Document:

The Panda Ethanol, Inc. 2006 Amend.and Restated L-T Incentive Plan, June 7,2006

 Exhibit 10.6 
 PANDA ETHANOL, INC. 
 2006 AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN 
 The Panda Ethanol, Inc. 2006 Long-Term Incentive Plan (the “Plan”) was adopted by the Board of Directors of Panda Ethanol, Inc., a Delaware
corporation (the “Company”), effective as of May 9, 2006, and approved by the Company’s stockholders on the 9th day of May, 2006. The Plan is now amended and restated in its entirety and approved by the Board of Directors and shareholders of the Company on June 7, 2006. 
 ARTICLE 1 
 PURPOSE 
 The purpose of the Plan is to attract and retain the services of key employees, consultants and Outside Directors of the Company and its Subsidiaries and
to provide such persons with a proprietary interest in the Company through the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend
equivalent rights, and other awards, whether granted singly, or in combination, or in tandem, that will 
 (a) increase the
interest of such persons in the Company’s welfare; 
 (b) furnish an incentive to such persons to continue their services
for the Company; and 
 (c) provide a means through which the Company may attract able persons as employees, and Outside
Directors. 
 With respect to Reporting Participants, the Plan and all transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the “1934 Act”) in the event the Common Stock as a class should ever be registered under the 1934 Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void ab initio, to the extent permitted by law and deemed advisable by the Committee. No Incentive Stock Options shall be issued to Consultants, independent contractors or Outside
Directors of the Company. 
 ARTICLE 2 
 DEFINITIONS 
 For the purpose of the Plan, unless the context requires otherwise, the following terms
shall have the meanings indicated: 
 2.1 “Award” means the grant of any Incentive Stock Option, Nonqualified Stock Option, Reload
Option, Restricted Stock, SAR, Restricted Stock Units, Performance Award, Dividend Equivalent Right or Other Award, whether granted singly or in combination or in tandem (each individually referred to herein as an “Incentive” or as
“Award”). 
 2.2 “Award Agreement” means a written agreement between a Participant and the Company which sets out the
terms of the grant of an Award. 

 2.3 “Award Period” means the period set forth in the Award Agreement during which one or more
Incentives granted under an Award may be exercised. 
 2.4 “Board” means the board of directors of the Company. 
 2.5 “Callable” means Common Stock issued to a Participant which is subject to the Company’s right to call and repurchase such Common Stock
upon Termination of Employment pursuant to the terms of the Award Agreement under which the Participant purchased the Common Stock. 
 2.6
“Change in Control” means that following an offering of the Common Stock pursuant to an IPO, a “Change in Control” shall mean any of the following: (i) any consolidation, merger or share exchange of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s Common Stock would be converted into cash, securities or other property, other than a consolidation, merger or share exchange of the Company in
which the holders of the Company’s Common Stock immediately prior to such transaction have the same proportionate ownership of Common Stock of the surviving corporation immediately after such transaction or the merger of the Company into one of
its subsidiaries; (ii) any sale, lease, exchange or other transfer (excluding transfer by way of pledge or hypothecation) in one transaction or a series of related transactions, of all or substantially all of the assets of the Company;
(iii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; (iv) the cessation of control (by virtue of their not constituting a majority of directors) of the Board by the
individuals (the “Continuing Directors”) who (x) at the date of an IPO were directors or (y) become directors after the date of an IPO and whose election or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds of the directors then in office who were directors at the date of an IPO or whose election or nomination for election was previously so approved; (v) the acquisition of beneficial ownership (within the meaning
of Rule 13d-3 under the 1934 Act) of an aggregate of 50% or more of the voting power of the Company’s outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under the 1934 Act) who beneficially owned less than
50% of the voting power of the Company’s outstanding voting securities on the date of an IPO; provided, however, that notwithstanding the foregoing, an acquisition shall not constitute a Change in Control hereunder if the acquirer
is (x) a trustee or other fiduciary holding securities under an employee benefit plan of the Company and acting in such capacity, (y) a Subsidiary of the Company or a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of voting securities of the Company or (z) any other person whose acquisition of shares of voting securities is approved in advance by a majority of the Continuing Directors or
(aa) a purchase(s) of the shares are sold pursuant to effective registration under applicable federal and state securities laws; or (vi) in a Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion of a case involving the
Company to a case under Chapter 7. Notwithstanding the above, no amount may become payable under any Award which is subject to Code section 409A unless the Change in Control also satisfies the definition of a Change in Control under the guidance
issued under section 409A of the Code, and the payment occurs within the time specified in such guidance for the payment to be treated as on account of the Change in Control. 
 2.7 “Code” means the Internal Revenue Code of 1986, as amended. 
 2.8 “Committee” means the committee appointed or designated by the Board to serve as the Compensation Committee (or a similarly named Committee generally intended to administer and oversee employee
compensation plans such as the Plan) of the Board to administer the Plan in accordance with Article 3 of this Plan. 
 2.9 “Common
Stock” means the Common Stock, par value $0.001 per share, which the Company is currently authorized to issue or may in the future be authorized to issue, or any securities into which or for which the common stock of the Company may be
converted or exchanged, as the case may be, pursuant to the terms of this Plan. 
  

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 2.10 “Company” means Panda Ethanol, Inc., a Delaware corporation, and any successor entity.
Notwithstanding the foregoing, for purposes of determining an entity is entitled to grant Awards to an employee of a Subsidiary or related entity under this Plan, “Company” shall include any Subsidiary, or related company treated as a
member of the controlled group with Company under Code Section 414(b) or (c). In making the determination of whether a Subsidiary or related company is a member of the controlled group with the Company under Code Section 414(b) or (c), the
definition of “controlled group” in Code Section 1563(a) shall govern and the phrase “at least 80 percent” in Code Section 1563(a) shall be replaced with “at least 50 percent” in each place it appears in Code
Section 1563(a)(1), (2) and (3) and in applying Treasury Regulation § 1.414(c)-2 for purposes of determining whether the entities (whether or not incorporated) that are under common control for purposes of Code
Section 414(c). This shall be construed in a manner consistent with Panda Ethanol, Inc. being treated as a service recipient so that the options and equity rights granted hereunder are granted on stock of the service recipient as such phase is
defined under Proposed Treasury Regulation § 1.409A-1(b)(5)(iii), and any successor provision thereto. 
 2.11
“Consultant” means any person performing advisor or consulting services to the Company or a Subsidiary, with or without compensation, to whom the Company chooses to grant an Award in accordance with the Plan, provided that bona fide
services must be rendered by such person and such services shall not be rendered in connection with the offer or sale of securities in a capital raising transaction. A Consultant is not eligible to receive Incentive Stock Options (or Statutory Stock
Options). 
 2.12 “Corporation” means any entity that (i) is defined as a corporation under Section 7701 of the Code and
(ii) is the Company or is in an unbroken chain of corporations (other than the Company) beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total
combined voting power of all classes of stock in one of the other corporations in the chain. For purposes of clause (ii) hereof, an entity shall be treated as a “corporation” if it satisfies the definition of a corporation under
Section 7701 of the Code. 
 2.13 “Date of Grant” means the effective date on which an Award is made to a Participant as set
forth in the applicable Award Agreement; provided, however, that solely for purposes of Section 16 of the 1934 Act and the rules and regulations promulgated thereunder in the event the Common Stock should ever be registered under the 1934 Act,
the Date of Grant of an Award shall be the date of stockholder approval of the Plan if such date is later than the effective date of such Award as set forth in the Award Agreement. 
 2.14 “Dividend Equivalent Right” means the right of the holder thereof to receive credits as set forth in Section 6.9 hereof based on the
cash dividends that would have been paid on the shares of Common Stock specified in the Award if such shares were held by the Participant to whom the Award is made. 
 2.15 “Employee” means common law employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Section 3401(c) of the Code) of the Company or any Subsidiary of the
Company. 
 2.16 “Executive Officer” means an officer of the Company or a Subsidiary subject to Section 16 of the 1934 Act in
the event the Common Stock should ever be registered under the 1934 Act or a “covered employee” as defined in Section 162(m)(3) of the Code. 
  

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 2.17 “Fair Market Value” means, as of a particular date, (a) if the shares of Common Stock
are listed on a national securities exchange, the closing sales price per share of Common Stock on the consolidated transaction reporting system for the principal securities exchange for the Common Stock on that date, or, if there shall have been no
such sale so reported on that date, on the last preceding date on which such a sale was so reported, (b) if the shares of Common Stock are not so listed but are quoted on the Nasdaq National Market System, the closing sales price per share of
Common Stock on the Nasdaq National Market System on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (c) if the Common Stock is not so listed or
quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by Nasdaq, or, if not reported by
Nasdaq, by the National Quotation Bureau, Inc., or (d) if none of the above is applicable, such amount as may be determined by the Board (acting on the advice of an Independent Third Party, should the Board elect in its sole discretion to
utilize an Independent Third Party for this purpose), in good faith, to be the fair market value per share of Common Stock and in compliance with the valuation methods permitted under Treasury Regulations § 1.422-2(e) and
§ 20.2031-2 and the guidance issued under Section 409A of the Code. 
 2.18 “Incentive” is defined in
Section 2.1 hereof. 
 2.19 “Incentive Stock Option” or “Statutory Stock Option” or “ISO” means an
incentive stock option within the meaning of Section 422 of the Code, granted pursuant to this Plan. 
 2.20 “Independent Third
Party” means an individual or entity independent of the Company having experience in providing investment banking or similar appraisal or valuation services and with expertise generally in the valuation of securities or other property for
purposes of this Plan. The Board may utilize one or more Independent Third Parties. 
 2.21 “IPO” means the first public offering
of any class of equity securities of this Company (or any successor or assign of the Company whether by merger, consolidation, sale of assets or otherwise occurring after this Plan is effective) pursuant to a registration statement filed with and
declared effective by the Securities Exchange Commission. 
 2.22 “Nonpublicly Traded” means Company Stock as it exists prior to an
IPO. 
 2.23 “Nonqualified Stock Option” or “Nonstatutory Stock Option” or “NQSO” means a nonqualified stock
option, granted pursuant to this Plan, which is not an Incentive Stock Option. 
 2.24 “Option Price” means the price which must be
paid by a Participant upon exercise of a Stock Option to purchase a share of Common Stock. 
 2.25 “Other Award” means an Award
issued pursuant to Section 6.10 hereof. 
 2.26 “Outside Director” means a director of the Company who is not an Employee.
Outside Directors are not eligible to receive an Incentive Stock Option. 
 2.27 “Participant” means an Employee, Consultant,
independent contractor, or Outside Director of the Company or a Subsidiary to whom an Award is granted under this Plan for any grant that is not an Incentive Stock Option. A Participant also includes an Employee to whom an Award for an Incentive
Stock Option is granted. 
  

