Document:

exv10w1

 

Exhibit 10.1

Monarch Pointe Fund, Ltd.

Mercator Momentum Fund, LP

Mercator Momentum Fund III, LP

c/o M.A.G. Capital, LLC

555 South Flower Street, Suite 4200

Los Angeles, California 90071

Camden International

Longview Fund

Longview Equity Fund

Longview International Equity Fund

c/o 600 Montgomery Street, 44th Floor

San Francisco, CA 94111

Asset Managers International Limited

c/o Pentagon Capital Management, Plc

88 Baker Street

London W1U 6TQ

Ocean Park Advisors, LLC

5710 Crescent Park East, Suite 334

Playa Vista, CA 90094

March 20, 2006

Ladies and Gentlemen:

     Reference is hereby made to (i) the Subscription Agreement dated December 6, 2005, by and
among Diametrics Medical, Inc., a Minnesota corporation (the “Company”) and the Purchasers named
therein (the “Subscription Agreement”), (ii) the Convertible Secured Promissory Note of the Company
dated December 6, 2005 (the “Monarch Note”), in the principal amount of $375,000, issued to Monarch
Pointe Fund, Ltd. (“Monarch”), and (iii) the Convertible Secured Promissory Note of the Company
dated December 6, 2005 (the “AMIL Note” and, together with the Monarch Note, the “Notes”), in the
principal amount of $375,000, issued to Asset Managers International Limited (“AMIL”). Capitalized
terms used but not otherwise defined herein shall have the respective meanings assigned to such
terms in the Subscription Agreement or the Notes, as applicable.

     Section 9(a) of the Subscription Agreement provides, among other things, that the Company
shall prepare and file a registration statement with the SEC within 120 days from the Closing Date,
covering the shares of Company Common Stock issuable thereunder. Section 10 of the Subscription
Agreement provides that, if the Company fails to file a registration statement within the specified
time period, the Company shall pay certain of the Purchasers, collectively, $200 per day that such
filing is late. The parties recognize that, notwithstanding the Company’s commercially reasonable
efforts, a registration statement will not be filed with the SEC within the specified time period.

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Upon the agreement of each Purchaser, Section 9(a) of the Subscription Agreement shall hereby be
amended such that the deadline for filing a registration statement shall be September 6,
2006. Furthermore, the Purchasers, and each of them, hereby waive any payments that would
otherwise be due under Section 10 of the Agreement. Other than as expressly set forth herein, the
Notes shall remain in full force and effect in accordance with their terms.

     Section 8.1 of the Notes provides, among other things, that the Company shall use commercially
reasonable efforts to prepare and file a registration statement with the SEC within 120 days of the
date of the Notes, covering the shares of Company Common Stock issuable under the Notes, and
further that the Company will use commercially reasonable efforts to cause such registration
statement to be declared effective within 210 days of the date of the Notes. The parties recognize
that, notwithstanding the Company’s commercially reasonable efforts, a registration statement will
not be filed with the SEC or declared effective within the specified time periods. Upon the
agreement of each of Monarch and AMIL, Section 8.1 of each of the Notes shall hereby be amended
such that the deadline for filing a registration statement shall be September 6, 2006 and
the deadline for such registration to be declared effective shall be December 6, 2006.
Other than as expressly set forth herein, the Notes shall remain in full force and effect in
accordance with their terms.

     Please indicate your agreement with the foregoing by signing a copy of this letter and
returning by facsimile to the Company at (310) 745-0855, attention: Heng Chuk, Chief Financial
Officer.

	 	 	 	 	 
	 

	 	Diametrics Medical, Inc.	 	 
	 
	 	 	 	 
	 

	 	/s/	 	 
	 

	 	 

Heng Chuk
	 	 
	 

	 	Chief Financial Officer & Secretary	 	 

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AGREED AND ACCEPTED AS OF

THE DATE INDICATED ABOVE:

	 	 	 	 	 	 	 	 	 
	Monarch Pointe Fund, Ltd.	 	 	 	Mercator Momentum Fund, LP
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/
	 	 	 	By:
	 	/s/
	Name:

	 	 

H. Harry Aharonian
	 	 
	 	Name:
	 	 
