such Restricted Stock Award.

Section 10.10 Listing and Registration of Shares of Common Stock. The Company,
in its discretion, may postpone the issuance and/or delivery of shares of Common
Stock upon any exercise of an Award until completion of such stock exchange
listing, registration or other qualification of such shares under any state
and/or federal law, rule or regulation as the Company may consider appropriate,
and may require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of the shares in compliance with applicable laws, rules and
regulations.
Section 10.11 Termination of Employment, Death and Disability.

  (a)   Termination of Employment. Except as otherwise provided in (b) below,
and unless otherwise provided in the Award, if Employment of an Employee or
service of a Non-Employee Director or Consultant is terminated for any reason
whatsoever, any nonvested Award granted pursuant to this Plan outstanding at the
time of such termination and all rights thereunder shall wholly and completely
terminate and no further vesting shall occur, and the Employee, Consultant or
Non-Employee Director shall be entitled to exercise his or her rights with
respect to the portion of the Award vested as of the date of termination for a
period that shall end on the earlier of (i) the expiration date set forth in the
Award with respect to the vested portion of such Award or (ii) the date that
occurs six (6) months after such termination date (three (3) months after the
date of termination in the case of an Incentive Option).     (b)   Continuation.
Notwithstanding any other provision of this Plan, the Committee, in its
discretion, may provide for the acceleration of vesting upon death, Disability
or Retirement or for the continuation of any Award for such period and upon such
terms and conditions as are determined by the Committee in the event that a
Participant ceases to be an Employee, Consultant or Non-Employee Director.

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Section 10.12 Change in Control.

  (a)   Change in Control. Unless otherwise provided in the Award, in the event
of a Change in Control described in the definition of Change in Control under
Section 1.02 of this Plan:

  (i)   the Committee may accelerate vesting and the time at which all Options
and Stock Appreciation Rights then outstanding may be exercised so that those
types of Awards may be exercised in full for a limited period of time on or
before a specified date fixed by the Committee, after which specified date all
unexercised Options and Stock Appreciation Rights and all rights of Participants
thereunder shall terminate, or the Committee may accelerate vesting and the time
at which Options and Stock Appreciation Rights may be exercised so that those
types of Awards may be exercised in full for their then remaining term;     (ii)
  the Committee may waive all restrictions and conditions of all Restricted
Stock and Restricted Stock Unit then outstanding with the result that those
types of Awards shall be deemed satisfied, and the Restriction Period or other
limitations on payment in full with respect thereto shall be deemed to have
expired, as of the date of the Change in Control or such other date as may be
determined by the Committee; and     (iii)   the Committee may determine to
amend Performance Awards and Other Stock or Performance-Based Awards, or
substitute new Performance Awards and Other Stock or Performance-Based Awards in
consideration of cancellation of outstanding Performance Awards and any Other
Stock or Performance-Based Awards, in order to ensure that such Awards shall
become fully vested, deemed earned in full and promptly paid to the Participants
as of the date of the Change in Control or such other date as may be determined
by the Committee, without regard to payment schedules and notwithstanding that
the applicable performance cycle, retention cycle or other restrictions and
conditions shall not have been completed or satisfied.

Notwithstanding the above provisions of this Section 10.12(a), the Committee
shall not be required to take any action described in the preceding provisions
of this Section 10.12(a), and any decision made by the Committee, in its sole
discretion, not to take some or all of the actions described in the preceding
provisions of this Section 10.12(a) shall be final, binding and conclusive with
respect to the Company, all Participants and all other interested persons.

  (b)   Right of Cash-Out. If approved by the Board prior to or within thirty
(30) days after such time as a Change in Control shall be deemed to have
occurred, the Board shall have the right for a forty-five (45) day period
immediately following the date that the Change in Control is deemed to have
occurred to require all, but not less than all, Participants to transfer and
deliver to the Company all Awards previously granted to the Participants in
exchange for an amount equal to the