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 2.28 “Plan” means this Panda Ethanol, Inc. 2006 Long-Term Incentive Plan, as amended from time
to time. 
 2.29 “Performance Award” means an Award hereunder of cash, shares of Common Stock, units or rights based upon, payable
in, or otherwise related to, Common Stock pursuant to Section 6.8 hereof. 
 2.30 “Performance Goal” means any of the goals
set forth in Section 6.11 hereof. 
 2.31 “Reload Stock Option” means a Nonqualified Stock Option or an Incentive Stock Option
granted pursuant to Section 8.3(c) hereof. 
 2.32 “Reporting Participant” means a Participant who is subject to the reporting
requirements of Section 16 of the 1934 Act in the event the Common Stock should ever be registered under the 1934 Act. 
 2.33
“Restricted Stock” means shares of Common Stock issued or transferred to a Participant pursuant to Section 6.4 of this Plan which are subject to restrictions or limitations set forth in this Plan and in the related Award Agreement.

 2.34 “Restricted Stock Units” means units awarded to Participants pursuant to Section 6.7 hereof, which are convertible
into Common Stock at such time as such units are no longer subject to restrictions as established by the Committee. 
 2.35
“Retirement” means any Termination of Service solely due to retirement upon or after attainment of age sixty-five (65), or permitted early retirement as determined by the Committee. 
 2.36 “SAR” or “stock appreciation right” means the right to receive a payment, in cash and/or Common Stock, equal to the excess of
the Fair Market Value of a specified number of shares of Common Stock on a specified date, provided the amount is fixed on the date the SAR is exercised over the SAR Price for such shares. 
 2.37 “SAR Price” means the exercise price of each share of Common Stock covered by a SAR, determined on the Date of Grant of the SAR.

 2.38 “Stock Option” means a Nonqualified Stock Option, a Reload Stock Option or an Incentive Stock Option. 
 2.39 “Subsidiary” means (i) any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the other corporations in the chain, (ii) any limited partnership, if the Company or any
corporation described in item (i) above owns a majority of the general partnership interest and a majority of the limited partnership interests entitled to vote on the removal and replacement of the general partner, and (iii) any
partnership or limited liability company, if the partners or members thereof are composed only of the Company, any corporation listed in item (i) above or any limited partnership listed in item (ii) above. “Subsidiaries” means
more than one of any such corporations, limited partnerships, partnerships or limited liability companies. 
 2.40 “Termination of
Service” occurs when a Participant who is an Employee of the Company or any Subsidiary shall cease to serve as an Employee of the Company and its Subsidiaries, for any reason; or, when a Participant who is an Outside Director of the Company or
a Subsidiary shall cease to serve as a director of the Company and its Subsidiaries for any reason. Except as may be necessary or desirable to comply with 

  

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applicable federal or state law, a “Termination of Service” shall not be deemed to have occurred when a Participant who is an Employee becomes an
Outside Director or vice versa. If, however, a Participant who is an Employee and who has an Incentive Stock Option ceases to be an Employee but does not suffer a Termination of Service, and if that Participant does not exercise the Incentive Stock
Option within the time required under Section 422 of the Code upon ceasing to be an Employee, the Incentive Stock Option shall thereafter become a Nonqualified Stock Option. Notwithstanding the above, effective on and after January 1,
2005, for any Award which is deferred compensation subject to Section 409A of the Code, “Termination from Service” shall have the same meaning as “Separation from Service” under Section 409A(a)(2)(A)(i) of the Code and
any guidance issued thereunder. 
 2.41 “Total and Permanent Disability” means a Participant is qualified for long-term disability
benefits under the Company’s or Subsidiary’s disability plan or insurance policy; or, if no such plan or policy is then in existence or if the Participant is not eligible to participate in such plan or policy, that the Participant, because
of a physical or mental condition resulting from bodily injury, disease, or mental disorder which prevents the Participant from performing his or her duties of employment for a period of six (6) continuous months, as determined in good faith by
the Committee, based upon medical reports or other evidence satisfactory to the Committee; provided that, with respect to any Incentive Stock Option, Total and Permanent Disability shall have the meaning given it under the rules governing
Incentive Stock Options under the Code. Notwithstanding the above, for purposes of any Award hereunder which is deemed to be deferred compensation subject to Section 409A of the Code, effective for all periods on or after January 1, 2005,
“Total and Permanent Disability” shall mean a participant who either (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to last for a
continuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health plan covering employees of the participant’s employer, or otherwise satisfies such definition as it is modified by any guidance issued under or regarding
Section 409A of the Code. 
 ARTICLE 3 
 ADMINISTRATION 
 3.1 General Administration; Establishment of Committee. Subject to the terms
of this Article 3, the Plan shall be administered by the Board or such committee of the Board as is designated by the Board to administer the Plan (the “Committee”). The Committee shall consist of not fewer than two persons. Any
member of the Committee may be removed at any time, with or without cause, by resolution of the Board. Any vacancy occurring in the membership of the Committee may be filled by appointment by the Board. At any time there is no Committee to
administer the Plan, any references in this Plan to the Committee shall be deemed to refer to the Board. 
 Membership on the Committee shall
be limited to those members of the Board who are “outside directors” under Section 162(m) of the Code and “non-employee directors” as defined in Rule 16b-3 promulgated under the 1934 Act only in the event the Common Stock
should ever be registered under the 1934 Act. The Committee shall select one of its members to act as its Chairman. A majority of the Committee shall constitute a quorum, and the act of a majority of the members of the Committee present at a meeting
at which a quorum is present shall be the act of the Committee. 
  

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 3.2 Designation of Participants and Awards. 
 (a) The Committee or the Board shall determine and designate from time to time the eligible persons to whom Awards will be granted and
shall set forth in each related Award Agreement, where applicable, the Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance requirements, as are approved by the Committee, but not inconsistent with the
Plan. The Committee shall determine whether an Award shall include one type of Incentive or two or more Incentives granted in combination or two or more Incentives granted in tandem (that is, a joint grant where exercise of one Incentive results in
cancellation of all or a portion of the other Incentive). Although the members of the Committee shall be eligible to receive Awards, all decisions with respect to any Award, and the terms and conditions thereof, to be granted under the Plan to any
member of the Committee shall be made solely and exclusively by the other members of the Committee, or if such member is the only member of the Committee, by the Board. 
 (b) Notwithstanding Subsection 3.2(a), the Board may, in its discretion and by a resolution adopted by the Board, authorize one or more
officers of the Company (an “Authorized Officer”) to (i) designate one or more Employees as eligible persons to whom Awards will be granted under the Plan and (ii) determine the number of shares of Common Stock that will be
subject to such Awards; provided, however, that the resolution of the Board granting such authority shall (x) specify the total number of shares of Common Stock that may be made subject to the Awards, (y) set forth the price or prices (or
a formula by which such price or prices may be determined) to be paid for the purchase of the Common Stock subject to such Awards, and (z) not authorize an officer to designate himself as a recipient of any Award. 
 (c) Notwithstanding the above, no Awards shall be granted under the Plan until such time as the shelf registration statement referenced in
that certain Registration Rights Agreement dated as of June 5, 2006 is declared effective by the Securities Exchange Commission. 
 3.3 Authority of the Committee. The Committee, in its discretion, shall (i) interpret the Plan, (ii) prescribe, amend, and rescind any rules and regulations necessary or appropriate for the administration of the Plan,
(iii) establish performance goals for an Award and certify the extent of their achievement, and (iv) make such other determinations or certifications and take such other action as it deems necessary or advisable in the administration of
the Plan. Any interpretation, determination, or other action made or taken by the Committee shall be final, binding, and conclusive on all interested parties. The Committee’s discretion set forth herein shall not be limited by any provision of
the Plan, including any provision which by its terms is applicable notwithstanding any other provision of the Plan to the contrary. 
 The
Committee may delegate to officers of the Company, pursuant to a written delegation, the authority to perform specified functions under the Plan. Any actions taken by any officers of the Company pursuant to such written delegation of authority shall
be deemed to have been taken by the Committee. 
 With respect to restrictions in the Plan that are based on the requirements of Rule 16b-3
promulgated under the 1934 Act in the event the Common Stock should ever be registered under the 1934 Act, Section 422 of the Code, Section 162(m) of the Code, the rules of any exchange or inter-dealer quotation system upon which the
Company’s securities are listed or quoted, or any other applicable law, rule or restriction (collectively, “applicable law”), to the extent that any such restrictions are no longer required by applicable law, the Committee shall have
the sole discretion and authority to grant Awards that are not subject to such mandated restrictions and/or to waive any such mandated restrictions with respect to outstanding Awards. 
  

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 3.4 Prohibition on Acceleration of Benefits. Any Award which constitutes deferred compensation
under Section 409A of the Code shall not have the time or schedule of any payment thereunder accelerated, except as permitted under the guidance issued under Section 409A of the Code. 
 ARTICLE 4 
 ELIGIBILITY

 Any Employee (including an Employee who is also a director or an officer), or Outside Director of the Company or any Subsidiary whose
judgment, initiative, and efforts contributed or may be expected to contribute to the successful performance of the Company or any Subsidiary is eligible to participate in the Plan; provided that only Employees of the Company or any Subsidiary shall
be eligible to receive Incentive Stock Options. An independent contractor providing services to the Company or any Subsidiary whose judgment, initiative, and efforts contributed or may be expected to contribute to the successful performance of the
Company or any Subsidiary is eligible to participate in the Plan; provided that independent contractors shall not be eligible to receive Incentive Stock Options. The Committee, upon its own action, may grant, but shall not be required to grant, an
Award to any Employee or Outside Director of the Company or any Subsidiary. Awards may be granted by the Committee at any time and from time to time to new Participants, or to some or all of the existing Participants, and may include or exclude
previous Participants, as the Committee shall determine. Except as required by this Plan, Awards granted at different times need not contain similar provisions. The Committee’s determinations under the Plan (including without limitation
determinations of which Employees or Outside Directors, if any, are to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it
selectively among Participants who receive, or are eligible to receive, Awards under the Plan. 
 ARTICLE 5 
 SHARES SUBJECT TO PLAN 
 5.1 Number
Available for Awards. Subject to adjustment as provided in Articles 11 and 12, the maximum number of shares of Common Stock that may be delivered pursuant to Awards granted under the Plan is three million three hundred and thirty three
thousand three hundred thirty three (3,333,333) shares. Shares to be issued may be made available from authorized but unissued Common Stock, Common Stock held by the Company in its treasury, or Common Stock purchased by the Company on the open
market or otherwise. During the term of this Plan, the Company will at all times reserve and keep available the number of shares of Common Stock that shall be sufficient to satisfy the requirements of this Plan. The maximum number of shares of
Common Stock that may be delivered pursuant to Awards under the Plan that are Incentive Stock Option grants is three million three hundred and thirty three thousand three hundred thirty three (3,333,333) shares. 
 5.2 Reuse of Shares. To the extent that any Award under this Plan shall be forfeited, shall expire or be canceled, in whole or in part, then the
number of shares of Common Stock covered by the Award or stock option so forfeited, expired or canceled may again be awarded pursuant to the provisions of this Plan. In the event that previously acquired shares of Common Stock are delivered to the
Company in full or partial payment of the exercise price for the exercise of a Stock Option granted under this Plan, the number of shares of Common Stock available for future Awards under this Plan shall be reduced only by the net number of shares
of Common Stock issued upon the exercise of the Stock Option. Awards that may be satisfied either by the issuance of shares of Common Stock or by cash or other consideration shall be counted against the maximum number of shares of Common Stock that
may be issued under this Plan only during the period that the Award 