 H.
Harry Aharonian
	Its:

	 	Portfolio Manager
	 	 	 	Its:
	 	Portfolio Manager
	 
	 	 	 	 	 	 	 	 
	Mercator Momentum Fund III, LP	 	 	 	M.A.G. Capital, LLC
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/
	 	 	 	By:
	 	/s/
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	H. Harry Aharonian
	 	 	 	Name:
	 	H. Harry Aharonian
	Its:

	 	Portfolio Manager
	 	 	 	Its:
	 	Portfolio Manager
	 
	 	 	 	 	 	 	 	 
	Ocean Park Advisors, LLC	 	 	 	Camden International
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/
	 	 	 	By:
	 	/s/
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	W. Bruce Comer, III
	 	 	 	Name:
	 	Deirdre M. McCoy
	Its:

	 	CEO
	 	 	 	Its:
	 	Director
	 
	 	 	 	 	 	 	 	 
	Longview Fund	 	 	 	Longview Equity Fund
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/
	 	 	 	By:
	 	/s/
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	S. Michael Rudolph
	 	 	 	Name:
	 	Wayne H. Coleson
	Its:

	 	CFO – Investment Advisor
	 	 	 	Its:
	 	CEO, Investment Advisor
	 
	 	 	 	 	 	 	 	 
	Longview International Equity Fund	 	 	 	Asset Managers International Limited
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/
	 	 	 	By:
	 	/s/
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Wayne H. Coleson
	 	 	 	Name:
	 	Carolynn D. Hiron
	Its:

	 	CEO – Investment Advisor
	 	 	 	Its:
	 	Director

3exv10w17

 

EXHIBIT 10.17

WESTERN REFINING

LONG-TERM INCENTIVE PLAN

 

 

WESTERN REFINING

LONG-TERM INCENTIVE PLAN

Table of Contents

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

 i

 

 

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

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

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WESTERN REFINING

LONG-TERM INCENTIVE PLAN

ARTICLE I.

INTRODUCTION

Section 1.01 Purpose. This Western Refining Long-Term Incentive Plan (as the same may be amended
from time to time, this “Plan”) is intended to promote the interests of Western Refining,
Inc., a Delaware corporation (the “Company”), and its stockholders by encouraging
Employees, Consultants and Non-Employee Directors of the Company or its Affiliates (as defined
below) to acquire or increase their equity interests in the Company, thereby giving them an added
incentive to work toward the continued growth and success of the Company. The Board of Directors
of the Company (the “Board”) also contemplates that through this Plan, the Company and its
Affiliates will be better able to compete for the services of the individuals needed for the
continued growth and success of the Company. The Plan provides for payment of various forms of
incentive compensation, and accordingly, is not intended to be a plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, and shall be administered accordingly.

Section 1.02 Definitions. As used in this Plan, the following terms shall have the meanings set
forth below:

     “Affiliate” means (i) any entity in which the Company, directly or indirectly, owns 50% or
more of the combined voting power, as determined by the Committee, (ii) any “parent corporation” of
the Company (as defined in section 424(e) of the Code), (iii) any “subsidiary corporation” of any
such parent corporation (as defined in section 424(f) of the Code) of the Company and (iv) any
trades or businesses, whether or not incorporated which are members of a controlled group or are
under common control (as defined in Sections 414(b) or (c) of the Code) with the Company.

     “Awards” means, collectively, Options, Purchased Stock, Bonus Stock, Stock Appreciation
Rights, Restricted Stock Unit, Restricted Stock, Performance Awards, or Other Stock or
Performance-Based Awards.

     “Board” has the meaning set forth in Section 1.01 of this Plan.

     “Bonus Stock” means Common Stock described in Article V of this Plan.

     “Change of Control” shall be deemed to have occurred upon any of the following events:

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

1

 

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

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     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules
and regulations thereunder.

     “Committee” means a committee appointed by the Board, which shall consist of not less than two
(2) independent members of the Board, each of whom shall qualify as a “non-employee director” (as
that term is defined in Rule 16b-3 of the General Rules and Regulations under the Exchange Act)
appointed by and serving at the pleasure of the Board to administer this Plan or, if none, the
independent members of the Board; provided, however, that with respect to any Award
granted to a Covered Employee which is intended to be “performance-based compensation” as described
in Section 162(m)(4)(C) of the Code, the Committee shall consist solely of two (2) or more “outside
directors” as described in Section 162(m)(4)(C)(i) of the Code.

