Document:

12-2012 EX 10.2 CST (A#3)

EXHIBIT 10.2

TRANSITION SERVICES AGREEMENT
BETWEEN
ULTRAMAR LTD.
AND
CST CANADA CO.
DATED AS OF [•], 2013

TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (this “Agreement”) made and entered into effective as of [•], 2013 is by and between ULTRAMAR LTD., a corporation formed under the laws of Canada (“Ultramar”), and CST CANADA CO., a corporation created under the Laws of Nova Scotia (“CST”) both indirect wholly owned subsidiaries of Valero Energy Corporation (“Valero”).  Ultramar and CST are sometimes herein referred to individually as a “Party” and collectively as the “Parties”.  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in Article I.
RECITALS
WHEREAS, Valero has determined that it would be appropriate, desirable and in the best interests of Valero and the shareholders of Valero to separate the CST Business from Valero;
WHEREAS, Valero and CST have entered into the Separation and Distribution Agreement, dated [•], 2013 (the “Separation Agreement”), in connection with the separation of the CST Business from Valero and the Distribution of CST Common Stock to shareholders of Valero;
WHEREAS, the Separation Agreement also provides for the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the separation of CST and its subsidiaries from Valero; and
WHEREAS, in order to ensure an orderly transition under the Separation Agreement, it will be necessary for Ultramar to provide certain corporate, general and administrative services to CST on an interim, transitional basis;
NOW, THEREFORE, for and in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Ultramar and CST hereby agree as follows:
ARTICLE I
DEFINITIONS

Section 1.1Definitions.  As used herein, the following terms shall have the following meanings, unless context clearly requires otherwise, and capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Separation Agreement:
“Additional Services” has the meaning ascribed to such term in Section 2.1(b).
“Applicable Rate” means the Prime Rate plus two percent (2.0%), or such lower rate as may from time to time represent the maximum rate of interest payable under applicable law.
“Applicable Services Termination Date” means, with respect to each Service, the earlier of (A) the Expiration Date, (B) the date on which the Service terminates pursuant to Section 2.1(d)(i), or (C) the date on which CST terminates such Service pursuant to Section 2.1(d)(ii).

“CST” collectively means CST Canada Co. and its direct and indirect wholly-owned subsidiaries.
“Expiration Date” means the date which is eighteen (18) months after the Distribution Date.
“Service” means any one of the services listed in Section 2.1(a), and any Additional Services, with two or more of such Services collectively referred to as “Services”.
“Ultramar Parties” collectively means Ultramar and one or more of its Affiliates.
Section1.2Rules of Construction.  The Recitals to this Agreement are made a part hereof for all purposes.  In this Agreement, terms defined in the singular have the corresponding meanings in the plural, and vice versa.  All references to Sections and Articles refer to sections and articles of this Agreement, and all references to Annexes, Exhibits, Schedules or Attachments refer to annexes, exhibits, schedules or attachments to this Agreement, which are attached hereto and made a part hereof for all purposes.  The word “including” means “including, but not limited to.”  The words “hereof,” “hereby,” “herein,” “hereunder” and similar terms in this Agreement shall refer to this Agreement as a whole and not any particular section or article in which such words appear.
ARTICLE II
PROVISION OF SERVICES
Section 2.1Provision of Services by Ultramar.
(a)Services to be Provided.   Commencing on the Distribution Date, subject to the other provisions of this Agreement, Ultramar shall provide or cause to be provided to CST each of the Services described in the Annexes to this Agreement, for the time period and upon the terms and conditions set forth in each Annex.
(b)Nature and Quality of Services; Additional Services.  The quality of the Services shall be substantially similar to those provided to other Affiliates of Ultramar, and where applicable substantially consistent with the quantity and scope of the Services provided to CST by the Ultramar Parties prior to the Distribution Date.  Prior to the first anniversary of the Distribution Date, if one of the Parties identifies any commercial or other service that is needed by it to assure a smooth and orderly transition of the businesses in connection with the consummation of the transactions contemplated by the Separation Agreement, and that is not otherwise governed by the provisions of the Separation Agreement or any Ancillary Agreement, the Parties will cooperate in determining whether there is a mutually acceptable basis on which the other Party will provide such service.  Any such additional services that Ultramar may provide CST are herein referred to as “Additional Services”.  Ultramar shall not be obligated to provide Services from or at any other location other than Ultramar’s head office, currently located at 2200, McGill College Avenue, Montreal, Quebec, H3A 3L3.  
(c)Limitations; Resource Allocations.  CST acknowledges that Ultramar provides similar services to itself and other Valero Affiliates.  Consequently, Ultramar may, from time to 

2

time, experience competing demands for its various services.  Accordingly, CST agrees that Ultramar may use its reasonable discretion in prioritizing requests for service delivery among CST and other Valero Affiliates, in each case consistent with past practices; provided that Ultramar communicates scheduling issues associated with the delivery of any particular service hereunder with the relevant CST personnel, and Ultramar makes reasonable efforts to accommodate requests for services (provided such services requested are consistent with services provided to CST by Ultramar prior to the Distribution Date).   Ultramar shall not be required to add or retain staff, equipment, facilities or other resources in order to provide any Service.   Ultramar shall have the right to outsource all or portions of some Services to qualified third parties if Ultramar deems it necessary in order to enable Ultramar’s and its Affiliates’ personnel to continue to adequately perform their other job functions.
(d)Cancellation of Services prior to Expiration Date.
(i)Subject to clause (ii) of this Section 2.1(d), Ultramar shall have no obligation to provide any Service beyond (A) the termination date for such Service as provided in the applicable Annex for such Service or, if the applicable Annex does not specify a termination date for the Service, then (B) the Expiration Date.
(ii)CST shall have the option to terminate this Agreement or any one or more of the Services at any time prior to the Expiration Date, provided that CST gives Ultramar at least 30 days prior written notice of its election to exercise such option.
(iii)Following the Applicable Services Termination Date and except as otherwise agreed to by Ultramar and CST, neither Ultramar nor CST will be under any further obligation with respect to any Service so terminated; provided that CST will remain obligated for any Service Fees for the terminated Service through the Applicable Services Termination Date and any Direct Charges related to such Service.
Section 2.2Ultramar Fees for Services.
(a)Service Fees.
(i)CST shall pay to Ultramar a monthly fee (each a “Service Fee”) for each of the Services as specified on the applicable Annex for each Service (subject to adjustment as set forth in clause (iii) immediately below) for each month up to and including the month in which the Applicable Services Termination Date for each such Service occurs.  Notwithstanding the foregoing, certain Service Fees are identified on the Annexes as being payable on other than a monthly basis, in which case each such Service Fee shall be payable as set forth on the applicable Annex.  CST shall be responsible for all applicable taxes imposed on the performance of the Services, other than any taxes imposed on Ultramar’s income.
(ii)Except as otherwise noted on the Annexes, the Service Fee for each Service shall be increased on January 1, 2014 and on January 1st of each succeeding calendar year by a percentage amount equal to the most recently implemented general annual merit increase (expressed as a percentage) for Ultramar employees working at Ultramar’s head office.   For example, 