  

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is outstanding or to the extent the Award is ultimately satisfied by the issuance of shares of Common Stock. Awards will not reduce the number of shares of
Common Stock that may be issued pursuant to this Plan if the settlement of the Award will not require the issuance of shares of Common Stock, as, for example, a SAR that can be satisfied only by the payment of cash. 
 ARTICLE 6 
 GRANT OF AWARDS

 6.1 In General. 
 (a) The grant of an Award shall be authorized by the Committee and shall be evidenced by an Award Agreement setting forth the Incentive or Incentives being granted, the total number of shares of Common Stock subject
to the Incentive(s), the Option Price (if applicable), the Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance objectives, as are approved by the Committee, but not inconsistent with the Plan. The Company
shall execute an Award Agreement with a Participant after the Committee approves the issuance of an Award. Any Award granted pursuant to this Plan must be granted within ten (10) years of the date of adoption of this Plan. The Plan shall be
submitted to the Company’s stockholders for approval; however, the Committee may grant Awards under the Plan prior to the time of stockholder approval. Any such Award granted prior to such stockholder approval shall be made subject to such
stockholder approval. The grant of an Award to a Participant shall not be deemed either to entitle the Participant to, or to disqualify the Participant from, receipt of any other Award under the Plan. 
 (b) If the Committee establishes a purchase price for an Award, the Participant must accept such Award within a period of thirty
(30) days (or such shorter period as the Committee may specify) after the Date of Grant by executing the applicable Award Agreement and paying such purchase price. 
 (c) Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified by the Award. If the Award does not specify inherent equivalents, then no interest equivalents
shall be credited. 
 6.2 Option Price. The Option Price for any share of Common Stock which may be purchased under a Nonqualified
Stock Option for any share of Common Stock may be equal to, or greater than the Fair Market Value of the share on the Date of Grant. The Option Price shall never be less than the Fair Market Value of the share of the Date of Grant. The Option Price
for any share of Common Stock which may be purchased under an Incentive Stock Option must be at least equal to the Fair Market Value of the share on the Date of Grant; if an Incentive Stock Option is granted to an Employee who owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company (or any parent or Subsidiary), the Option Price shall be at least 110%
of the Fair Market Value of the Common Stock on the Date of Grant. 
 6.3 Maximum ISO Grants. The Committee may not grant Incentive
Stock Options under the Plan to any Employee which would permit the aggregate Fair Market Value (determined on the Date of Grant) of the Common Stock with respect to which Incentive Stock Options (under this and any other plan of the Company and its
Subsidiaries) are exercisable for the first time by such Employee during any calendar year to exceed $100,000. To the extent any Stock Option granted under this Plan which is designated as an Incentive 

  

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Stock Option exceeds this limit or otherwise fails to qualify as an Incentive Stock Option, such Stock Option (or any such portion thereof) shall be a
Nonqualified Stock Option. In such case, the Committee shall designate which stock will be treated as Incentive Stock Option stock by causing the issuance of a separate stock certificate and identifying such stock as Incentive Stock Option stock on
the Company’s stock transfer records. 
 6.4 Restricted Stock. If Restricted Stock is granted to or received by a Participant
under an Award (including a Stock Option), the Committee shall set forth in the related Award Agreement: (i) the number of shares of Common Stock awarded, (ii) the price, if any, to be paid by the Participant for such Restricted Stock and
the method of payment of the price, (iii) the time or times within which such Award may be subject to forfeiture, in whole or in part, or the schedule which determines when the Participant earns a vested interest in the shares of Common Stock
(subject to the Restricted Stock Award), (iv) specified Performance Goals of the Company, a Subsidiary, any division thereof or any group of Employees of the Company, or other criteria, which the Committee determines must be met in order to
remove any restrictions (including vesting) on such Award, and (v) all other terms, limitations, restrictions, and conditions of the Restricted Stock, which shall be consistent with this Plan. The provisions of Restricted Stock need not be the
same with respect to each Participant. 
 (a) Legend on Shares. Each Participant who is awarded or receives Restricted
Stock shall be issued a stock certificate or certificates in respect of such shares of Common Stock which shall vest under the terms of the Award. Such certificate(s) shall be registered in the name of the Participant, and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, substantially as provided in Section 15.9 of the Plan. 
 (b) Restrictions and Conditions. Shares of Restricted Stock shall be subject to the following restrictions and conditions:

 (i) Subject to the other provisions of this Plan and the terms of the particular Award Agreements, during such period as
may be determined by the Committee commencing on the Date of Grant or the date of exercise of an Award (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock.
Except for these limitations, the Committee may in its sole discretion, remove any or all of the restrictions on such Restricted Stock whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising
after the date of the Award, such action is appropriate. 
 (ii) Except as provided in sub-paragraph (i) above or in the
applicable Award Agreement, the Participant shall have, with respect to his or her Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the right to receive any dividends thereon.
Certificates for shares of Common Stock free of restriction under this Plan shall be delivered to the Participant promptly after, and only after, the Restriction Period shall expire without forfeiture in respect of such shares of Common Stock or
after any other restrictions imposed in such shares of Common Stock by the applicable Award Agreement or other agreement have expired. Certificates for the shares of Common Stock forfeited under the provisions of the Plan and the applicable Award
Agreement shall be promptly returned to the Company by the forfeiting Participant. Each Award Agreement shall require that (x) each Participant, by his or her acceptance of Restricted Stock, shall irrevocably grant to the Company a power of
attorney to transfer any shares so forfeited to the Company and agrees to execute any documents requested by the Company in connection with such forfeiture and transfer, and (y) such provisions regarding returns and transfers of stock
certificates with respect to forfeited shares of Common Stock shall be specifically performable by the Company in a court of equity or law. 
  

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 (iii) The Restriction Period of Restricted Stock shall commence on the Date of Grant or
the date of exercise of an Award, as specified in the Award Agreement, and, subject to Article 12 of the Plan, unless otherwise established by the Committee in the Award Agreement setting forth the terms of the Restricted Stock, shall expire upon
satisfaction of the conditions set forth in the Award Agreement; such conditions may provide for vesting based on such Performance Goals, as may be determined by the Committee in its sole discretion. 
 (iv) Except as otherwise provided in the particular Award Agreement, upon Termination of Service for any reason during the Restriction
Period, the nonvested shares of Restricted Stock shall be forfeited by the Participant. In the event a Participant has paid any consideration to the Company for such forfeited Restricted Stock, the Committee shall specify in the Award Agreement that
either (i) the Company shall be obligated to, or (ii) the Company may, in its sole discretion, elect to, pay to the Participant, as soon as practicable after the event causing forfeiture, in cash, an amount equal to the lesser of the total
consideration paid by the Participant for such forfeited shares or the Fair Market Value of such forfeited shares as of the date of Termination of Service, as the Committee, in its sole discretion shall select. Upon any forfeiture, all rights of a
Participant with respect to the forfeited shares of the Restricted Stock shall cease and terminate, without any further obligation on the part of the Company. 
 6.5 SARs. The Committee may grant SARs to any Participant, either as a separate Award or in connection with a Stock Option. SARs shall be subject to such terms and conditions as the Committee shall impose. The
grant of the SAR may provide that the holder may be paid for the value of the SAR either in cash or in shares of Common Stock, or a combination thereof. In the event of the exercise of a SAR payable in shares of Common Stock, the holder of the SAR
shall receive that number of whole shares of Common Stock having an aggregate Fair Market Value on the date of exercise equal to the value obtained by multiplying (i) the difference between the Fair Market Value of a share of Common Stock on
the date of exercise over the SAR Price as set forth in such SAR (or other value specified in the agreement granting the SAR), by (ii) the number of shares of Common Stock as to which the SAR is exercised, with a cash settlement to be made for
any fractional shares of Common Stock. The Committee, in its sole discretion, may place a ceiling on the amount payable upon exercise of a SAR, but any such limitation shall be specified at the time that the SAR is granted. 
 Effective for any SAR granted on or after January 1, 2005, the exercise price of any SAR shall in no event be less than the Fair Market Value of the
Shares at the time of the grant. The Award of the SAR shall provide for a period during which the Participant may exercise the SAR which shall be prior to the specified payment date. The Award of the SAR shall provide the specified date on which
payment will be made. The payment amount shall be based upon the difference in the Fair Market Value of the shares at the exercise date and the SAR exercise price set in the Award multiplied by the number of shares exercised (the
“Spread”). The Award for the SAR may provide for crediting of interest equivalents from the date of exercise to the specified payment date at a rate specified in the Award provided the interest rate used is permissible under
Section 409A of the Code and the guidance issued thereunder. If the Award does not specify any interest equivalent, no interest equivalents shall be credited on the Spread from the date of exercise to the specified payment date. A SAR shall
only be issued following the date the Company’s Common Stock is offered in a transaction registered under the applicable federal and state securities laws, when its securities are publicly traded on an established market; however, if guidance
under Code Section 409A provides for different requirements in order for the SAR to be exempt from being treated as a non-qualified deferred compensation plan, the issuance of the SAR shall be permitted when such requirements are satisfied as
determined by the Committee in its sole discretion. 
  