     “Common Stock” means the common stock, $0.01 par value per share, of the Company.

     “Company” has the meaning set forth in Section 1.01 of this Plan.

     “Consultant” means any individual, other than a Director or an Employee, who renders
consulting or advisory services to the Company or an Affiliate, provided that such services are not
in connection with the offer or sale of securities in a capital-raising transaction.

     “Covered Employee” shall mean any of the Chief Executive Officer of the Company and the four
highest paid officers of the Company other than the Chief Executive Officer, as described in
Section 162(m)(3) of the Code.

     “Director” means an individual who is a member of the Board.

     “Disability” means the Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expect to result in
death or can be expected to last for a continuous period of not less than 12 months or is, by
reason of a medically determinable physical or mental impairment which can be expected to result in
death or can be expected to last of continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident health plan covering
employees of the Company.

     “Effective Date” means, with respect to this Plan, the date that this Plan is (a) adopted by
the Board and (b) approved by stockholders of the Company, provided that such stockholder approval
occurs not more than one (1) year prior to or after the date of such adoption by the Board.

     “Employee” means any employee of the Company or an Affiliate.

     “Employment” includes any period in which a Participant is an Employee.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” or “FMV Per Share” means, with respect to shares of Common Stock if traded
on a securities exchange the average of the highest and lowest sales price (or, if applicable, the
highest and lowest reported bid price) of a share of Common Stock on the

3

 

applicable date as reported in The Wall Street Journal (or other reporting service approved by
the Committee), or if a grant is made effective as of the initial public offering of Common Stock
of the Company, at the initial public offering price. If such shares are not publicly traded at
the time a determination of its fair market value is required to be made hereunder, the
determination of fair market value shall be made in good faith by the Committee using any fair and
reasonable means selected in the Committee’s discretion.

     “Full Value Awards” shall mean any Award other than Options or Stock Appreciation Rights.

     “Incentive Option” means any Option that satisfies the requirements of Code Section 422 and is
granted pursuant to Article III of this Plan.

     “Incumbent Board” has the meaning set forth in paragraph (e) of the definition of “Change of
Control” under this Section 1.02.

     “Non-Employee Director” means a Director who is neither an Employee nor a Consultant.

     “Non-Qualified Option” means an Option not intended to satisfy the requirements of Code
Section 422 that is granted pursuant to Article II of this Plan.

     “Option” means an option to acquire Common Stock granted pursuant to the provisions of this
Plan and includes either an Incentive Option or a Non-Qualified Option, or both, as applicable.

     “Option Expiration Date” means, with respect to an Option, the date determined by the
Committee, which shall not be more than ten (10) years after the date of grant of such Option.

     “Optionee” means a Participant who has received or will receive an Option.

     “Other Stock or Performance-Based Award” means an award granted pursuant to Article IX
of this Plan that is not otherwise specifically provided for, the value of which is based in whole
or in part upon the value of a share of Common Stock.

     “Participant” means any Non-Employee Director, Employee or Consultant granted an Award under
this Plan.

     “Performance Award” means an Award granted pursuant to Article III of this Plan, that,
if earned, shall be payable in shares of Common Stock, cash or any combination thereof as
determined by the Committee.

     “Plan” has the meaning set forth in Section 1.01 of this Plan.

     “Purchased Stock” means a right to purchase Common Stock granted pursuant to Article
IV of this Plan.

4

 

     “Restricted Period” means, with respect to an Award, the period established by the Committee
during which such Award either remains subject to forfeiture or is not exercisable by the
Participant.

     “Restricted Stock” means one or more shares of Common Stock, prior to the lapse of
restrictions thereon, granted under Article VII of this Plan.

     “Restricted Stock Unit” means an Award, granted pursuant to Article VI of this Plan,
of the right to receive (a) shares of Common Stock issued at the end of a Restricted Period, (b)
the Fair Market Value of shares of Common Stock paid in cash at the end of a Restricted Period or
(c) a combination of shares of Common Stock and cash, as determined by the Committee, paid at the
end of a Restricted Period.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Spread” has the meaning set forth in Section 6.01(a) of this Plan.

     “Stock Appreciation Rights” means an Award granted pursuant to Article VI of this
Plan.

Section 1.03 Shares Subject to this Plan-Limitations-Adjustments.