3

assuming that Ultramar employees receive their annual merit increase on July 1 of each calendar year, the percentage increase in the Service Fees that takes effect on January 1, 2014 shall equal the general merit increase percentage for Ultramar employees that went into effect on July 1, 2013.
(iii)For any Service Fee based upon full time employee (FTE) calculations or estimated total annual hours for a particular Service, Ultramar has provided an estimated FTE number or Total Annual Hours (“Basis”) in the applicable Annex that is based upon 2012 calculations for such Service.  On a semi-annual basis, or earlier if requested by either Party, the Parties shall meet to discuss and modify Basis calculations.  Any modifications to the Service Fees and or Basis shall be commemorated by an amendment to applicable Annex(es) signed by both Parties.
(b)    Direct Charges.  In addition to the fees set forth above, and except as may otherwise be set forth in any Ancillary Agreement, to the extent practicable, the following items will be directly charged to CST (“Direct Charges”): (1) all third party expenses directly related to CST or the Stations, including, but not limited to, outside legal fees, outside accounting fees, fees and expenses of external advisors and consultants, (2) costs associated with any telecommunications contracts or information service licenses to the extent related or arising out of the assignment of any such contracts or licenses to CST, and (3) insurance costs, including but not limited to, general liability, automobile liability, comprehensive liability, excess liability, property and directors and officers.
Section 2.3Payment of Fees.
(a)    Except where other billing and/or payment terms are expressly set forth in any Annex hereto, on or before the 15th day of each month during the term of this Agreement, Ultramar shall make a diligent effort to submit to CST an invoice for the Services provided hereunder during the immediately preceding calendar month.  Except for amounts being disputed by CST in good faith in accordance with Section 2.5, CST shall remit payment within thirty (30) days after its receipt of such invoice.  Unless otherwise agreed to in writing, CST shall remit all funds due under this Agreement to Ultramar either by wire transfer or Automated Clearing House (ACH) in immediately available funds.  Ultramar’s wiring instructions are as follows (Ultramar may revise these from time to time upon notice to CST):
	
			
	BENEFICIARY ACCOUNT NAME:
	 
	ULTRAMAR LTD

	BANK CODE:
	 
	0002    (SCOTIABANK)

	ACCOUNT NUMBER:
	 
	900010164518

	CANADIAN CLEARING CODE
	 
	CC00263081

	SWIFT CODE:
	 
	NOSCCATT

	BENEFICIARY BANK:
	 
	THE BANK OF NOVA SCOTIA

	ADDRESS:
	 
	MONTREAL BUSINESS SERVICE CENTRE
PLACE MONTREAL TRUST

	 
	 
	1800 McGill College, 12th floor

	 
	 
	MONTREAL  (QUEBEC), H3A 3K9

DETAILS OF THE PAYMENT SHOULD SEND TO:  BANKING@ULTRAMAR.CA

4

(b)    To the extent reasonably practicable, all third party invoices for Direct Charges shall be submitted to CST for payment.  For Direct Charges not paid directly by CST, if any, Ultramar shall include such amounts in its monthly invoice to CST.
Section 2.4Records Maintenance and Audits.  Ultramar shall, for the time period required by applicable law after the termination of this Agreement, maintain records and other evidence sufficient to accurately and properly reflect the performance of the Services hereunder and the amounts due determined in accordance with Section 2.2.  CST or its representatives shall have reasonable access, after requesting such access in writing in advance, during normal business hours to such records for the purpose of auditing and verifying the accuracy of the invoices submitted regarding such amounts due.  Any such audits performed by or on behalf of CST shall be at CST’s sole cost and expense.  CST shall have the right to audit Ultramar’s books for a period of one (1) year after the month in which the Services were rendered, except in those circumstances where contracts by Ultramar or any of its Affiliates with third parties limit the audit period to less than one year.
Section 2.5Disputed Amounts.   In the event of a good-faith dispute as to the amount and/or propriety of any invoices or any portions thereof submitted pursuant to Section 2.3, if any, CST shall pay all undisputed charges on such invoice, but shall be entitled to withhold payment of any amount in dispute and shall promptly notify Ultramar in writing of such disputed amounts and the reasons each such charge is disputed.  Upon written request, Ultramar shall use commercially reasonable efforts to provide CST with sufficient records relating to the disputed charge so as to enable the Parties to resolve the dispute.  In the event the Parties are unable to resolve the dispute within 30 days after the invoice becomes due, the matter shall be submitted to Grant Thornton, LLP, or such other accounting firm as the Parties shall agree.  The fees and expenses related to such resolution of the dispute by such firm shall be borne 50% by CST and 50% by Ultramar.  CST shall remit payment of the amount determined by such firm to be properly payable not later than ten (10) days following such determination, together with interest thereon calculated daily at the Applicable Rate.  In the event of any overpayments by CST, Ultramar agrees to promptly (a) refund any such overpaid amount to CST, as well as (b) pay interest on the overpayment calculated daily at the Applicable Rate.  The determination of such accounting firm in resolution of the dispute shall be final and binding upon the Parties and enforceable by either Party in any court of competent jurisdiction, absent fraud or manifest error.  So long as the Parties are attempting in good faith to resolve the dispute, neither Party shall be entitled to terminate the Services related to, or the cause of, the disputed amounts.
Section 2.6Undisputed Amounts.   Any statement or payment not disputed in writing by either Party within one year of the date of such statement or payment shall, absent fraud or manifest error, be considered final and binding and no longer subject to dispute or adjustment.
ARTICLE III
CONFIDENTIALITY

5

Section 3.1Each Party acknowledges that in connection with its performance under this Agreement, it may gain access to confidential material and information that is proprietary to the other Party.  Unless otherwise required by applicable law, each Party agrees:
(a)    to hold such material and information in strict confidence and not make use thereof other than for performance under or enforcement of this Agreement or the operation of the receiving Party’s business;
(b)    to reveal such material and information only to those employees, advisors and contractors requiring such information in connection with the performance of the Services or the operation of the receiving Party’s business only after such employees, advisors or contractors agree to be bound by this confidentiality provision; and
(c)    not to reveal such material and information to any third person, except as necessary in connection with the performance or evaluation of the Services or the operation of the receiving Party’s business, and then only to the extent that such persons agree to be bound by the confidentiality obligations set forth herein.
Section 3.2Notwithstanding the provisions of Section 3.1, a Party may disclose confidential information it has received from the other Party where required in any legal proceedings or by any governmental authority having jurisdiction, but in such event, the receiving Party will provide the disclosing Party with prompt prior notice so that the disclosing Party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement.  In the event that the disclosing Party is unable to obtain such protective order or other appropriate remedy, the receiving Party will furnish only that portion of the confidential information which it is advised by a written opinion of its counsel is legally required, and will give the disclosing Party written notice of the information to be disclosed as far in advance as practicable, and will exercise its best efforts to obtain a protective order or other reliable assurance that confidential treatment will be accorded the confidential information so disclosed.
Section 3.3This confidentiality provision shall survive for a period of two (2) years following the expiration or termination of this Agreement.
ARTICLE IV
MISCELLANEOUS
Section 4.1Termination.  This Agreement shall terminate on the Expiration Date, unless terminated earlier pursuant to Section 2.1(d).
Section 4.2No Third Party Beneficiaries.  The provisions of this Agreement are enforceable solely by the Parties to the Agreement and no assignee or other person shall have the right, separate and apart from the Parties hereto, to enforce any provisions of this Agreement or to compel any Party to this Agreement to comply with the terms of this Agreement; provided, however, that the limitations of liability in Section 4.4 shall inure to the benefit of, and be enforceable by, Ultramar and each of its Affiliates.