 11 

 6.6 SAR Price. The SAR Price for any share of Common Stock subject to a SAR may be equal to or
greater than the Fair Market Value of the share on the Date of Grant. 
 6.7 Restricted Stock Units. Restricted Stock Units may be
awarded or sold to any Participant under such terms and conditions as shall be established by the Committee. Restricted Stock Units shall be subject to such restrictions as the Committee determines, including, without limitation, (a) a
prohibition against sale, assignment, transfer, pledge, hypothecation or other encumbrance for a specified period; or (b) a requirement that the holder forfeit (or in the case of shares of Common Stock or units sold to the Participant, resell
to the Company at cost) such shares or units in the event of Termination of Service during the period of restriction. 
 6.8 Performance
Awards. 
 (a) The Committee may grant Performance Awards to any Participant upon such terms and conditions as shall be
specified at the time of the grant and may include provisions establishing the performance period, the Performance Goals to be achieved during a performance period, and the maximum or minimum settlement values. Each Performance Award shall have its
own terms and conditions. If the Committee determines, in its sole discretion, that the established performance measures or objectives are no longer suitable because of a change in the Company’s business, operations, corporate structure, or for
other reasons that the Committee deemed satisfactory, the Committee may modify the performance measures or objectives and/or the performance period. However, the Committee may not, in any event, increase the number of shares of Common Stock earned
by any Executive Officer upon satisfaction of any Performance Goal. 
 (b) Performance Awards may be valued by reference to
the Fair Market Value of a share of Common Stock or according to any formula or method deemed appropriate by the Committee, in its sole discretion, including, but not limited to, achievement of Performance Goals or other specific financial,
production, sales or cost performance objectives that the Committee believes to be relevant to the Company’s business and/or remaining in the employ of the Company for a specified period of time. Performance Awards may be paid in cash, shares
of Common Stock, or other consideration, or any combination thereof. If payable in shares of Common Stock, the consideration for the issuance of such shares may be the achievement of the performance objective established at the time of the grant of
the Performance Award. Performance Awards may be payable in a single payment or in installments and may be payable at a specified date or dates or upon attaining the performance objective. The extent to which any applicable performance objective has
been achieved shall be conclusively determined by the Committee. 
 6.9 Dividend Equivalent Rights. For grants prior to
January 1, 2005, the Committee may grant a Dividend Equivalent Right to any Participant, either as a component of another Award or as a separate Award. The terms and conditions of the Dividend Equivalent Right shall be specified by the grant.
Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Common Stock (which may thereafter accrue additional dividend equivalents). Any such
reinvestment shall be at the Fair Market Value at the time thereof. Dividend Equivalent Rights may be settled in cash or shares of Common Stock, or a combination thereof, in a single payment or in installments. A Dividend Equivalent Right granted as
a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right granted as a component of
another Award may also contain terms and conditions different from such other Award. 
  

 12 

 Effective for grants on or after January 1, 2005, the Committee may grant a Dividend Equivalent
Right to any Participant, either as a component of another Award or as a separate Award. The terms and conditions of the Dividend Equivalent Right shall be specified by the grant and will comply with the requirements of Section 409A of the
Code, to the extent applicable. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Common Stock (which may thereafter accrue additional dividend
equivalents) and will be paid at a date specified in the Award. Any such reinvestment shall be at the Fair Market Value at the time thereof. Dividend Equivalent Rights may be settled in cash or shares of Common Stock, or a combination thereof, in a
single payment or in installments which payment date or dates shall be specified in the Award. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon a specified date
or a schedule of specified payment dates in the Award, and that such Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award. 
 6.10 Other Awards. The Committee may grant to any Participant other forms of Awards, based upon, payable in, or otherwise related to, in whole or
in part, shares of Common Stock, if the Committee determines that such other form of Award is consistent with the purpose and restrictions of this Plan. The terms and conditions of such other form of Award shall be specified by the grant. Such Other
Awards may be granted for no cash consideration, for such minimum consideration as may be required by applicable law, or for such other consideration as may be specified by the grant. 
 6.11 Performance Goals. Awards of Restricted Stock, Restricted Stock Units, Performance Award and Other Awards (whether relating to cash or shares
of Common Stock) under the Plan may be made subject to the attainment of Performance Goals relating to one or more business criteria within the meaning of Section 162(m) of the Code, including, but not limited to, cash flow; cost; ratio of debt
to debt plus equity; profit before tax; economic profit; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating earnings; economic value added; ratio of operating earnings to
capital spending; free cash flow; net profit; net sales; sales growth; price of the Company’s Common Stock; return on net assets, equity or stockholders’ equity; market share; or total return to stockholders (“Performance
Criteria”). Any Performance Criteria may be used to measure the performance of the Company as a whole or any business unit of the Company and may be measured relative to a peer group or index. Any Performance Criteria may include or exclude
(i) extraordinary, unusual and/or non-recurring items of gain or loss, (ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting regulations or laws, or (iv) the effect of a merger or acquisition,
as identified in the Company’s quarterly and annual earnings releases. In all other respects, Performance Criteria shall be calculated in accordance with the Company’s financial statements, under generally accepted accounting principles,
or under a methodology established by the Committee prior to the issuance of an Award which is consistently applied and identified in the audited financial statements, including footnotes, or the Management Discussion and Analysis section of the
Company’s annual report. However, the Committee may not in any event increase the amount of compensation payable to an individual upon the attainment of a Performance Goal. Any Performance Goal Award issued on or after January 1, 2005,
shall only be paid at a time specified or pursuant to a fixed schedule specified in the Award if such Performance Goal Award constitutes a non-qualified deferred compensation plan under Section 409A of the Code and the guidance issued
thereunder or related thereto. 
 6.12 Tandem Awards. The Committee may grant two or more Incentives in one Award in the form of a
“tandem Award,” so that the right of the Participant to exercise one Incentive shall be canceled if, and to the extent, the other Incentive is exercised. For example, if a Stock Option and a SAR are issued in a 

  

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tandem Award, and the Participant exercises the SAR with respect to 100 shares of Common Stock, the right of the Participant to exercise the related Stock
Option shall be canceled to the extent of 100 shares of Common Stock. 
 6.13 Maximum Individual Grants. No participant may receive
during any calendar year of the Company, Awards covering an aggregate of more than two million (2,000,000) shares of Company Stock. 
 6.14 Option Price. The Option Price for a Nonqualified Stock Option shall be such price as determined by the Committee; provided, however, such Option Price shall not be less than the Fair Market Value of the Common Stock on the date
of the Grant. The Option Price for an Incentive Stock Option shall be at least one hundred percent (100%) of the Fair Market Value of the share on the Date of Grant. If an Incentive Stock Option is granted to an Employee who owns or is deemed
to own (by reason of attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of the Company’s stock (or of any parent or Subsidiary), the Option Price shall be at least
one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the Date of Grant. 
 ARTICLE 7 
 AWARD PERIOD; VESTING; TERMINATION OF SERVICE 
 7.1 Award Period. Subject to the other provisions of this Plan, the Committee may, in its discretion, provide that an Incentive may not be exercised in whole or in part for any period or periods of time or beyond any date specified
in the Award Agreement. Except as provided in the Award Agreement, an Incentive may be exercised in whole or in part at any time during its term. The Award Period for an Incentive shall be reduced or terminated upon Termination of Service. No
Incentive granted under the Plan may be exercised at any time after the end of its Award Period. No portion of any Incentive may be exercised after the expiration of ten (10) years from its Date of Grant. However, if an Employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company (or any parent or Subsidiary) and an Incentive Stock Option is
granted to such Employee, the term of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no more than five (5) years from the Date of Grant. 
 7.2 Vesting. The Committee, in its sole discretion, may determine that an Incentive will be immediately vested in whole or in part, or that all or
any portion may not be vested until a date, or dates, subsequent to its Date of Grant, or until the occurrence of one or more specified events, subject in any case to the terms of the Plan. If the Committee imposes conditions upon vesting, then,
subsequent to the Date of Grant, the Committee may, in its sole discretion, accelerate the date on which all or any portion of the Incentive may be vested. 
 7.3 Termination of Service. In the event of Termination of Service of a Participant, an Incentive or Award may only be exercised as determined by the Committee and as provided in the Award Agreement.

 ARTICLE 8 
 EXERCISE
OF INCENTIVE 
 8.1 In General. A vested Incentive may be exercised during its Award Period, subject to limitations and
restrictions set forth in the Award Agreement and in Article 7. A vested Incentive may be exercised at such times and in such amounts as provided in this Plan and the applicable Award Agreement, subject to the terms, conditions and restrictions of
the Plan. 
  

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 8.2 Securities Law and Exchange Restrictions. In no event may an Incentive be exercised or shares
of Common Stock be issued pursuant to an Award if a necessary listing or quotation of the shares of Common Stock on a stock exchange or inter-dealer quotation system or any registration under state or federal securities laws required under the
circumstances has not been accomplished. 
 8.3 Exercise of Stock Option. 
 (a) In General. If a Stock Option is exercisable prior to the time it is vested, the Common Stock obtained on the exercise of the
Stock Option shall be Restricted Stock which is subject to the applicable provisions of the Plan and the Award Agreement. If the Committee imposes conditions upon exercise, then subsequent to the Date of Grant, the Committee may, in its sole
discretion, accelerate the date on which all or any portion of the Stock Option may be exercised. No Stock Option may be exercised for a fractional share of Common Stock. The granting of a Stock Option shall impose no obligation upon the Participant
to exercise that Stock Option. 
 (b) Notice and Payment. Subject to such administrative regulations as the Committee
may from time to time adopt, a Stock Option may be exercised by the delivery of written notice to the Company setting forth the number of shares of Common Stock with respect to which the Stock Option is to be exercised and the date of exercise
thereof (the “Exercise Date”) which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On the Exercise Date, the Participant shall deliver to the Company
consideration with a value equal to the total Option Price of the shares to be purchased, payable as provided in the Award Agreement, which may provide for payment in any one or more of the following ways: (a) cash or check, bank draft, or
money order payable to the order of the Company, (b) Common Stock (including Restricted Stock) owned by the Participant on the Exercise Date, valued at its Fair Market Value on the Exercise Date, and which the Participant has not acquired from
the Company within six (6) months prior to the Exercise Date, (c) by delivery (including by FAX) to the Company or its designated agent of an executed irrevocable option exercise form together with irrevocable instructions from the
Participant to a broker or dealer, reasonably acceptable to the Company, to sell certain of the shares of Common Stock purchased upon exercise of the Stock Option or to pledge such shares as collateral for a loan and promptly deliver to the Company
the amount of sale or loan proceeds necessary to pay such purchase price, and/or (d) in any other form of valid consideration that is acceptable to the Committee in its sole discretion. In the event that shares of Restricted Stock are tendered
as consideration for the exercise of a Stock Option, a number of shares of Common Stock issued upon the exercise of the Stock Option equal to the number of shares of Restricted Stock used as consideration therefor shall be subject to the same
restrictions and provisions as the Restricted Stock so tendered. 
 (c) Reload Stock Options. In the event that shares
of Common Stock are delivered by a Participant in payment of all or a portion of the exercise price of a Stock Option as set forth in Section 8.3(b) above and/or shares of Common Stock are delivered to or withheld by the Company in satisfaction
of the Company’s tax withholding obligations upon exercise in accordance with Section 15.6 hereof, then, subject to Article 10 hereof, the Committee may authorize the automatic grant to a Participant so exercising a Nonqualified Stock
Option, a replacement Nonqualified Stock Option, and to a Participant so exercising an Incentive Stock Option, a replacement Incentive Stock Option (in either case, a “Reload Stock Option”), to purchase that number of shares so delivered
to or withheld by the Company, as the case may be, at an option exercise price equal to the Fair Market Value per share of the Common Stock on the date of exercise of the original Stock Option (subject to the provisions of the Plan regarding
Incentive Stock Options and, in any event not less than the par value per share of the Common Stock). The option period for a Reload Stock Option will commence on its Date of Grant 

  

 15 

 
and expire on the expiration date of the original Stock Option it replaces (subject to the provisions of the Plan regarding Incentive Stock Options), after
which period the Reload Stock Option cannot be exercised. The Date of Grant of a Reload Stock Option shall be the date that the Stock Option it replaces is exercised. A Reload Stock Option shall automatically vest and be exercisable in full after
the expiration of six (6) months from its Date of Grant. It shall be a condition to the grant of a Reload Stock Option that promptly after its Date of Grant, a stock option agreement shall be delivered to the Participant and executed by the
Participant and the Company which sets forth the total number of shares subject to the Reload Stock Option, the option exercise price, the option period of the Reload Stock Option and such other terms and provisions as are consistent with the Plan.