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

5

 

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

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

Section 1.05 Granting of Awards to Participants. The Committee shall have the authority to grant,
prior to the expiration date of this Plan, Awards to such Employees, Consultants and Non-Employee
Directors as may be selected by it, subject to the terms and conditions set forth in this Plan. In
selecting the persons to receive Awards, including the type and size of the Award,

6

 

the Committee may consider the contribution that the recipient has made and/or may make to the
growth of the Company or its Affiliates and any other factors that it may deem relevant. No member
of the Committee shall vote or act upon any matter relating solely to himself. Grants of Awards to
members of the Committee must be ratified by the Board. In no event shall any Employee, Consultant
or Non-Employee Director, nor his legal representatives, heirs, legatees or distributees have any
right to participate in this Plan, except to such extent, if any, as permitted under this Plan and
as the Committee may determine.

Section 1.06 Leave of Absence. If an employee is on military, sick leave or other bona fide leave
of absence, such person shall be considered an “Employee” for purposes of an outstanding Award
during the period of such leave, provided that it does not exceed ninety (90) days (or such longer
period as may be determined by the Committee in its sole discretion), or, if longer, so long as the
person’s right to reemployment is guaranteed either by statute or by contract. If the period of
leave exceeds ninety (90) days (or such longer period as may be determined by the Committee in its
sole discretion), the employment relationship shall be deemed to have terminated on the
ninety-first (91st) day (or the first (1st) day immediately following any
period of leave in excess of ninety (90) days as approved by the Committee) of such leave, unless
the person’s right to reemployment is guaranteed by statute or contract.

Section 1.07 Term of Plan. If not sooner terminated under the provisions of Section 1.08,
this Plan shall terminate upon, and no further Awards shall be made after, the tenth
(10th) anniversary of the Effective Date.

Section 1.08 Amendment and Discontinuance of this Plan. The Board may amend, suspend or terminate
this Plan at any time without prior notice to or consent of any person; provided,
however, that subject to Section 10.12, no amendment, suspension or termination of
this Plan may, without the consent of the holder of an Award, terminate such Award or adversely
affect such person’s rights with respect to such Award in any material respect; and
provided further that no amendment shall be effective prior to its approval by the
stockholders of the Company, to the extent such approval is required by applicable legal
requirements or the requirements of any securities market or exchange on which the Company’s stock
is then listed. Notwithstanding the foregoing, the Board may amend this Plan in such manner as it
deems necessary in order to permit Awards to meet the requirements of the Code or other applicable
laws, or to prevent adverse tax consequences to the Participants.

ARTICLE II.

NON-QUALIFIED OPTIONS

Section 2.01 Eligibility. The Committee may grant Non-Qualified Options to purchase shares of
Common Stock to any Employee, Consultant or Non-Employee Director. Each Non-Qualified Option
granted under this Plan shall be evidenced by a written agreement between the Company and the
individual to whom such Non-Qualified Option is granted in such form as the Committee shall
provide.

Section 2.02 Exercise Price. The exercise price to be paid for each share of Common Stock
deliverable upon exercise of each Non-Qualified Option granted under this Article II shall
not be less than one hundred percent (100%) of the FMV Per Share on the date of grant of such

7

 

Non-Qualified Option. The exercise price for each Non-Qualified Option granted under this
Article II shall be subject to adjustment as provided in Section 2.03(e) of this
Plan.

Section 2.03 Terms and Conditions of Non-Qualified Options. Non-Qualified Options shall be in such
form as the Committee may from time to time approve, shall be subject to the following terms and
conditions and may contain such additional terms and conditions (including, but not limited to
conditions of vesting or exercise of the Options), not inconsistent with the Plan, as the Committee
shall deem desirable:

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

8

 

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

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

Section 2.04 Option Repricing. The Committee, solely with the consent of stockholders, may grant
to holders of outstanding Non-Qualified Options, in exchange for the surrender and cancellation of
such Non-Qualified Options, new Non-Qualified Options having exercise prices lower (or higher with
any required consent) than the exercise price provided in the Non-Qualified Options so surrendered
and canceled and containing such other terms and conditions as the Committee may deem appropriate.

Section 2.05 Vesting. See Section 10.11 of this Plan for provisions on vesting in
connection with termination of Employment or service. Also, see Section 10.12 of this Plan
relating to vesting in connection with a Change of Control.