6

Section 4.3No Fiduciary Duties.   It is expressly understood and agreed that this Agreement is a purely commercial transaction between Ultramar and CST and that nothing stated herein shall operate to create any special or fiduciary duty that either Party or any of its Affiliates shall owe to the other Party or vice versa.  Nothing stated herein shall obligate or require Ultramar to do anything which Ultramar deems to be detrimental or injurious to any other business or commercial activities of either Ultramar or any of its Affiliates, and it is expressly understood and agreed that Ultramar shall be obliged to exert only commercially reasonable efforts in providing Services hereunder.
Section 4.4Limited Warranty; Limitation of Liability
Ultramar represents that it will use reasonable care in providing Services to CST, and such Services shall be provided by Ultramar in accordance with all applicable laws, rules, and regulations.  EXCEPT AS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE, ALL SERVICES AND PRODUCTS ARE RENDERED AND PROVIDED TO CST AS IS, WHERE IS, WITH ALL FAULTS, AND ULTRAMAR MAKES NO (AND HEREBY DISCLAIMS AND NEGATES ANY AND ALL) REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES RENDERED OR PRODUCTS OBTAINED FOR CST.  FURTHERMORE, CST MAY NOT RELY UPON ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE MADE TO ULTRAMAR BY ANY PARTY (INCLUDING, AN AFFILIATE OF ULTRAMAR) PERFORMING SERVICES ON BEHALF OF ULTRAMAR HEREUNDER, UNLESS SUCH PARTY MAKES AN EXPRESS WARRANTY TO CST.
IT IS EXPRESSLY UNDERSTOOD BY CST THAT ULTRAMAR AND ITS AFFILIATES SHALL HAVE NO LIABILITY FOR THE FAILURE TO PERFORM ANY SERVICES HEREUNDER AND FURTHER THAT ULTRAMAR AND ITS AFFILIATES SHALL HAVE NO LIABILITY WHATSOEVER FOR THE SERVICES PROVIDED BY ANY THIRD PARTY, UNLESS IN EITHER EVENT SUCH SERVICES ARE PROVIDED IN A MANNER THAT CONSTITUTES GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF ULTRAMAR OR ITS AFFILIATES.  CST AGREES THAT THE REMUNERATION PAID TO ULTRAMAR HEREUNDER FOR THE SERVICES TO BE PERFORMED REFLECT THIS LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES.  IN NO EVENT SHALL ULTRAMAR BE LIABLE TO CST OR ANY OTHER PERSON FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, LOST PROFITS, LOSS OF GOODWILL, OR LOST OPPORTUNITIES, RESULTING FROM ANY ERROR IN THE PERFORMANCE OF SERVICES OR FROM THE BREACH OF THIS AGREEMENT, REGARDLESS OF THE FAULT OF ULTRAMAR, ANY ULTRAMAR AFFILIATE, OR ANY THIRD PARTY PROVIDER OR WHETHER ULTRAMAR, ANY ULTRAMAR AFFILIATE, OR THE THIRD PARTY PROVIDER ARE CONCURRENTLY, PARTIALLY, OR SOLELY NEGLIGENT.  TO THE EXTENT ANY THIRD PARTY PROVIDER HAS LIMITED ITS LIABILITY TO ULTRAMAR OR ITS AFFILIATE FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT, CST AGREES TO BE BOUND BY SUCH 

7

LIMITATION OF LIABILITY FOR ANY PRODUCT OR SERVICE PROVIDED TO CST BY SUCH THIRD PARTY PROVIDER UNDER ULTRAMAR’S OR SUCH AFFILIATE’S AGREEMENT.   EXCEPT IN CASES OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, ULTRAMAR’S AND ITS AFFILIATES’ COLLECTIVE MAXIMUM LIABILITY TO CST WITH RESPECT TO ALL CLAIMS ARISING OUT OF THIS AGREEMENT SHALL BE LIMITED IN THE AGGREGATE TO THE AMOUNT PAYABLE HEREUNDER BY CST (EXCLUDING DIRECT CHARGES).
Section 4.5Force Majeure.  If any Party to this Agreement is rendered unable by force majeure to carry out its obligations under this Agreement, other than a Party’s obligation to make payments as provided for herein, that Party shall give the other Party prompt written notice of the force majeure with reasonably full particulars concerning it.  Thereupon, the obligations of the Party giving the notice, insofar as they are affected by the force majeure, shall be suspended during, but no longer than the continuance of, the force majeure.  The affected Party shall use all reasonable diligence to remove or remedy the force majeure situation as quickly as practicable.
The requirement that any force majeure situation be removed or remedied with all reasonable diligence shall not require the settlement of strikes, lockouts or other labour difficulty by the Party involved, contrary to its wishes. Rather, all such difficulties may be handled entirely within the discretion of the Party concerned.
The term “force majeure” means any one or more of: (a) an act of God, (b) a strike, lockout, labour difficulty or other industrial disturbance, (c) an act of a public enemy, war, blockade, insurrection or public riot, (d) lightning, fire, storm, flood or explosion, (e) governmental action, delay, restraint or inaction, (f) judicial order or injunction, (g) material shortage or unavailability of equipment, or (h) any other cause or event, whether of the kind specifically enumerated above or otherwise, which is not reasonably within the control of the Party claiming suspension.
Section 4.6Further Assurances.  In connection with this Agreement and all transactions contemplated by this Agreement, each Party hereto agrees to execute and deliver such additional documents and instruments as may be required for a Party to provide the services hereunder and to perform such other additional acts as may be necessary or appropriate to effectuate, carry out, and perform all of the terms and provisions of this Agreement.
Section 4.7Notices.  Any notice, request, demand, direction or other communication required or permitted to be given or made under this Agreement to a Party shall be in writing and may be given by hand delivery, postage prepaid first-class mail delivery, delivery by a reputable international courier service guaranteeing next business day delivery or by confirmed facsimile to such Party at its address noted below:
(a)in the case of Ultramar, to:
ULTRAMAR LTD.
2200, McGill College Avenue
Montreal, Quebec, H3A 3L3
Attention:    Director, Legal Affairs 