 (d) Issuance of Certificate. Except as otherwise provided in Section 6.4 hereof (with respect to shares of
Restricted Stock) or in the applicable Award Agreement, upon payment of all amounts due from the Participant, the Company shall cause certificates for the Common Stock then being purchased to be delivered as directed by the Participant (or the
person exercising the Participant’s Stock Option in the event of his death) at its principal business office promptly after the Exercise Date; provided that if the Participant has exercised an Incentive Stock Option, the Company may at its
option retain physical possession of the certificate evidencing the shares acquired upon exercise until the expiration of the holding periods described in Section 422(a)(1) of the Code. The obligation of the Company to deliver shares of Common
Stock shall, however, be subject to the condition that, if at any time the Committee shall determine in its discretion that the listing, registration, or qualification of the Stock Option or the Common Stock upon any securities exchange or
inter-dealer quotation system or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with, the Stock Option or the issuance or purchase of shares of Common
Stock thereunder, the Stock Option may not be exercised in whole or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not reasonably acceptable to the
Committee. 
 (e) Failure to Pay. Except as may otherwise be provided in an Award Agreement, if the Participant fails
to pay for any of the Common Stock specified in such notice or fails to accept delivery thereof, that portion of the Participant’s Stock Option and right to purchase such Common Stock may be forfeited by the Participant, in the Company’s
sole discretion. 
 8.4 SARs. Subject to the conditions of this Section 8.4 and such administrative regulations as the Committee
may from time to time adopt, a SAR may be exercised by the delivery (including by FAX) of written notice to the Committee setting forth the number of shares of Common Stock with respect to which the SAR is to be exercised and the date of exercise
thereof (the “Exercise Date”) which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. Subject to the terms of the Award Agreement, on the Exercise Date, the
Participant shall be credited by the Company with cash in an amount equal to the excess (if any) of the Fair Market Value (as of the date of the exercise of the SAR) per share of Common Stock over the SAR Price per share specified in such SAR,
multiplied by the total number of shares of Common Stock of the SAR being surrendered, which shall be paid to the Participant at the date specified in the SAR. In the discretion of the Committee, and subject to the terms of the Award Agreement, the
Company may satisfy its obligation upon exercise of a SAR by distributing on the specified date for the Award, that number of shares of Common Stock having an aggregate Fair Market Value (as of the date of the exercise of the SAR) equal to the
amount of cash otherwise payable to the Participant, with a cash settlement to be made for any fractional share interests, or the Company may settle such obligation in part with shares of Common Stock and in part with cash. 
 8.5 Disqualifying Disposition of Incentive Stock Option. If shares of Common Stock acquired upon exercise of an Incentive Stock Option are
disposed of by a Participant prior to the expiration of either two 

  

 16 

 
(2) years from the Date of Grant of such Stock Option or one (1) year from the transfer of shares of Common Stock to the Participant pursuant to the
exercise of such Stock Option, or in any other disqualifying disposition within the meaning of Section 422 of the Code, such Participant shall notify the Company in writing of the date and terms of such disposition. A disqualifying disposition
by a Participant shall not affect the status of any other Stock Option granted under the Plan as an Incentive Stock Option within the meaning of Section 422 of the Code. 
 ARTICLE 9 
 AMENDMENT OR DISCONTINUANCE 
 Subject to the limitations set forth in this Article 9, the Board may at any time and from time to time, without the consent of the Participants, alter,
amend, revise, suspend, or discontinue the Plan in whole or in part; provided, however, that no amendment which requires stockholder approval in order for the Plan and Incentives awarded under the Plan to continue to comply with Sections 162(m),
421, and 422 of the Code, including any successors to such Sections, shall be effective unless such amendment shall be approved by the requisite vote of the stockholders of the Company entitled to vote thereon. Any such amendment shall, to the
extent deemed necessary or advisable by the Committee, be applicable to any outstanding Incentives theretofore granted under the Plan, notwithstanding any contrary provisions contained in any Award Agreement. In the event of any such amendment to
the Plan, the holder of any Incentive outstanding under the Plan shall, upon request of the Committee and as a condition to the exercisability thereof, execute a conforming amendment in the form prescribed by the Committee to any Award Agreement
relating thereto. Notwithstanding anything contained in this Plan to the contrary, unless required by law, no action contemplated or permitted by this Article 9 shall adversely affect any rights of Participants or obligations of the Company to
Participants with respect to any Incentive theretofore granted under the Plan without the consent of the affected Participant. 
 ARTICLE
10 
 TERM 
 The Plan
shall be effective from the date that this Plan is approved by the Board. Unless sooner terminated by action of the Board, the Plan will terminate on May 9, 2016, but Incentives granted before that date will continue to be effective in
accordance with their terms and conditions. 
 ARTICLE 11 
 CAPITAL ADJUSTMENTS 
 In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination,
subdivision, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event affects the
Common Stock such that an adjustment is determined by the Committee to be appropriate to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of the (i) the number of shares and type of 

  

 17 

 
Common Stock (or the securities or property) which thereafter may be made the subject of Awards, (ii) the number of shares and type of Common Stock (or
other securities or property) subject to outstanding Awards, (iii) the number of shares and type of Common Stock (or other securities or property) specified as the annual per-participant limitation, (iv) the Option Price of each
outstanding Award, (v) the amount, if any, the Company pays for forfeited shares of Common Stock in accordance with Section 6.4, and (vi) the number of or SAR Price of shares of Common Stock then subject to outstanding SARs previously
granted and unexercised under the Plan to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate SAR Price; provided
however, that the number of shares of Common Stock (or other securities or property) subject to any Award shall always be a whole number. In lieu of the foregoing, if deemed appropriate, the Committee may make provision for a cash payment to the
holder of an outstanding Award. Notwithstanding the foregoing, no such adjustment or cash payment shall be made or authorized to the extent that such adjustment or cash payment would cause the Plan or any Stock Option to violate Section 422 of
the Code. Such adjustments shall be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which the Company is subject. 
 Upon the occurrence of any such adjustment or cash payment, the Company shall provide notice to each affected Participant of its computation of such adjustment or cash payment which shall be conclusive and shall be
binding upon each such Participant. 
 ARTICLE 12 
 RECAPITALIZATION, MERGER AND CONSOLIDATION 
 12.1 No Effect on Company’s Authority. The
existence of this Plan and Incentives granted hereunder shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the
Company’s capital structure and its business, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the Common Stock or the rights thereof (or
any rights, options, or warrants to purchase same), or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or
otherwise. 
 12.2 Conversion of Incentives Where Company Survives. Subject to any required action by the stockholders, if the Company
shall be the surviving or resulting corporation in any merger, consolidation or share exchange, any Incentive granted hereunder shall pertain to and apply to the securities or rights (including cash, property, or assets) to which a holder of the
number of shares of Common Stock subject to the Incentive would have been entitled. 
 12.3 Exchange or Cancellation of Incentives Where
Company Does Not Survive. In the event of any merger, consolidation or share exchange pursuant to which the Company is not the surviving or resulting corporation or where stockholders of the Company prior to such transaction do not control a
majority of the voting shares of the surviving corporation, there shall be substituted for each share of Common Stock subject to the unexercised portions of outstanding Incentives, that number of shares of each class of stock or other securities or
that amount of cash, property, or assets of the surviving, resulting or consolidated company which were distributed or distributable to the stockholders of the Company in respect to each share of Common Stock held by them, such outstanding
Incentives to be thereafter exercisable for such stock, securities, cash, or property in accordance with their terms. 
 Notwithstanding the
foregoing, however, all such Incentives may be canceled by the Company, in its sole discretion, as of the effective date of any such reorganization, merger, consolidation, or share exchange, or of any proposed sale of all or substantially all of the
assets of the Company, or of any dissolution or liquidation of the Company, by either: 
  

 18 

 (a) giving notice to each holder thereof or his personal representative of its intention
to cancel those Incentives for which the issuance of shares of Common Stock involved payment by the Participant for such shares and, permitting the purchase during the thirty (30) day period next preceding such effective date of any or all of
the shares of Common Stock subject to such outstanding Incentives, including in the Board’s discretion some or all of the shares as to which such Incentives would not otherwise be vested and exercisable; or 
 (b) in the case of Incentives that are either (i) settled only in shares of Common Stock, or (ii) at the election of the
Participant, settled in shares of Common Stock, paying the holder thereof an amount equal to a reasonable estimate of the difference between the net amount per share payable in such transaction or as a result of such transaction, and the price per
share of such Incentive to be paid by the Participant (hereinafter the “Spread”), multiplied by the number of shares subject to the Incentive. In cases where the shares constitute, or would after exercise, constitute Restricted Stock, the
Company, in its discretion may include some or all of those shares in the calculation of the amount payable hereunder. In estimating the Spread, appropriate adjustments to give effect to the existence of the Incentives shall be made, such as deeming
the Incentives to have been exercised, with the Company receiving the exercise price payable thereunder, and treating the shares receivable upon exercise of the Incentives as being outstanding in determining the net amount per share. In cases where
the proposed transaction consists of the acquisition of assets of the Company, the net amount per share shall be calculated on the basis of the net amount receivable with respect to shares of Common Stock upon a distribution and liquidation by the
Company after giving effect to expenses and charges, including but not limited to taxes, payable by the Company before such liquidation could be completed. 
 (c) An Award that by its terms would be fully vested or exercisable upon a Change of Control will be considered vested or exercisable for purposes of Section 12.3(a) hereof. 
 ARTICLE 13 
 LIQUIDATION OR
DISSOLUTION 
 Subject to Section 12.3 hereof, in case the Company shall, at any time while any Incentive under this Plan shall be
in force and remain unexpired, (i) sell all or substantially all of its property, or (ii) dissolve, liquidate, or wind up its affairs, then each Participant shall be entitled to receive, in lieu of each share of Common Stock of the Company
which such Participant would have been entitled to receive under the Incentive, the same kind and amount of any securities or assets as may be issuable, distributable, or payable upon any such sale, dissolution, liquidation, or winding up with
respect to each share of Common Stock of the Company. If the Company shall, at any time prior to the expiration of any Incentive, make any partial distribution of its assets, in the nature of a partial liquidation, whether payable in cash or in kind
(but excluding the distribution of a cash dividend payable out of earned surplus and designated as such) and an adjustment is determined by the Committee to be appropriate to prevent the dilution of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it may deem equitable, make such adjustment in accordance with the provisions of Article 11 hereof. 
  