ARTICLE III.

INCENTIVE OPTIONS

     The terms specified in this Article III shall be applicable to all Incentive Options.
Except as modified by the provisions of this Article III, all of the provisions of
Article II shall be applicable to Incentive Options. Options which are specifically
designated as Non-Qualified Options shall not be subject to the terms of this Article
III.

Section 3.01 Eligibility. Incentive Options may only be granted to Employees of a “corporation”
within the meaning of Code 
section 7701(a)(3).

Section 3.02 Exercise Price. Subject to Section 3.4, the exercise price per share shall
not be less than one hundred percent (100%) of the FMV Per Share on the date of grant of the
Incentive Option.

Section 3.03 Dollar Limitation. The aggregate Fair Market Value (determined as of the respective
date or dates of grant) of shares of Common Stock for which one or more Options granted to any
Employee under this Plan (or any other option plan of the Company or any Affiliate which is a
parent or subsidiary as defined in Code Sections 424(e) or (f), as applicable) may for the first
time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the
sum of $100,000. To the extent the Employee holds two (2) or more such Options which become
exercisable for the first time in the same calendar year, the foregoing limitation on the
exercisability of such Options as Incentive Options shall be applied on the basis of the order in
which such Options are granted.

10

 

Section 3.04 10% Stockholder. If any Employee to whom an Incentive Option is granted owns stock
possessing more than ten percent (10%) of the total combined voting power of all classes of stock
of the Company or any “parent corporation” of the Company (as defined in Section 424(e) of the
Code) or any “subsidiary corporation” of the Company (as defined in Section 424(f) of the Code),
then the exercise price per share under such Incentive Option shall not be less than one hundred
ten percent (110%) of the FMV Per Share on the date of grant, and the Option term shall not exceed
five (5) years measured from the date of grant. For purposes of the immediately preceding
sentence, the attribution rules under Section 424(d) of the Code shall apply for purposes of
determining an Employee’s ownership.

Section 3.05 Incentive Options Not Transferable. No Incentive Option granted hereunder (a) shall
be transferable other than by will or by the laws of descent and distribution and (b) except as
permitted in regulations or other guidance issued under Section 422 of the Code, shall be
exercisable during the Optionee’s lifetime by any person other than the Optionee (or his guardian).

Section 3.06 Compliance with Code Section 422. All Options that are intended to be Incentive
Options described in Code Section 422 shall be designated as such in the Option grant and in all
respects shall be issued in compliance with Code Section 422.

Section 3.07 Limitations on Exercise. No Incentive Option shall be exercisable more than three (3)
months after the Optionee ceases to be an Employee for any reason other than death or Disability,
or more than one (1) year after the Optionee ceases to be an Employee due to death or Disability.

ARTICLE IV.

PURCHASED STOCK

Section 4.01 Eligibility. The Committee shall have the authority to sell shares of Common Stock to
such Employees, Consultants and Non-Employee Directors as may be selected by it, on such terms and
conditions as it may establish, subject to the further provisions of this Article IV. Each
issuance of Common Stock under this Article IV shall be evidenced by an agreement, which
shall be subject to applicable provisions of this Plan and to such other provisions not
inconsistent with this Plan as the Committee may approve for the particular sale transaction.

Section 4.02 Purchase Price. The price per share of Common Stock to be purchased by a Participant
under this Article IV shall be determined in the sole discretion of the Committee, and may
be less than, but shall not be greater than the FMV Per Share at the time of purchase.

Section 4.03 Payment of Purchase Price. Payment of the purchase price of Purchased Stock under
this Article IV shall be made in full in cash.

ARTICLE V.

BONUS STOCK

     The Committee may, from time to time and subject to the provisions of this Plan, grant shares
of Bonus Stock to Employees, Consultants and Non-Employee Directors. Such grants of Bonus Stock
shall be in consideration of performance of services by the Participant without

11

 

additional consideration, except as may be required by the Committee or pursuant to
Section 10.01. Bonus Stock shall be shares of Common Stock that are not subject to a
Restricted Period under Article VII.

ARTICLE VI.

STOCK APPRECIATION RIGHTS AND RESTRICTED STOCK UNIT

Section 6.01 Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation
Rights to Employees, Consultants and Non-Employee Directors on the following terms and conditions:

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

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

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

12

 

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

ARTICLE VII.