8

Email: “legalaffairs@ultramar.ca”
Facsimile:     514. 380-8795

(b)in the case of CST, to:
CST Canada Co.
2200, McGill College Avenue
Montreal, Quebec, H3A 3L3
Attention:    Marie-Helene Beland (Legal Notices)
Marie-Helene.Beland@cstcan.ca
Facsimile:  514-499-9927
Christian Houle (Other Notices)
Christian.Houle@cstcan.ca
Facsimile: 514-499-9927
or at such other address of which notice may have been given by such Party in accordance with the provisions of this Section.
Section 4.8Counterparts.  This Agreement may be executed in several counterparts, no one of which needs to be executed by all of the Parties.  Such counterpart shall be deemed to be an original and shall have the same force and effect as an original.  All counterparts together shall constitute but one and the same instrument.   Signed counterparts delivered via facsimile or via a “pdf” or other legible image file transmitted by electronic mail shall have the same binding effects as originals.
Section 4.9Applicable Law.  The provisions of this Agreement shall be construed in accordance with the laws of the Province of Quebec and the laws of Canada applicable therein.
Section 4.10Dispute Resolution.  Except as provided in Section 2.5 with respect to disputed amounts, the dispute resolution procedures set forth in Article IV of the Separation Agreement shall apply to any dispute, controversy or claim (whether sounding in contract, tort or otherwise) that arises out of or relates to this Agreement, any breach or alleged breach hereof, the transactions contemplated hereby (including all actions taken in furtherance of the transactions contemplated hereby on or prior to the date hereof), or the construction, interpretation, enforceability or validity hereof.
Section 4.11Binding Effect; Assignment.  Except for the ability of Ultramar to cause one or more of the Services to be performed by a third party provider or an Affiliate of Ultramar, no Party shall have the right to assign or delegate its rights or obligations under this Agreement without the consent of the other Party.
Section 4.12Invalidity of Provisions.  In the event that one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect under any 

9

applicable law, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired thereby.
Section 4.13Compliance with Law.  CST represents and agrees that it and its Affiliates will use the Services provided hereunder only in accordance with all applicable law, and in accordance with the conditions, rules, regulations and specifications which may be set forth in any manuals, materials, documents or instructions made available or communicated by Ultramar to CST or any of its Affiliates on an ongoing basis throughout the term of this Agreement.  In performing the Services, Ultramar will comply and will cause its Affiliates to comply, with all applicable law.  Ultramar reserves the right to take all actions, including termination of any particular Service or Services, that Ultramar reasonably believes to be necessary to assure compliance with applicable law (including specifically, but without limitation, any applicable competition laws and regulations); provided, however, that Ultramar will endeavor to provide CST with as much prior notice as is reasonably practical before taking any such action.
Section 4.14Modification; Amendment.  This Agreement may not be amended or modified except by a written instrument signed by both Parties hereto.
Section 4.15Waiver.  No waiver by either Party of any term or breach of this Agreement shall be construed as a waiver of any other term or breach hereof or of the same or a similar term or breach on any other occasion.
Section 4.16Entire Agreement.  This Agreement constitutes the whole and entire agreement between the Parties hereto and supersedes any prior agreement, undertaking, declarations, commitments or representations, verbal or oral, in respect of the subject matter hereof.
ARTICLE V
SERVICES BY CORNER STORE
If and to the extent that any Annex provides for services of any nature to be provided by CST or any of its Affiliates to any of the Ultramar Parties, such services shall be provided upon and subject to all of the terms, conditions and limitations (including the limitations on liability in Section 4.4) set forth above in this Agreement with respect to the provision of the Services, as fully as if such services were “Services” and relevant instances of the term “Ultramar” were replaced with “CST” and vice-versa, and also subject to any specific provisions set forth in the relevant Annex.
[Signatures of Parties on Next Page]

10

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement with effect as of the date first above written.

ULTRAMAR LTD.
By:____________________________________
Name:  
Title:  

CST CANADA CO.
By:____________________________________
Name:  
Title:  
 

11

Annex A
Facilities Services

		
	1.
	Receptionist (weekly flat fee of $795)

		
	•
	Answer questions concerning reception or delivery of mail.

		
	•
	Order stationary to maintain adequate inventory of stationary and meet the need of the McGill office. 

		
	•
	Distribute paper and ink cartridge as needed.

		
	•
	Replace receptionist as needed.

Annex A - Page 1

Annex B
Human Resources

		
	1.
	Supervisor Payroll and Benefits (64.00$ per hour)

		
	•
	Plan, coordinate and control all activities related to the production of the pay.

		
	•
	Solve complex problems escalated by the payroll team.

		
	•
	Send to new employees information/forms concerning benefits.  These documents are given in person in an information meeting for employees located at the McGill office building.  Ensure forms are sent back and adequately completed in due time. 

		
	•
	Prepare G/L journal entries and charge them to departments.  Record all journal entries in the system.

		
	•
	Supervise and verify the compilation and production of benefits reports as well as government remittances, payments to insurance companies, governments, third parties. 

		
	•
	Answers questions of various stakeholders (employees, managers, executives, governments, third parties, etc)

		
	•
	Act as resource person for I.T. matters.

2    Clerk, Corporate payroll (39.00$ per hour)

		
	•
	Gather, compile and verify all payroll/HR related documents (authorisation for changes payroll forms, time sheet, etc.).

		
	•
	Update the computerized employee file.

		
	•
	Ensure attendance reports are monthly completed and approved.  Verify and validate unusual information.  Make adjustment to the employee’s pay if required.

		
	•
	Prepare all documents related to a termination of employment: vacation/RRSP eligibility, record of employment, benefits letters. 

		
	•
	Update employee’s information in Sun Life’s OASIS system.

		
	•
	Inform Sun Life of employees’ termination and retirement for Savings Plan adjustment purposes.

		
	•
	Transmit to ADP, the data allowing them to produce the pay every 2 weeks according to the established schedule.

		
	•
	Validate that transmitted modifications correspond to the pay register.

		
	•
	Distribute payroll stubs to employees not using the direct deposit option.

		
	•
	Verify and compute paid mileage to the employees receiving a car allowance in order to produce proper income tax forms.

		
	•
	Reconcile every pay in order to input journal entries which will establish payroll liabilities and apply expenses according to Company policies.

		
	•
	Reconcile gross pay with G/L (SAP).

		
	•
	Compile and verify every month government remittances.

		
	•
	Issue monthly checks to pay insurance companies and various government authorities.  Prepare departments’ G/L journal entries.

Annex B - Page  1

		
	•
	Compile, verify and balance monthly payroll reports related to the Savings plan.  Produce transmission report to Sun Life and the request to transfer the required funds. 

		
	•
	Answer all request in a precise and timely manner, verbally or in writing.