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      “cash value” (defined below) of the Awards. Such right shall be exercised
by written notice to all Participants. For purposes of this Section 10.12(b),
the “cash value” of an Award shall equal the sum of (i) all cash to which the
Participant would be entitled upon settlement or exercise of any Award which is
not an Option and (ii) in the case of any Award that is an Option, the excess of
the “market value” (defined below) per share over the Option price, if any,
multiplied by the number of shares subject to such Award. For purposes of the
preceding sentence, “market value” per share shall mean the higher of (x) the
average of the Fair Market Value per share of Common Stock on each of the five
(5) trading days immediately following the date a Change in Control is deemed to
have occurred or (y) the highest price, if any, offered in connection with the
Change in Control. The amount payable to each Participant by the Company
pursuant to this Section 10.12(b) shall be paid in cash or by certified check
and shall be reduced by any taxes required to be withheld. Notwithstanding the
foregoing, neither the Board, the Company nor the Committee shall have the right
to cash-out any Award, if the existence or exercise of such right would result
in adverse tax consequences to the Participant pursuant to section 409A of the
Code.

ARTICLE XI.
WITHHOLDING FOR TAXES
     Any issuance of Common Stock pursuant to the exercise of an Option or in
payment of any other Award under this Plan shall not be made until appropriate
arrangements satisfactory to the Company have been made for the payment of any
tax amounts (federal, state, local or other) that may be required to be withheld
or paid by the Company with respect thereto. Such arrangements may, at the
discretion of the Committee, include allowing the person to tender to the
Company shares of Common Stock owned by the person, or to request the Company to
withhold shares of Common Stock being acquired pursuant to the Award, whether
through the exercise of an Option or as a distribution pursuant to the Award,
which have an aggregate FMV Per Share as of the date of such withholding that is
not greater than the sum of all tax amounts to be withheld with respect thereto
at the minimum statutory rate, together with payment of any remaining portion of
such tax amounts in cash or by check payable and acceptable to the Company.
     Notwithstanding the foregoing, if on the date of an event giving rise to a
tax withholding obligation on the part of the Company the person is an officer
or individual subject to Rule 16b-3, such person may direct that such tax
withholding be effectuated by the Company withholding the necessary number of
shares of Common Stock (at the minimum statutory tax rate) from such Award
payment or exercise.
ARTICLE XII.
MISCELLANEOUS
Section 12.01 No Rights to Awards or Uniformity Among Awards. No Participant or
other person shall have any claim to be granted any Award; there is no
obligation for uniformity of treatment of Participants, or holders or
beneficiaries of Awards; and the terms and conditions of Awards need not be the
same with respect to each recipient.

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Section 12.02 Conflicts with Plan. In the event of any inconsistency or conflict
between the terms of this Plan and an Award, the terms of this Plan shall
govern.
Section 12.03 No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or any Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under this Plan, unless otherwise expressly provided in this Plan or in any
Award.
Section 12.04 Governing Law. The validity, construction and effect of this Plan
and any rules and regulations relating to this Plan shall be determined in
accordance with applicable federal law and the laws of the State of Texas with
venue in Dallas County, without regard to any principles of conflicts of law.
Section 12.05 Gender, Tense and Headings. Whenever the context requires such,
words of the masculine gender used herein shall include the feminine and neuter,
and words used in the singular shall include the plural. Section headings as
used herein are inserted solely for convenience and reference and constitute no
part of this Plan.
Section 12.06 Severability. If any provision of this Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or as to any Participant or Award, or would disqualify this Plan or any Award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended as necessary to conform to the applicable laws, or
if it cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of this Plan or the Award, such
provision shall be stricken as to such jurisdiction, Participant or Award, and
the remainder of this Plan and any such Award shall remain in full force and
effect.
Section 12.07 Other Laws. The Committee may refuse to issue or transfer any
shares or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance or transfer of such shares or such other
consideration might violate any applicable law.
Section 12.08 Stockholder Agreements. The Committee may condition the grant,
exercise or payment of any Award upon such person entering into a stockholders’
or repurchase agreement in such form as approved from time to time by the Board.
Section 12.09 Funding. Except as provided under Article VII of this Plan, no
provision of this Plan shall require or permit the Company, for the purpose of
satisfying any obligations under this Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes. Participants shall have no
rights under this Plan other than as unsecured general creditors of the Company,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other Employees, Consultants or Non-Employee Directors under general law.

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Section 12.10 No Guarantee of Tax Consequences. Neither the Board, nor the
Company nor the Committee makes any commitment or guarantee that any federal,
state or local tax treatment will apply or be available to any person
participating or eligible to participate hereunder.
Adopted: January 10, 2006

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