RESTRICTED STOCK

Section 7.01 Eligibility. All Employees, Consultants and Non-Employee Directors shall be eligible
for grants of Restricted Stock.

Section 7.02 Restrictions, Restricted Period and Vesting.

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

13

 

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

Section 7.03 Forfeiture of Restricted Stock. If, for any reason, the restrictions imposed by the
Committee upon Restricted Stock are not satisfied at the end of the Restricted Period, any
Restricted Stock remaining subject to such restrictions shall thereupon be forfeited by the
Participant and reacquired by the Company.

Section 7.04 Delivery of Shares of Common Stock. Pursuant to Section 10.05 of this Plan
and subject to the withholding requirements of Article XI of this Plan, at the expiration
of the Restricted Period, a stock certificate evidencing the Restricted Stock (to the nearest full
share) with respect to which the Restricted Period has expired shall be delivered without charge to
the Participant, or his personal representative, free of all restrictions under this Plan.

ARTICLE VIII.

PERFORMANCE AWARDS

Section 8.01 Performance Awards. The Committee may grant Performance Awards to Employees,
Consultants or Non-employee Directors based on performance criteria measured over a period of not
less than six (6) months and not more than ten (10) years. The Committee may use such business
criteria and other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to increase the amounts payable under any
Award subject to performance conditions, except as limited under Section 8.02 in the case
of a Performance Award which is intended to meet the requirements of Section 162(m) of the Code.

Section 8.02 Performance Goals. The grant and/or settlement of a Performance Award shall be
contingent upon terms set forth in this Section 8.02.

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

14

 

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

15

 

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

ARTICLE IX.

OTHER STOCK OR PERFORMANCE-BASED AWARDS

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

16

 

ARTICLE X.

CERTAIN PROVISIONS APPLICABLE TO ALL AWARDS

Section 10.01 Vesting and Other General Provisions. Awards shall be evidenced by a written
agreement or other document and may be granted on the terms and conditions set forth herein. In
addition, the Committee may impose on any Award or the exercise thereof, such additional terms and
conditions, not inconsistent with the provisions of this Plan, as the Committee shall determine,
including terms requiring forfeiture of Awards in the event of termination of Employment by the
Participant and terms permitting a Participant to make elections relating to his or her Award which
are not inconsistent with the Plan. The terms, conditions and/or restrictions contained in an
Award may differ from the terms, conditions and restrictions contained in any other Award. The
Committee may amend an Award; provided, however, that, subject to Section
10.12, no amendment of an Award may, without the consent of the holder of the Award, adversely
affect such person’s rights with respect to such Award in any material respect. Notwithstanding
the foregoing, the Committee may amend any Award without the consent of the holder if the Committee
deems it necessary to avoid adverse tax consequences to the holder under Code Section 409A. The
Committee shall retain full power and discretion to accelerate or waive, at any time, any term or
condition of an Award that is not mandatory under this Plan; provided, however,
that, subject to Section 10.12, the Committee shall not have discretion to accelerate or
waive any term or condition of an Award (i) if such discretion would cause the Award to have
adverse tax consequences to the Participant under 409A, or (ii) if the Award is intended to qualify
as “performance-based compensation” for purposes of Section 162(m) of the Code and such discretion
would cause the Award not to so qualify. Except in cases in which the Committee is authorized to
require other forms of consideration under this Plan, or to the extent other forms of consideration
must be paid to satisfy the requirements of the Delaware Corporation Law, no consideration other
than services may be required for the grant of any Award.

Section 10.02 Stand-Alone, Additional, Tandem and Substitute Awards. Subject to Section
2.04 of this Plan, Awards granted under this Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with, or in substitution or exchange for, any
other Award or any award granted under another plan of the Company, any Affiliate or any business
entity to be acquired by the Company or an Affiliate, or any other right of a Participant to
receive payment from the Company or any Affiliate. Such additional, tandem and substitute or
exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for
another Award, the Committee shall require the surrender of such other Award for cancellation in
consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the Company or any
Affiliate. Any such action contemplated under this Section 10.02 shall be effective only
to the extent that such action will not cause (a) the holder of the Award to lose the protection of
Section 16(b) of the Exchange Act and rules and regulations promulgated thereunder or (b) any Award
that is designed to qualify payments thereunder as performance-based compensation as defined in
Section 162(m) of the Code to fail to qualify as such performance-based compensation.