 19 

 ARTICLE 14 
 INCENTIVES IN SUBSTITUTION FOR 
 INCENTIVES GRANTED BY OTHER ENTITIES 
 Incentives may be granted under the Plan from time to time in substitution for similar instruments held by employees or directors of a corporation,
partnership, or limited liability company who become or are about to become Employees or Outside Directors of the Company or any Subsidiary as a result of a merger or consolidation of the employing corporation with the Company, the acquisition by
the Company of equity of the employing entity, or any other similar transaction pursuant to which the Company becomes the successor employer. The terms and conditions of the substitute Incentives so granted may vary from the terms and conditions set
forth in this Plan to such extent as the Committee at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the Incentives in substitution for which they are granted. 
 ARTICLE 15 
 MISCELLANEOUS PROVISIONS

 15.1 Investment Intent. The Company may require that there be presented to and filed with it by any Participant under the Plan,
such evidence as it may deem necessary to establish that the Incentives granted or the shares of Common Stock to be purchased or transferred are being acquired for investment and not with a view to their distribution. 
 15.2 No Right to Continued Employment. Neither the Plan nor any Incentive granted under the Plan shall confer upon any Participant any right with
respect to continuance of employment by the Company or any Subsidiary. 
 15.3 Indemnification of Board and Committee. No member of
the Board or the Committee, nor any officer or Employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan,
and all members of the Board and the Committee, each officer of the Company, and each Employee of the Company acting on behalf of the Board or the Committee shall, to the extent permitted by law, be fully indemnified and protected by the Company in
respect of any such action, determination, or interpretation. 
 15.4 Effect of the Plan. Neither the adoption of this Plan nor any
action of the Board or the Committee shall be deemed to give any person any right to be granted an Award or any other rights except as may be evidenced by an Award Agreement, or any amendment thereto, duly authorized by the Committee and executed on
behalf of the Company, and then only to the extent and upon the terms and conditions expressly set forth therein. 
 15.5 Compliance With
Other Laws and Regulations. Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell or issue shares of Common Stock under any Incentive if the issuance thereof would constitute a violation by the
Participant or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange or inter-dealer quotation system or other forum in which shares of Common Stock are quoted or traded (including
without limitation Section 16 of the 1934 Act in the event the Common Stock should ever be registered under the 1934 Act and Section 162(m) of the Code); and, as a condition of any sale or issuance of shares of Common Stock under an
Incentive, the Committee may require such agreements or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation. The Plan, the grant and exercise of Incentives hereunder, and the
obligation of the Company to sell and deliver shares of Common Stock, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. 
  

 20 

 15.6 Tax Requirements. The Company or, if applicable, any Subsidiary (for purposes of this
Section 15.6, the term “Company” shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts paid in cash or other form in connection with the Plan, any Federal, state, local,
or other taxes required by law to be withheld in connection with an Award granted under this Plan. The Company may, in its sole discretion, also require the Participant receiving shares of Common Stock issued under the Plan to pay the Company the
amount of any taxes that the Company is required to withhold in connection with the Participant’s income arising with respect to the Award. Such payments shall be required to be made when requested by Company and may be required to be made
prior to the delivery of any certificate representing shares of Common Stock. Such payment may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under
(iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery by the exercising Participant to the Company of shares of Common Stock that the
Participant has not acquired from the Company within six (6) months prior to the date of exercise, which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares under
(iii) below) the required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to be delivered upon the exercise of the Stock Option, which
shares so withheld have an aggregate fair market value that equals (but does not exceed) the required tax withholding payment; or (iv) any combination of (i), (ii), or (iii). The Company may, in its sole discretion, withhold any such taxes from
any other cash remuneration otherwise paid by the Company to the Participant. The Committee may in the Award Agreement impose any additional tax requirements or provisions that the Committee deems necessary or desirable. 
 15.7 Assignability. Incentive Stock Options may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than
by will or the laws of descent and distribution and may be exercised during the lifetime of the Participant only by the Participant or the Participant’s legally authorized representative, and each Award Agreement in respect of an Incentive
Stock Option shall so provide. The designation by a Participant of a beneficiary will not constitute a transfer of the Stock Option. The Committee may waive or modify any limitation contained in the preceding sentences of this Section 15.7 that
is not required for compliance with Section 422 of the Code. 
 Except as otherwise provided herein, Nonqualified Stock Options and SARs
may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than by will or the laws of descent and distribution. The Committee may, in its discretion, authorize all or a portion of a Nonqualified Stock Option
or SAR to be granted to a Participant on terms which permit transfer by such Participant to (i) the spouse (or former spouse), children or grandchildren of the Participant or a sister or brother of the Participant (“Immediate Family
Members”), (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, (iii) a partnership in which the only partners are (1) the Participant or such Immediate Family Members and/or (2) entities which
are controlled by the Participant or Immediate Family Members, (iv) an entity exempt from federal income tax pursuant to Section 501(c)(3) of the Code or any successor provision, or (v) a split interest trust or pooled income fund
described in Section 2522(c)(2) of the Code or any successor provision, provided that (x) there shall be no consideration for any such transfer, (y) the Award Agreement pursuant to which such Nonqualified Stock Option or SAR is
granted must be approved by the Committee and must expressly provide for transferability in a manner consistent with this Section, and (z) subsequent transfers of transferred Nonqualified Stock Options or SARs shall be prohibited except those
by will or the laws of descent and distribution. 
  

 21 

 Following any transfer, any such Nonqualified Stock Option and SAR shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer, provided that for purposes of Articles 8, 9, 11, 13 and 15 hereof the term “Participant” shall be deemed to include the transferee. The events of Termination
of Service shall continue to be applied with respect to the original Participant, following which the Nonqualified Stock Options and SARs shall be exercisable by the transferee only to the extent and for the periods specified in the Award Agreement.
The Committee and the Company shall have no obligation to inform any transferee of a Nonqualified Stock Option or SAR of any expiration, termination, lapse or acceleration of such Stock Option or SAR. The Company shall have no obligation to register
with any federal or state securities commission or agency any Common Stock issuable or issued under a Nonqualified Stock Option or SAR that has been transferred by a Participant under this Section 15.7. 
 15.8 Use of Proceeds. Proceeds from the sale of shares of Common Stock pursuant to Incentives granted under this Plan shall constitute general
funds of the Company. 
 15.9 Compliance With Other Agreements. Any shares of Common Stock issued upon exercise of an Incentive
awarded under this Plan prior to such date on which the Company’s Common Stock is offered in a transaction registered under the applicable state and federal securities laws, shall be subject to all of the terms and provisions of this Plan. Upon
the Award of any Incentive prior to the date on which the Company’s Common Stock were offered in a transaction registered under the applicable state and federal securities laws, the Participant shall enter into such joinder agreements or other
appropriate instruments binding them and any shares of Common Stock they may acquire under any Incentive to said agreements. 
 15.10
Legend. Each certificate representing shares of Restricted Stock issued to a Participant shall bear the following legend, or a similar legend deemed by the Company to constitute an appropriate notice of the provisions hereof (any such
certificate not having such legend shall be surrendered upon demand by the Company and so endorsed): 
 On the face of the certificate:

 “Transfer of this stock is restricted in accordance with conditions printed on the reverse of this certificate.” 
 On the reverse: 
 “The shares of stock
evidenced by this certificate are subject to and transferable only in accordance with that certain Panda Ethanol, Inc. 2006 Long-Term Incentive Plan, a copy of which is on file at the principal office of the Company in Dallas, Texas. No transfer or
pledge of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said Plan. By acceptance of this certificate, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said
Plan.” 
 The following legend shall be inserted on a certificate evidencing Common Stock issued under the Plan if the shares were not
issued in a transaction registered under the applicable federal and state securities laws: 
 “Shares of stock represented by this
certificate have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued pursuant to exemptions from the 

  

 22 

 
registration requirements of applicable state and federal securities laws, and may not be offered for sale, sold or transferred other than pursuant to
effective registration under such laws, or in transactions otherwise in compliance with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon an opinion of counsel satisfactory
to the Company.” 
 A copy of this Plan shall be kept on file in the office of the Company at 4100 Spring Valley Road, Suite 1001
Dallas, Texas 75244, United States, or any successor location of the Company’s principal executive offices. 
 15.11 Construction and
Interpretation. The terms of this Plan and any Award granted hereunder which may be exempt from the application of Section 409A of the Code shall be interpreted and construed in a manner consistent with maintaining such exempt status. The
terms of any Award hereunder which is not eligible to be exempt under Section 409A of the Code shall be construed and interpreted in a manner so that it complies with the requirements of Section 409A of the Code and the guidance issued
thereunder. 
 *************** 
  

 23 

 IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of June 7, 2006, by its
Chairman and President and Secretary pursuant to prior action taken by the Board. 
  

			
	PANDA ETHANOL, INC.
		