Annex B - Page  2

Annex C
Financial Accounting & Taxes

	
		
	1.  Financial Accounting (100$ per hour)

	 
	Help and support in the development of financial and operational reporting;

	 
	General support on SAP (Cost centers, Profit centers, Hierarchy and Material);

	 
	Lifo accounting support;

	 
	Support in the development of support schedules, journal entries and reconciliation of complex accounting topics (ARO, AFDA, Reserves etc);

	
								
	2.  Income Taxes (96$ per hour)

	 
	Obtain registration numbers for the company: business number (income taxes, DAS, W/H)

	 
	Set-up and monitor instalment base for monthly income tax instalments

	 
	Set-up and monitor work papers for monthly tax entries (current and deferred)

	 
	Set-up and monitor monthly balance sheet account reconciliations for tax accounts

	 
	Set-up, in conjunction with accounting dept, capital asset purchase tax class determination

	 
	Review capital asset rules
	 
	 
	 
	 

	 
	Set-up year-end tax package planning schedules for tax return completion

	 
	Set-up and monitor tax return blueprint / sections
	 
	 

	 
	Set-up and monitor deferred tax blueprint / sections
	 
	 

	 
	Miscellaneous
	 
	 
	 
	 
	 

	 
	 
	Review system software tax a (TaxPrep, TaxPrep forms)

	 
	 
	Review internet tax library subscription (CCH versus Ernst & Young)

	 
	 
	Review principles surrounding "on the job training period" grant (Quebec)

	 
	 
	Review M&P credit determination (Quebec) on purchases
	 

	 
	 
	Review possible M&P deductions (Ontario, Newfoundland)
	 

	 
	 
	Review R&D legislation
	 
	 
	 
	 

	 
	 
	Review withholding tax regulations
	 
	 
	 

	 
	 
	Review transfer pricing implications
	 
	 
	 

	 
	 
	Review PMI (major project grant) criterias (Quebec)
	 

	 
	 
	Review prior government audits + audit préparation
	 

	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 

	3.  Commodity taxes (96$ per hour)

	 
	Obtain registration numbers for the company: business number (GST/HST + QST; with fuel, tobacco, liquor sales)

	 
	Obtain registration under IFTA for inter-provincial truck transportation

	 
	Set-up and monitor monthly work papers/analyses documentation/ reconciliations (GST/HST + QST)

Annex C - Page 1

	
								
	 
	Set-up and monitor monthly reporting requirements (GST/HST + QST)
	 

	 
	Review system set-up configuration (SAP, ESP, PDI) for GST/HST + QST

	 
	Review SAP system tax code functionalities (GST/HST + QST)
	 

	 
	Review prepared meals exemption thresholds (HST Ontario)
	 

	 
	Obtain authorisation to pick-up goods with regional rebates (Quebec fuel tax)

	 
	Obtain authorisation for cash flow tax reduction on inventory (Quebec fuel tax)

	 
	Review and set-up procedures to obtain refund for evaporation losses (Quebec + Ontario fuel tax)

	 
	Review procedures to obtain credits on thefts (GST/HST + QST + Quebec/Ontario/NB fuel tax)

	 
	Review procedures to obtain credits on accidental losses (Quebec/Ontario/NB fuel tax)

	 
	Review procedures to obtain refunds on sales of fuel at ambient temperatures (Quebec/Ontario fuel tax)

	 
	Review procedures to obtain credits on bad debts (GST/HST + QST + Ontario/NS fuel tax)

	 
	Review tax credit procedures for coupons, sponsorship, gift certificates (GST/HST + QST)

	 
	Review input tax credit restrictions (HST + QST /Quebec + Ontario)
	 

	 
	Review convenience store product tax classifications (GST/HST + QST)

	 
	Review impacts of taxes on native reserves (GST/HST + QST)
	 

	 
	Review prior government tax audits (GST/HST + QST) + audit preparation

–

Annex C - Page 2

	
								
	4.  Property taxes (75$ per hour)       These services will be provided by CST to Ultramar

	 
	 

	 
	Administration

	 
	Review system and methodology in Property Tax payments and recordings

	 
	Review all outstanding items

	 
	 
	files under appeals

	 
	 
	system developments (PTS)

	 
	 
	municipal requests for information

	 
	Review procedures for surplus properties

	 
	Review limits of authority for payments

	 
	Review creation of pipeline accounts in the PTS system

	 
	Review 2014 budget impacts for major projects

	 
	 
	 
	 
	 
	 
	 
	 

	 
	Pipeline accounts

	 
	analysis of actual cost versus taxable values

	 
	Prepare standard factual information to transmit to municipalities

	 
	 
	 
	 
	 
	 
	 
	 

	 
	Refinery

	 
	Review account presently under appeals (lawyer / technical expert)

	 
	 
	validate battery limits (production)

	 
	 
	validate taxability of accessory items

	 
	Review evaluation of new role 2014-16 (issued in oct. 2013)

	 
	Visit refinery with municipal inspector in May 2013

	 
	Review capital additions in 2012-13 subject to taxability (pump station, etc)
	 

	 
	Review impact of line 9 reversal

	 
	 
	 
	 
	 
	 
	 
	 

	 
	Montreal East Terminal

	 
	Review capital improvements in 2012-13 subject to taxability (pump station, etc)

	 
	Review evaluation of new role for 2014-16 (issued in Oct. 2013)

	 
	Visit refinery with municipal inspector in May 2013

	 
	Visit terminal with municipal inspector in summer 2013

	 
	Review impact of line 9 reversal

Annex C - Page 3

Annex D
Internal Audit

		
	1.
	Manager Internal Audit (86$ per hour)

		
	•
	Plan, coordinate and control all activities related to SOX, SOD, and Internal Audit according to requests.

		
	•
	Answer any questions that may arise regarding risk/control environment.

		
	•
	Review and approve documentation prepared by Senior Internal Auditors.

		
	•
	Communicate results to management.

2.    Senior Internal Auditor (65$ per hour)

SOX Process
		
	•
	Interview process owners to develop process descriptions across all company functions.

		
	•
	Prepare process descriptions and identify key financial controls.

		
	•
	Develo    p control descriptions, testing guidance, etc. related to key controls.

		
	•
	Perform walkthroughs of processes and controls.

		
	•
	Perform tests of controls and document results, identify weaknesses, determine potential impact, develop remediation plans, etc.

SOD
		
	•
	Ensure SAP/SOD issues are identified, accesses are appropriately restricted, and risks are mitigated.

Audit
		
	•
	Assist in audit assistance requests that may occur.

Annex D - Page 1

Annex E
Environment
These services will be provided by CST to Ultramar
		
	1.
	Environment Coordinator (41$ per hour)

		
	•
	Prepares cost estimates for projects, prepares AEEs for environmental projects and provides the required technical advice for various internal customers.

		
	•
	Grants mandates to consultants and contractors within the framework of site assessment, characterization and remediation projects and the dismantling of oil facilities. 

		
	•
	With assistance from external consultants, evaluates the costs of site environmental assessment, characterization and remediation projects during site closures, site redevelopment, spills, site acquisitions, etc.

		
	•
	Monitors the quality of the work of contractors/consultants and verifies invoices against tendered amounts in order to control approved budgets and established schedules.