Section 10.03 Term of Awards. The term or Restricted Period of each Award that is an Option, Stock
Appreciation Right, Restricted Stock Unit or Restricted Stock shall be for such period as

17

 

may be determined by the Committee; provided, however, that in no event shall the
term of any such Award exceed a period of ten (10) years (or such shorter terms as may be required
in respect of an Incentive Stock Option under Section 422 of the Code).

Section 10.04 Form and Timing of Payment under Awards; Deferrals. Subject to the terms of this
Plan and any applicable Award agreement, payments to be made by the Company or an Affiliate upon
the exercise of an Option or other Award or settlement of an Award may be made in a single payment
or transfer, in installments or on a deferred basis. The settlement of any Award may, subject to
any limitations set forth in the Award agreement, be accelerated and cash paid in lieu of shares in
connection with such settlement, in the discretion of the Committee or upon occurrence of one or
more specified events; provided, however, that such discretion may not be exercised by the
Committee if the exercise of such discretion would result in adverse tax consequences to the
Participant under section 409A of the Code. In the discretion of the Committee, Awards granted
pursuant to Article VIII of this Plan may be payable in cash or shares to the extent
permitted by the terms of the applicable Award agreement and the Plan. Installment or deferred
payments may be required by the Committee (subject to Section 1.08 of this Plan, including
the consent provisions thereof in the case of any deferral of an outstanding Award not provided for
in the original Award agreement); provided, however, that no deferral shall be required or
permitted by the Committee if such deferral would result in adverse tax consequences to the
Participant under section 409A of the Code. Payments may include, without limitation, provisions
for the payment or crediting of reasonable interest on installment or deferred payments or the
grant or crediting of amounts in respect of installment or deferred payments denominated in shares.
Any deferral shall only be allowed as is provided in a separate deferred compensation plan adopted
by the Company. The Plan shall not constitute an “employee benefit plan” for purposes of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended.

Section 10.05 Vested and Unvested Awards. After the satisfaction of all of the terms and
conditions set by the Committee with respect to an Award granted to a Participant pursuant to this
Plan, the following shall be delivered to such Participant: (a) with respect to an Award of
Restricted Stock, a certificate, without the legend set forth in Section 7.02(c), for the
number of shares that are no longer subject to such restrictions, terms and conditions; (b) with
respect to an Award of Restricted Stock Unit, to the extent not paid in cash, a certificate for the
number of shares equal to the number of shares of Common Stock earned; and (c) with respect to an
Award of Stock Appreciation Rights or Performance Awards, cash and/or a certificate for the number
of shares equal in value to the number of Stock Appreciation Rights or amount of Performance Awards
vested. The number of shares of Common Stock which shall be issuable upon exercise of a Stock
Appreciation Right or earning of a Performance Award shall be determined by dividing (1) by (2)
where (1) is the number of shares of Common Stock as to which the Stock Appreciation Right is
exercised multiplied by the Spread or the amount of Performance Award that is earned and payable,
as applicable, and (2) is the FMV Per Share of Common Stock on the date of exercise of the Stock
Appreciation Right or the date the Performance Award is earned and payable, as applicable. Upon
termination, resignation or removal of a Participant under circumstances that do not cause such
Participant to become fully vested, any remaining unvested Options, shares of Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights or Performance Awards, as the case may be, shall
either be forfeited back to the Company or, if

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appropriate under the terms of the Award, shall continue to be subject to the restrictions, terms
and conditions set by the Committee with respect to such Award.

Section 10.06 Exemptions from Section 16(b) Liability. It is the intent of the Company that the
grant of any Awards to or other transaction by a Participant who is subject to Section 16 of the
Exchange Act shall be exempt from Section 16(b) of the Exchange Act pursuant to an applicable
exemption (except for transactions acknowledged by the Participant in writing to be non-exempt).
Accordingly, if any provision of this Plan or any Award agreement does not comply with the
requirements of Rule 16b-3 as then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to the applicable requirements of
Rule 16b-3 so that such Participant shall avoid liability under Section 16(b) of the Exchange Act.