	By:	 	 /s/ MICHAEL TRENTEL

	Name:	 	 Michael Trentel

	Title:	 	 Chief Financial Officer

  

	
	 Attest:

	
	 /s/ R. RUSSELL PETTERSON

	 R. Russell Petterson

	 Assistant Secretary

  

 24Industry Track Agreement, dated as of June 6, 2006

 Exhibit 10.9 
 BNSF RAILWAY COMPANY 
 INDUSTRY TRACK AGREEMENT 
 THIS AGREEMENT (“Agreement”) made as of this 6th day of June, 2006, (“Effective Date”) by and between
BNSF RAILWAY COMPANY, a Delaware corporation (“Railroad”), and PANDA HEREFORD ETHANOL, L.P., a Delaware limited partnership (“Industry”). 
 WHEREAS, Industry desires that Railroad: (i) maintain and operate over certain rail, ties, ballast, and appurtenances thereto shown as heavy solid on Exhibit “A” attached hereto and incorporated
herein (“Railroad Track”); and (ii) operate over certain additional track shown as heavy hatched on Exhibit “A” (“Industry Track”), (Railroad Track and Industry Track collectively, together with all
appurtenances, called “Track”), located at Hereford, County of Deaf Smith, State of Texas, to serve a facility operated by Industry (“Plant”), and Railroad desires to provide such service, subject to the terms of
this Agreement. 
 NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows: 
 1. OWNERSHIP. Railroad shall own the Railroad Track and Industry shall own the Industry Track. 
 2. MAINTENANCE AND OPERATION. 
 (a) Industry
shall be responsible for obtaining, without expense to Railroad, all necessary real property rights and public authority and permission, including applicable permits, for the maintenance and operation of the Track. Industry shall strictly comply
with all laws, statutes, regulations, ordinances, orders, covenants, restrictions, or decisions of any court of competent jurisdiction, including, without limitation, those pertaining to environmental matters (collectively, “Legal
Requirements”) and other Railroad requirements relating to the use of the Track, Facilities or Equipment. Prior to entering Railroad’s property, Industry shall and shall cause its contractor(s) to comply with all Railroad’s
applicable safety rules and regulations. Prior to commencing any work on Railroad’s Property, Industry shall complete and shall require its contractor to complete the safety training program at the Railroad’s Internet Website
“http://contractororientation.com”. This training must be completed no more than one year in advance of Industry’s entry on Railroad’s property. 
 (b) Railroad shall, for the accommodation of and at the sole risk and expense of Industry, maintain the Railroad Track. Industry shall at all times, and at its sole risk and expense, maintain, or cause to be
maintained, the Industry Track and all Facilities and Equipment (defined below) (if any) in a safe and satisfactory condition and in compliance with all applicable Legal Requirements (defined below). Maintenance means, among other things, providing
proper drainage along the relevant portion of the Track, keeping the Track free and clear of snow, ice, vegetation, structures, and other obstacles, maintaining grade crossing warning devices, passive warning signs, gates, fences, barriers,
roadways, track drainage facilities, lighting and track and other signals. Without relieving Industry from any of its obligations under this Agreement, Railroad may refuse to operate over the Industry Track or use or enter the Facilities or contact
the Equipment whenever Railroad, in its sole discretion, determines that the same is unsatisfactory for Railroad’s operation, entry or contact, consistent with industry standards. If and when Industry has remedied such condition to
Railroad’s sole satisfaction, Railroad shall resume operation over the Industry Track or use of or entry into the Facilities or contact with the Equipment. Railroad’s operation over the Track or use of or entry into any Facility or contact
with any Equipment with knowledge of an unsatisfactory condition is not a waiver of Industry’s obligations contained herein or of Railroad’s right to recover for or be indemnified and defended against such damages to property or injury to
or death of persons that may result therefrom. 
 (c) Industry shall, at its sole expense, pay all costs for changes, repairs or alterations
to the Industry Track that may be necessary to conform to any changes of grade or relocation of the Railroad Track at the point of connection with the Industry Track, if such change of grade or relocation is required to comply with any Legal
Requirement or is made for any other reason beyond Railroad’s reasonable control. 
 (d) If Industry installs any gates or fencing
across the Track, or a track scale, unloading pit, loading or unloading device, adjustable loading dock, warehouse door, or any other structure (collectively, “Facilities”) affecting the Track, Industry shall be solely responsible
for assuring the safe and satisfactory condition of the same and shall not allow any Facilities to be a source of danger to the safe operation of the Track. Industry shall also be solely responsible for assuring the safe and satisfactory condition
of all of Industry’s equipment touching, used in conjunction with or affecting the Track (“Equipment”) and shall not allow any Equipment to be source of danger to the safe operation of the Track. Before utilizing or unloading
any equipment spotted onto the Track, Industry shall inspect the same and all other Equipment and Facilities for the safety of persons working on or about these items to assure compliance with the foregoing. Industry shall utilize all Facilities,
Equipment and spotted equipment so as not to affect negatively safe and efficient operation over the Track. Industry shall, among other things: keep any gates across the Track open whenever necessary, in Railroad’s sole judgment, to enable
Railroad to safely and efficiently operate over the Track; keep unloading pits securely covered when not in actual use and at all times when the Track is being switched by Railroad; keep all doors firmly secured; and keep adjustable loading docks at
warehouses securely fastened in an upright position when not in actual use and at all times when the Track is being switched by Railroad. 

 (e) Railroad may require for safety purposes that Industry, at its sole cost and expense, provide
flagmen, lights, traffic control devices, automatic warning devices, or any such safety measure that Railroad deems appropriate in connection with the Industry’s use of the Track, including but not limited to the furnishing of Railroad’s
Flagman and any vehicle rental costs incurred. The cost of flagger services provided by the Railroad, when deemed necessary by the Railroad’s representative, will be borne by the Industry. The estimated cost for one (1) flagger is $600.00
for an eight (8) hour basic day with time and one-half or double time for overtime, rest days and holidays. The estimated cost for each flagger includes vacation allowance, paid holidays, railway and unemployment insurance, public liability and
property damage insurance, health and welfare benefits, transportation, meals, lodging and supervision. Negotiations for Railroad labor or collective bargaining agreements and rate changes authorized by appropriate Federal authorities may increase
actual or estimated flagging rates. The flagging rate in effect at the time of performance by the Industry hereunder will be used to calculate the actual costs of flagging pursuant to this paragraph. 
 (f) In the event a public authority having jurisdiction thereover orders the separation of the grade of the Track and any street, road, highway, other
rail line or the like, Industry hereby consents to the removal and/or relocation of the Track and shall reimburse Railroad all expenses in connection with the removal and/or relocation of the Track. 
 (g) Industry shall not place, permit to be placed, or allow to remain, any permanent or temporary material, structure, pole, container, storage vessel,
above-ground or underground tank, or other obstruction within 8 1/2 feet laterally from the center (nine and
one-half (9- 1/2) feet on either side of the centerline of curved Track) or within 23 feet vertically from the
top of the rail of said Track (“Minimal Clearances”), provided that if any Legal Requirement requires greater clearances than those provided for in this Section 2(g), then Industry shall strictly comply with such Legal
Requirement. Industry shall not place or allow to be placed any freight car within 250 feet of either side of any at-grade crossings on the Track. Railroad’s operation over the Track with knowledge of an unauthorized reduced clearance will not
be a waiver of the covenants of Industry contained in this Section 2(g) or of Railroad’s right to recover and be indemnified and defended against such damages to property, or injury to or death of persons, that may result therefrom.

 3. TERM. Unless earlier terminated as provided herein, this Agreement will be in force for the term of Twenty Years
(20) from its date and will continue thereafter until terminated by either party giving to the other thirty (30) days written notice. 
 4.
INDEMNITY. 
 (a) For purposes of this Agreement: (i) “Indemnitees” means Railroad and Railroad’s affiliated
companies, partners, successors, assigns, legal representatives, officers, directors, shareholders, employees and agents; (ii) “Liabilities” means all claims, liabilities, fines, penalties, costs, damages, losses, liens, causes of
action, suits, demands, judgments and expenses (including, without limitation, court costs, reasonable attorneys’ fees and costs of investigation, removal and remediation and governmental oversight costs) environmental or otherwise; and
(iii) “Industry Parties” means Industry or Industry’s officers, agents, invitees, licensees, employees, or contractors, or any party directly or indirectly employed by any of them, or any party they control or exercise control
over. 
 (b) INDUSTRY SHALL RELEASE, INDEMNIFY, DEFEND, AND HOLD THE INDEMNITEES HARMLESS FROM AND AGAINST ANY LIABILITIES ARISING
OUT OF OR RELATED TO (IN WHOLE OR IN PART) ANY CLAIM THAT BY VIRTUE OF THE USE OF THE TRACK CONTEMPLATED IN THIS AGREEMENT, UNDER CERCLA OR OTHER ENVIRONMENTAL LAWS RAILROAD IS (I) AN “OWNER”, “OPERATOR”,
“ARRANGER” OR “TRANSPORTER” OF THE INDUSTRY TRACK OR THE PLANT, OR (II) OTHER THAN A COMMON CARRIER WITH RESPECT TO THE TRACK REGARDLESS OF ANY NEGLIGENCE OR STRICT LIABILITY OF ANY INDEMNITEE. 
 (c) IF ANY EMPLOYEE OF ANY INDUSTRY PARTY CLAIMS HE OR SHE IS AN EMPLOYEE OF ANY INDEMNITEE, INDUSTRY SHALL INDEMNIFY AND HOLD THE INDEMNITEES
HARMLESS FROM AND AGAINST ANY LIABILITIES ARISING OUT OF OR RELATED TO (IN WHOLE OR IN PART) ANY SUCH CLAIM INCLUDING, BUT NOT LIMITED TO, CLAIMS RELATED TO PROCEEDINGS UNDER OR RELATED TO THE FEDERAL EMPLOYERS’ LIABILITY ACT,THE SAFETY
APPLIANCE ACT, THE BOILER INSPECTION ACT, THE OCCUPATIONAL HEALTH AND SAFETY ACT, THE RESOURCE CONSERVATION AND RECOVERY ACT, AND ANY SIMILAR STATE OR FEDERAL STATUTE AND REGARDLESS OF ANY NEGLIGENCE OR STRICT LIABILITY OF ANY INDEMNITEE RELATED TO
SUCH CAUSES OF ACTION. 
 (d) Upon written notice from Railroad, Industry agrees to assume the defense of any lawsuit or other proceeding
brought against any Indemnitee by any entity, relating to any matter covered by this Agreement for which Industry has an obligation to assume liability for and/or save and hold harmless any Indemnitee. Industry shall pay all costs incident to such
defense, including, but not limited to, attorneys’ fees, investigators’ fees, litigation and appeal expenses, settlement payments, and amounts paid in satisfaction of judgments. 

 5. INSURANCE. Industry shall, at its sole cast and expense, procure and maintain during the life of this
Agreement the following insurance coverage: 
  

	 	A.	Commercial General Liability insurance that contains broad form contractual liability with a combined single limit of a minimum of $1,000,000 each occurrence and an aggregate limit
of at least $2,000,000. Coverage must be purchased on a post 1998 ISO occurrence or equivalent and include coverage for, but not limited to, Bodily Injury and Property Damage, Products and completed operations. The definition of insured contract
shall be amended to remove any exclusion or other limitation for any work being done within 50 feet of railroad property. 

  

	 	B.	Workers Compensation and Employers Liability insurance including coverage for, but not limited to: 

  

	 	•	 	Industry’s statutory liability under the worker’s compensation laws of the state(s) in which the work is to be performed. If optional under State law, the insurance must
cover all employees anyway. 

  

	 	•	 	Employers’ Liability (Part B) with limits of at least $500,000 each accident, $500,000 by disease policy limit, $500,000 by disease each employee. 