		
	•
	Negotiates environmental-related requests with municipal authorities and with the Department of Sustainable Development, Environment and Parks concerning projects governed by the Environmental Quality Act and/or the Soils Protection and Contaminated Sites Remediation Policy. 

		
	•
	As technical advisor, assists and guides Construction and Maintenance coordinators during spills or minor and major environmental incidents.

		
	•
	Prepares and obtains provincial and municipal permits for all projects and communicates with the authorities concerning the progress achieved.

		
	•
	Examines, interprets and delivers recommendations following the revision of reports submitted by our consultants.

		
	•
	Ensures that work completed on worksites complies with Ultramar’s Safety Program for Contractors.

		
	2.
	Environment Supervisor (71$ per hour)

		
	•
	Prepares budgets and identifies funding requirements for the environmental reserve.

		
	•
	Organizes and presents the review of the status of the environmental reserve, major projects and new concerns identified at the quarterly meeting with the Environment Committee.

		
	•
	Provides technical expertise (environmental assessment) and assists in the environmental assessment of projects for internal departments:

		
	•
	Real Estate Manager (real estate transactions)

		
	•
	Legal Services Manager (legal cases)

		
	•
	Manages and controls the databank of environmental reserve projects and established budgets.

Annex E - Page 1

		
	•
	Examines, interrogates and interprets the reports submitted by our consultants.

		
	•
	Assists in updating the Company’s assets following site closures and/or lease terminations.

		
	•
	Obtains environmental certification for business transactions and work completion.

		
	•
	For environmental-related requests in the context of remediation projects, negotiates with municipal authorities and with various environment departments of governments.

		
	•
	Manages the use of our Montreal East and St-Romuald treatment centers with the company in charge of operating them.  Identifies needs to optimize these operations.

		
	•
	Jointly with the Maintenance Manager, manages environmental emergency situations.

		
	•
	Establishes and maintains lines of communication with the various provincial environment departments.

Annex E - Page 2

Annex F
Transportation Agreements Management

Ontario & Québec (at no cost)
Until the earlier of the Expiration Date or such time as provided for under Section 2.1 d) (ii) above, Ultramar will process on behalf of CST all required data currently used through the “Freight payable system”, pay the carriers and charge back CST for such invoices paid on its behalf.

Annex F - Page 1

Annex G
Letters of credit

Until the earlier of the Expiration Date or each Letter of credit renewal term, Ultramar will (in its capacity as mandatory of CST), at no cost and upon written demand from CST, present for payment any letter of credit issued during the normal course of business to the benefit of Ultramar pursuant to any agreement which has been assigned to CST under the Separation and Distribution Agreement. 

Annex G - Page 1

Annex H
Trademark License
Home Heat related trademarks
Until the earlier of (i) the Expiration Date or (ii) such time as the trademarks listed below (“Trademarks”) have been modified by CST, in order to remove the Eagle design embedded within their respective accompanying design (“Rebranding”), Ultramar will license to CST the Trademarks to allow CST to proceed with the Rebranding. Upon Rebranding, the Trademarks, without their current respective accompanying design, shall be assigned to CST. For greater clarity, Ultramar shall retain all rights relating to the Eagle design, subject to Schedules J and K of the Petroleum Product Supply Agreement, entered into on April 1, 2013. In the event that CST has not proceeded with the Rebranding by the Expiration Date, this trademark license shall terminate, and all rights shall revert back to Ultramar.
It is further understood that during the course of this trademark license, Ultramar obligations shall be strictly limited to maintaining the registration of the Trademarks. Ultramar shall not have any obligation of any kind to take any other measures with respect to the Trademarks, including its defense. In addition, the parties acknowledge a possible passing-off of Ultracomfort in Ontario, and CST agrees that Ultramar shall not be taking any action with respect to the matter.

	
			
	Reg.No.
	Title
	Reg. Date

	275,794
	ULTRACONFORT; DESIGN
	14-Jan-1983

	275,792
	ULTRACOMFORT; DESIGN
	14-Jan-1983

	275,793
	ULTRACOMFORT & DESIGN
	14-Jan-1983

	275,795
	ULTRACONFORT; DESIGN
	14-Jan-1983

	596,678
	HOUSE & HOMENERGY & DESIGN (COLOUR)
	5-Dec-2003

	601,575
	HOUSE & HOMENERGY & DESIGN
	6-Feb-2004

	607,614
	HOUSE & ULTRACONFORT & DESIGN (COLOUR)
	14-Apr-2004

	601,574
	HOUSE & ULTRACONFORT & DESIGN
	6-Jun-2004

Annex H - Page 112-2012 EX 10.9 CST (A#3)

Exhibit 10.9

CST BRANDS, INC.
2013 OMNIBUS STOCK INCENTIVE PLAN

This CST Brands, Inc. 2013 Omnibus Stock Incentive Plan (hereinafter called the “Plan”) was approved by Valero Energy Corporation (“Valero”), as the sole stockholder of the Company (as defined below) and by the Board (as defined below), and became effective on February 28, 2013.
ARTICLE 1
PURPOSE
The purpose of the Plan is to attract and retain the services of employees and non-employee directors, to provide them with a proprietary interest in the Company, and to motivate them using stock-based incentives linked to long-range performance goals and the interests of the Company’s stockholders.
ARTICLE 2
DEFINITIONS
For the purpose of the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:
		
	2.1.
	“Annual Incentive Bonus Plan” means the annual bonus program or successor plans of the Company, its subsidiaries or its successors.

		
	2.2.
	“Award” means the grant of any Incentive Stock Option, Non-qualified Stock Option, SAR, Restricted Stock, Restricted Stock Unit, Stock Unit, Performance Share, Performance Unit, Performance Cash, or Dividend Equivalent whether granted singly, in combination or in tandem (each individually referred to herein as an “Incentive”).  “Award” also means any Incentive to which an award under the Annual Incentive Bonus Plan is converted into an Award made under the Plan.

		
	2.3.
	“Award Agreement” means a written agreement between a Participant and the Company, which contains the terms of the grant of an Award.

		
	2.4.
	“Award Period” means the period during which one or more Incentives granted under an Award may be exercised or earned.

		
	2.5.
	“Board” means the board of directors of the Company.

		
	2.6.
	“Cause” means the:

		
	(a)
	conviction of the Participant by a state or federal court of (i) a felony involving moral turpitude or (ii) embezzlement or misappropriation of funds of the Company,

		
	(b)
	the Company’s reasonable determination that the Participant has (i) committed an act of fraud, embezzlement, theft, or misappropriation of funds in connection with such Participant’s duties in the course of his or her employment with the Company (or applicable Subsidiary), or (ii) engaged in gross mismanagement, negligence or misconduct that causes or could potentially cause material loss, damage or injury to the Company, any of its Subsidiaries, or their respective employees, or

    

		
	(c)
	the Company’s reasonable determination that (i) the Participant has violated any company policy, including but not limited to, policies regarding sexual harassment, insider trading, confidentiality, substance abuse and/or conflicts of interest, which violation could result in the termination of the Participant’s employment or service as a Non-employee Director, or (ii) the Participant has failed to satisfactorily perform the material duties of the Participant’s position with the Company or any of its Subsidiaries.