Section 10.07 Securities Requirements. No shares of Common Stock will be issued or transferred
pursuant to an Award unless and until all then-applicable requirements imposed by federal and state
securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction
and by any stock market or exchange upon which the Common Stock may be listed, have been fully met.
As a condition precedent to the issuance of shares pursuant to the grant or exercise of an Award,
the Company may require the grantee to take any reasonable action to meet such requirements. The
Company shall not be obligated to take any affirmative action in order to cause the issuance or
transfer of shares pursuant to an Award to comply with any law or regulation described in the
second preceding sentence.

Section 10.08 Transferability.

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

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Section 10.09 Rights as a Stockholder.

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

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

Section 10.11 Termination of Employment, Death and Disability.

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

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Section 10.12 Change in Control.

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

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

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

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

21

 

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

ARTICLE XI.

WITHHOLDING FOR TAXES

     Any issuance of Common Stock pursuant to the exercise of an Option or in payment of any other
Award under this Plan shall not be made until appropriate arrangements satisfactory to the Company
have been made for the payment of any tax amounts (federal, state, local or other) that may be
required to be withheld or paid by the Company with respect thereto. Such arrangements may, at the
discretion of the Committee, include allowing the person to tender to the Company shares of Common
Stock owned by the person, or to request the Company to withhold shares of Common Stock being
acquired pursuant to the Award, whether through the exercise of an Option or as a distribution
pursuant to the Award, which have an aggregate FMV Per Share as of the date of such withholding
that is not greater than the sum of all tax amounts to be withheld with respect thereto at the
minimum statutory rate, together with payment of any remaining portion of such tax amounts in cash
or by check payable and acceptable to the Company.

     Notwithstanding the foregoing, if on the date of an event giving rise to a tax withholding
obligation on the part of the Company the person is an officer or individual subject to Rule 16b-3,
such person may direct that such tax withholding be effectuated by the Company withholding the
necessary number of shares of Common Stock (at the minimum statutory tax rate) from such Award
payment or exercise.

ARTICLE XII.

MISCELLANEOUS

Section 12.01 No Rights to Awards or Uniformity Among Awards. No Participant or other person shall
have any claim to be granted any Award; there is no obligation for uniformity of treatment of
Participants, or holders or beneficiaries of Awards; and the terms and conditions of Awards need
not be the same with respect to each recipient.

22

 

Section 12.02 Conflicts with Plan. In the event of any inconsistency or conflict between the terms
of this Plan and an Award, the terms of this Plan shall govern.

Section 12.03 No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any Affiliate. Further, the
Company or any Affiliate may at any time dismiss a Participant from employment, free from any
liability or any claim under this Plan, unless otherwise expressly provided in this Plan or in any
Award.

Section 12.04 Governing Law. The validity, construction and effect of this Plan and any rules and
regulations relating to this Plan shall be determined in accordance with applicable federal law and
the laws of the State of Texas with venue in Dallas County, without regard to any principles of
conflicts of law.

Section 12.05 Gender, Tense and Headings. Whenever the context requires such, words of the
masculine gender used herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely for convenience and
reference and constitute no part of this Plan.

Section 12.06 Severability. If any provision of this Plan or any Award is or becomes or is deemed
to be invalid, illegal or unenforceable in any jurisdiction or as to any Participant or Award, or
would disqualify this Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended as necessary to conform to the applicable laws, or
if it cannot be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of this Plan or the Award, such provision shall be stricken as to
such jurisdiction, Participant or Award, and the remainder of this Plan and any such Award shall
remain in full force and effect.

Section 12.07 Other Laws. The Committee may refuse to issue or transfer any shares or other
consideration under an Award if, acting in its sole discretion, it determines that the issuance or
transfer of such shares or such other consideration might violate any applicable law.

Section 12.08 Stockholder Agreements. The Committee may condition the grant, exercise or payment
of any Award upon such person entering into a stockholders’ or repurchase agreement in such form as
approved from time to time by the Board.

Section 12.09 Funding. Except as provided under Article VII of this Plan, no provision of
this Plan shall require or permit the Company, for the purpose of satisfying any obligations under
this Plan, to purchase assets or place any assets in a trust or other entity to which contributions
are made or otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes. Participants shall have no rights under this
Plan other than as unsecured general creditors of the Company, except that insofar as they may have
become entitled to payment of additional compensation by performance of services, they shall have
the same rights as other Employees, Consultants or Non-Employee Directors under general law.

23

 

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

Adopted: January 10, 2006

24

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