 In addition, Industry shall comply with the following additional requirements with respect to such insurance: 
 Any insurance policy shall be written by a reputable insurance company with a current Best’s Guide Rating of A- and Class VII or better, and
authorized to do business in the state(s) in which the service is to be provide. If any portion of the operation is to be subcontracted by Industry, Industry shall require that the subcontractor provide and maintain insurance coverage as set forth
herein. 
 Prior to commencing operations governed by this Agreement, Industry shall furnish to Railroad an acceptable certificate(s) of
insurance including an original signature of the authorized representative evidencing the required coverage, endorsements, and amendments and referencing the contract audit/folder number if available. The policy(ies) shall contain a provision that
obligates the insurance company(ies) issuing such policy(ies) to notify Railroad in writing at least 30 days prior to any cancellation or non-renewal with such provision indicated on the certificate of insurance. In the event of a claim or lawsuit
involving Railroad arising out of this agreement, Industry will make available any required policy covering such claim or lawsuit. 
 Failure
to provide evidence as required by this section within thirty (30) days after Railroad delivers written notice to Industry of such failure to provide evidence shall entitle, but not require, Railroad to terminate this Agreement immediately.
Acceptance of a certificate that does not comply with this section shall not operate as a waiver of Industry’s obligations hereunder. The fact that insurance (including, without limitation, self-insurance) is obtained by Industry shall not be
deemed to release or diminish the liability of Industry including, without limitation, liability under the indemnity provisions of this Agreement. Damages recoverable by Railroad shall not be limited by the amount of the required insurance coverage.

 6. DEFINITION OF COST AND EXPENSE. For the purpose of this Agreement, “cost’ or “costs” “expense” or
“expenses” includes, but is not limited to, actual labor and material costs including all assignable additives, and material and supply costs at current value where used. In the event that Industry shall fail to pay any monies due to
Railroad within thirty (30) days after the invoice date, then Industry shall pay interest on such unpaid sum from such due date until paid at an annual rate equal to the lesser of (i) the prime rate last published in The Wall Street
Journal in the preceding December plus two and one-half percent (2 1/2%), or (ii) the maximum rate
permitted by law. 
 7. RIGHT OF RAILROAD TO CONSTRUCT FUTURE FACILITIES. Railroad retains the right, without liability to the Industry
or any other party, to construct or allow to be constructed upon its property other facilities, and to use its property in any manner, provided Railroad uses all commercially reasonable efforts to avoid material interference with the use of the
Track as described herein. 
 8. PUBLIC ASSESSMENTS. Industry shall timely pay all compensation, assessments and levies required at any time by
any public authority, entity, or person for the privilege of maintaining and operating the Track, and shall not cause or permit any liens to be filed against the Railroad Track or any Railroad property. In the event any such liens are filed,
Industry shall cause such liens to be released within fifteen (15) days or be diligently working towards a resolution with respect to the release of any such lien, which release must be obtained within thirty (30) days of such lien being
filed. 
 9. NOTIFICATION REQUIREMENTS 
 (a) Industry shall give immediate notice to Railroad’s Resource Operations Center at (800) 832-5452 of any known release of hazardous substances on or from the Track, violation of environmental Legal Requirements, or inspection or
inquiry by governmental authorities charged with enforcing environmental Legal Requirements with respect to Industry’s use of the Track. Industry shall use 

 
the commercially reasonable efforts to promptly respond to any such release on or from the Track. Industry also shall give Railroad immediate notice of all
measures undertaken on behalf of Industry to investigate, remediate, respond to or otherwise cure such release or violation. 
 (b) In the
event that Railroad has notice from Industry or otherwise of a release or violation of Environmental Laws on the Track which occurred or may occur during the term of this Agreement, Railroad may require Industry, at Industry’s sole risk and
expense, to take timely measures to investigate, remediate, respond to or otherwise cure such release or violation affecting the Track or Railroad’s property. 
 (c) Industry shall promptly report to Railroad in writing any conditions or activities upon the Plant or Track which create a risk of harm to persons, property or the environment and shall take whatever action is
necessary to prevent injury to persons or property arising out of such conditions or activities; provided, however, that Industry’s reporting to Railroad shall not relieve Industry of any obligation whatsoever imposed on it by this Agreement.
Industry shall promptly respond to Railroad’s request for information regarding said conditions or activities. 
 10. DEFAULT. The
following events shall constitute defaults hereunder: (a) creating or allowing to remain any condition, including without limitation, any environmental condition, on or about the Track, which in Railroad’s sole judgment interferes with or
endangers the operations of Railroad; (b) assignment or transfer by operation of law of Industry’s rights or obligations under this Agreement, other than an assignment made in accordance with this Agreement; (c) defaults on any of the
covenants or agreements of Industry contained in this document. 
 11. TERMINATION. 
 (a) In addition to all other remedies available at law or in equity, Railroad may, without incurring any liability to Industry, terminate this Agreement
and discontinue the maintenance and operation of the Track and remove the Railroad Track, in the event of any of the following events: 
  

	 	(i)	any default as described in Sections 10(a) or (b) occurs; 

  

	 	(ii)	any default as described in Section 10(c) occurs and persists for 30 days following written notice from Railroad; 

  

	 	(iii)	Industry fails to utilize rail service from Railroad to or from the Plant for a period of eight (8) months in any period of twelve (12) months; 

 

	 	(iv)	Railroad is authorized by competent public authority to abandon its line to which said Track is connected; or 

  

	 	(v)	Railroad is dispossessed of the right to operate over the Track or its connecting track or any part thereof, Railroad may terminate this Agreement effective immediately by written
notice to Industry. 

 (b) Upon the expiration or earlier termination of this Agreement as provided herein, Railroad at its
sole discretion shall have the right to: (i) require Industry to transfer title to that portion of the Industry Track located upon Railroad’s property, and any Facilities or improvements located upon, over, or under Railroad’s
property to Railroad. Upon such transfer, Railroad shall pay Industry the salvage value of the same; or (ii) require Industry to remove, at its sole cost and expense, that portion of the Industry Track located upon Railroad’s property and
any Facilities, Equipment or improvements upon, over, or under such property and restore the Railroad’s property to substantially the state in which it was on the Effective Date of this Agreement. In the event Railroad elects option
(ii) and Industry fails within thirty (30) days after the date of such termination, or such additional time as is reasonably necessary to remove any Facilities, Equipment or improvements and complete restoration of the Railroad’s
property so long as Industry commences such removal and restoration within the thirty day period and diligently pursues such removal and restoration to completion, to make the removal and restoration, then Railroad may do so itself and in such event
Industry shall, within thirty (30) days after receipt of a bill therefor, reimburse Railroad for any costs incurred. 
 (c) Industry
hereby agrees to waive and release all claims, rights, and causes of action that Industry has or may have against Railroad because of the discontinuance of operation and removal of the Railroad Track as provided in this Section 11. 

12. ASSIGNMENT. This Agreement will inure to the benefit of and be binding upon the successors and assigns of the parties hereto; provided, however,
that Industry may not assign this Agreement without the prior written consent of Railroad, which may be withheld in Railroad’s sole discretion. Either party hereto may assign any receivables due them under this Agreement; provided, however,
that such assignments will not relieve the assignor of any of its rights or obligations under this Agreement. Notwithstanding the foregoing, Railroad hereby consents to the granting of a security interest in and an assignment by Industry of this
Agreement and its rights herein to a lender, security holder, investor, equity provider to Industry and/or others providing financing or refinancing to or on behalf of Industry (together the “Financing Parties”) or any trustee or agent
acting on behalf of a Financing Party provided that each such Financing Party enters into Railroad’s then-current standard form of Collateral Security Agreement. 
 13. NOTICES. Any notice required or permitted to be given hereunder must be in writing and the same shall be given and will be 

 
deemed to have been given if (i) placed in the United States mail, certified, return receipt requested, or (ii) deposited into the custody of a
nationally recognized overnight delivery service, addressed to the party to be notified at the address specified below, or to such other address as the party to be notified may designate by giving the other party no less than thirty
(30) days’ advance written notice. The address for such notice shall be the address set forth below each party’s signature, which may be changed by written notice to the other party. 
 14. SURVIVAL. Neither termination nor expiration will release either party from any liability or obligation under this Agreement, whether of indemnity or
otherwise, resulting from any acts, omissions or events happening prior to the date of termination or expiration, or, provided Railroad does not elect option 11(b)(i), the date when the Track, Facilities, Equipment and improvements are removed and
the right-of-way is restored to its condition as of the Effective Date. 
 15. MISCELLANEOUS. 
 (a) Except to the extent required by applicable law, this Agreement must not be placed of public record. 
 (b) To the maximum extent possible, each provision of this Agreement must be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is prohibited by, or held to be invalid under, applicable law, such provision will be ineffective solely to the extent of such prohibition or invalidity, and this will not invalidate the remainder of such
provision or any other provision of this Agreement. All questions concerning the interpretation or application of provisions of this Agreement must be decided according to the laws of the State of Texas. 
 (c) This Agreement is the full and complete agreement between Railroad and Industry with respect to all matters relating to the maintenance and operation
of the Track and supersedes all other agreements between the parties hereto relating to the maintenance and operation of the Track. However, nothing herein is intended to terminate any surviving obligation of Industry or Industry’s obligation
to defend and hold Railroad harmless in any prior written agreement between the parties. 
 (d) In the event that the Industry consists of
two of more parties, all covenants and agreements of Industry herein contained shall be the joint and several covenants and agreements of such parties. Notwithstanding the foregoing, however, a Financing Party that has executed Railroad’s
standard form of Collateral Security Agreement shall not be jointly and severally liable for the covenants and agreements of Industry except as described under such Collateral Security Agreement. 
 (e) The waiver by Railroad of the breach of any provision herein by Industry shall in no way impair the right of Railroad to enforce that provision for
any subsequent breach thereof. All remedies provided hereunder are cumulative and are in addition to all other remedies available at law or in equity. 
 (f) This Agreement is also made for the benefit of such other railroads that, either by agreement with Railroad or order of competent public authority, have the right to use the Track, all of which railroads shall be
deemed “Railroad” under this Agreement. 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate the day and year
first herein above written. 
  

			
	RAILROAD:
	
	BNSF RAILWAY COMPANY
		
	By:	 	 /s/ KEVIN KAUFMAN

	Name:	 	Kevin Kaufman
	Title:	 	Group Vice President
	
	Address for notices:
	
	Staubach Global Services
	3017 Lou Menk Dr., Suite 100
	Fort Worth, TX 76131-2800
	Attn: Track Agreements
	
	INDUSTRY:
	
	PANDA HEREFORD ETHANOL, L.P.
		
	By:	 	 /s/ DAROL LINDLOFF

	Name:	 	Darol Lindloff
	Title:	 	Chief Operating Officer
	
	Address for notices:
	
	4100 Spring Valley Road, Suite 1001
	Dallas, Texas 75244
	Attention: General Counsel

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