		
	2.7.
	“Change of Control.”  A Change of Control shall be deemed to occur when:

		
	(a)
	Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d‐3 promulgated under the Exchange Act) of 20 percent or more of either (i) the then-outstanding shares of Common Stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 2.7, the following acquisitions shall not constitute a Change of Control:  (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any company controlled by, controlling or under common control with the Company or (z) any acquisition pursuant to a transaction that complies with Sections 2.7(c)(i), 2.7(c)(ii) and 2.7(c)(iii);

		
	(b)
	Individuals who, as of the Separation, 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 Separation whose election, or nomination for election by the Company’s stockholders, 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 was 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 actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

		
	(c)
	Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or securities of another entity by the Company or any of its Subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50 percent of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may 

Page 2

be, (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20 percent or more of, respectively, the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
		
	(d)
	Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

		
	2.8.
	“Code” means the Internal Revenue Code of 1986, as amended, together with the published rulings, regulations, and interpretations promulgated thereunder.

		
	2.9.
	“Committee” means the Compensation Committee of the Board or such other Committee appointed or designated by the Board to administer the Plan in accordance with Article 3 of this Plan.

		
	2.10.
	“Common Stock” means the Company’s $0.01 par value common stock, which the Company is currently authorized to issue or may in the future be authorized to issue.

		
	2.11.
	“Company” means CST Brands, Inc., a Delaware corporation, and any successor entity.

		
	2.12.
	“Covered Participant” means a Participant who is a “covered employee” as defined in Section 162(m)(3) of the Code, and any individual the Committee determines should be treated as such a covered employee.

		
	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.

		
	2.14.
	“Dividend Equivalent” means an Award, designated as a Dividend Equivalent, granted to Participants pursuant to Section 6.8 hereof, or in conjunction with other Awards, the value of which is determined, in whole or in part, by the value of payments tied to or based on the payment of dividends to holders of Common Stock and may be conditioned on the attainment of Performance Goals in a manner deemed appropriate by the Committee and described in the Award Agreement.

		
	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, or an individual who has agreed to become an employee of the Company or any Subsidiary and actually becomes such an employee within the following six months.

		
	2.16.
	“Exchange Act” means the Securities Exchange Act of 1934, as amended.

		
	2.17.
	“Fair Market Value” of a share of Common Stock is the mean of the highest and lowest prices per share on the New York Stock Exchange on the pertinent date, or in the absence of reported sales on such day, then on the next following day for which sales were reported.

Page 3

		
	2.18.
	“Good Reason” means that the Participant’s employment may be terminated by the Employee for Good Reason following a Change of Control, or anytime within two years following the date of Change of Control, when Good Reason means:

		
	(a)
	The assignment to the Employee of any duties inconsistent in any respect with the Employee’s position (including status, offices, titles and reporting requirements), authority, duties, or responsibilities or any other action by the Company that results in a diminution in such position’s, authority, duties, or responsibilities, excluding for this purpose an isolated, insubstantial , and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Employee;

		
	(b)
	Any reduction in the Employee’s base salary, annual incentive target opportunity, and/or long‐term incentive target opportunity below the level at which the Employee was awarded compensation immediately prior to the Change of Control;

		
	(c)
	The Company’s requiring that the Employee to be based at any office or location other than the location at which the Employee was based immediately preceding the Change of Control or a location other than the principal executive offices of the Company, without the Employee’s written consent; or

		
	(d)
	Any requirement for the Employee to travel on Company business to a substantially greater extent than required immediately prior to the Change of Control.

		
	2.19.
	“Incentive” means an Award under the Plan as defined by Section 2.2 of Article 2.

		
	2.20.
	“Incentive Stock Option” or “ISO” means an incentive stock option within the meaning of Section 422 of the Code, granted pursuant to this Plan.

		
	2.21.
	“Limited SAR” or “Limited Stock Appreciation Right” means an Award designated as an SAR as defined in this Article 2, which is granted with certain limiting features as determined by the Committee and as set forth in the Award Agreement at the time of grant.

		
	2.22.
	“Non-Employee Director” means a member of the Board who is not an Employee.

		
	2.23.
	“Non-qualified Stock Option” or “NQSO” means a stock option, granted pursuant to this Plan that is not intended to comply with the requirements set forth in Section 422 of the Code.

		
	2.24.
	“NYSE” means the New York Stock Exchange.

		
	2.25.
	“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.

		
	2.26.
	“Participant” shall mean an Employee or Non-Employee Director to whom an Award is granted under this Plan.

		
	2.27.
	“Performance Award” means an Award made pursuant to this Plan to a Participant that is subject to the attainment of one or more Performance Goals.  Performance Awards may be in the form of Performance Shares, Performance Units, Performance Cash, or Dividend Equivalents.

		
	2.28.
	“Performance Cash” means an Award, designated as Performance Cash and denominated in cash, granted to a Participant pursuant to Section 6.7 hereof, the value of which is conditioned, in whole or 

Page 4

in part, by the attainment of Performance Goals in a manner deemed appropriate by the Committee and described in the Award Agreement.
		
	2.29.
	“Performance Criteria” or “Performance Goals” or “Performance Measures” mean the objectives established by the Committee for a Performance Period, for the purpose of determining when an Award subject to such objectives is earned.

		
	2.30.
	“Performance Period” means the time period designated by the Committee during which performance goals must be met.

		
	2.31.
	“Performance Share” means an Award, designated as a Performance Share in the form of shares of Common Stock or other securities of the Company, granted to a Participant pursuant to Section 6.7 hereof, the value of which is determined, in whole or in part, by the value of Common Stock and/or conditioned on the attainment of Performance Goals in a manner deemed appropriate by the Committee and described in the Award Agreement.

		
	2.32.
	“Performance Unit” means an Award, designated as a Performance Unit, granted to a Participant pursuant to Section 6.7 hereof, the value of which is determined, in whole or in part, by the attainment of Performance Goals in a manner deemed appropriate by the Committee and described in the Award Agreement.

		
	2.33.
	“Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.

		
	2.34.
	“Plan” means the CST Brands, Inc. 2013 Omnibus Stock Incentive Plan, as amended from time to time.

		
	2.35.
	“Restricted Stock” means shares of Common Stock issued or transferred to a Participant pursuant to Section 6.4 of this Plan that are subject to restrictions or limitations set forth in this Plan and in the related Award Agreement.

		
	2.36.
	“Restricted Stock Unit” means a fixed or variable dollar-denominated right to acquire Common Stock, which may or may not be subject to restrictions, contingently awarded under Section 6.4 of the Plan.

		
	2.37.
	“Retirement” means any termination of service due to retirement upon attainment of certain age and/or service requirements as specified by the Company’s qualified retirement program(s) or successor programs or as determined by the Committee in the event of early retirement.

		
	2.38.
	“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 the date the SAR is exercised over the SAR Price for such shares, and may be granted as a Limited SAR.

		
	2.39.
	“SAR Price” means the Fair Market Value of each share of Common Stock covered by a SAR, determined by the Committee on the Date of Grant of the SAR.

		
	2.40.
	“SEC” shall mean the Securities and Exchange Commission.

		
	2.41.
	“Separation” means the separation of the Company from Valero and the associated distribution of Common Stock to Valero shareholders.

Page 5

		
	2.42.
	“Stock Option” means a Non-qualified Stock Option or an Incentive Stock Option.

		
	2.43.
	“Stock Unit Award” means awards of Common Stock or other awards pursuant to Section 6.8 hereof that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other securities of the Company.

		
	2.44.
	“Subsidiary” means any entity for which CST Brands, Inc. is the ultimate parent company and in which all of the equity, partnership, member or other interests are owned by CST Brands, Inc. or another one of its Subsidiaries.  “Subsidiaries” means more than one of any such entities.

ARTICLE 3
ADMINISTRATION
		
	3.1.
	The Committee shall administer the Plan unless otherwise determined by the Board.  The administering 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; and any vacancy occurring in the membership of the Committee may be filled by appointment by the Board.  

		
	3.2.
	The Committee shall select one of its members to act as its Chair.  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.

		
	3.3.
	The Committee 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 the Award Period, the Date of Grant, and such other terms and conditions as may be approved by the Committee not inconsistent with the Plan.  The Committee shall determine whether an Award shall include one type of Incentive, two or more Incentives granted in combination, or two or more Incentives granted in tandem.

		
	3.4.
	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, and (iii) make such other determinations 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.

		
	3.5.
	With respect to restrictions in the Plan that are based on the requirements of Rule 16b-3 under the Exchange Act, Section 422 of the Code, Section 162(m) of the Code, the rules of the NYSE or 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.

ARTICLE 4
ELIGIBILITY
Employees (including Employees who are also a director or an officer) and Non-Employee Directors are eligible to participate in the Plan.  The Committee, in its discretion, may grant, but shall not be required to grant, an Award to any Employee or Non-Employee Director.  Awards may be granted by the Committee at any time and from time to time selectively to one or more new Participants, or to then Participants, or to a 

Page 6

greater or lesser number of Participants, and may include or exclude previous Participants, all as the Committee shall determine.  Except as may be required by the Plan, Awards need not be uniform.
ARTICLE 5
SHARES SUBJECT TO PLAN
		
	5.1.
	Total Shares Available.  Subject to adjustment as provided in Articles 14 and 15, the maximum number of shares of Common Stock that may be delivered pursuant to (a) Awards granted under the Plan is an amount equal to 10 percent of the total number of shares of Common Stock issued by the Company as of immediately following the Separation (the “Share Limit”) and (b) Stock Options granted under the Plan intended to be Incentive Stock Options is an amount equal to 50 percent of the Share Limit.

		
	5.2.
	Source of 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 a number of shares of Common Stock that shall be sufficient to satisfy the requirements of this Plan.

		
	5.3.
	Restoration and Retention of Shares (“Share Counting”).  If any shares of Common Stock subject to an Award shall not be issued or transferred to a Participant and shall cease to be issuable or transferable to a Participant because of the forfeiture, termination, expiration or cancellation, in whole or in part, of such Award or for any other reason, or if any such shares shall, after issuance or transfer, be reacquired by the Company because of the Participant’s failure to comply with the terms and conditions of an Award or for any other reason, the shares not so issued or transferred, or the shares so reacquired by the Company, as the case may be, shall no longer be charged against the limitation provided for in Section 5.1 and may be used thereafter for additional Awards under the Plan.  The following additional parameters shall apply:

		
	(a)
	To the extent an Award under the Plan is settled or paid in cash, shares subject to such Award will not be considered to have been issued and will not be applied against the maximum number of shares of Common Stock provided for in Section 5.1.

		
	(b)
	If an Award may be settled in shares of Common Stock or cash, such shares shall be deemed issued only when and to the extent that settlement or payment is actually made in shares of Common Stock.  To the extent an Award is settled or paid in cash, and not shares of Common Stock, any shares previously reserved for issuance or transfer pursuant to such Award will again be deemed available for issuance or transfer under the Plan, and the maximum number of shares of Common Stock that may be issued or transferred under the Plan shall be reduced only by the number of shares actually issued and transferred to the Participant.

		
	(c)
	Notwithstanding the foregoing:  (i) Shares withheld or tendered to pay withholding taxes or the exercise price of an Award shall not again be available for the grant of Awards under the Plan, and (ii) the full number of Shares subject to a Stock Option or SAR granted that are settled by the issuance of Shares shall be counted against the Shares authorized for issuance under this Plan, regardless of the number of Shares actually issued upon the settlement of such Stock Option or SAR.

Page 7

		
	(d)
	Any Shares repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of Shares available for the future grant of Awards.

		
	5.4.
	Uncertificated Shares.  Shares issued under the Plan will be registered in uncertificated book-entry form (unless a holder of Common Stock requests a certificate representing such holder’s shares of Common Stock).  As a result, instead of receiving Common Stock certificates, holders of Common Stock will receive account statements reflecting their ownership interest in shares of Common Stock.  The book-entry shares will be held with the Company’s transfer agent, which will serve as the record keeper for all shares of Common Stock being issued in connection with the Plan.  Any stockholder who wants to receive a physical certificate evidencing shares of Common Stock issued under the Plan will be able to obtain a certificate by contacting the Company’s transfer agent.  

ARTICLE 6
GRANT OF AWARDS
		
	6.1.
	In General.

		
	(a)
	The grant of an Award shall be authorized by the Committee and may 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) or the value of the Performance Award (if applicable), the Option Price (if applicable), the Award Period, the Date of Grant, and such other terms as are approved by the Committee not inconsistent with the Plan.  The Company may 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 10 years of the date of adoption of this Plan or within 10 years following the date upon which the Plan was last amended and approved by its stockholders.  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 Date of Grant purchase price for an Award, the Participant must pay such purchase price within 30 days (or such shorter period as the Committee may specify) after the Date of Grant.

		
	6.2.
	Limitations on Awards.

		
	(a)
	The Plan is subject to the following additional limitations:

		
	(i)
	The Option Price of Stock Options cannot be less than 100 percent of the Fair Market Value of a share of Common Stock on the Date of Grant of the Stock Option.

		
	(ii)
	The SAR Price of a SAR cannot be less than 100 percent of the Fair Market Value of a share of Common Stock on the Date of Grant of the SAR.

		
	(iii)
	Repricing of Stock Options and SAR’s or other downward adjustments in the Option Price or SAR Price of previously granted Stock Options or SAR’s, respectively, are prohibited, except in connection with a corporate transaction involving the Company such as any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares, provided that the terms of outstanding Awards 

Page 8

may not be amended without stockholder approval to reduce the exercise price of outstanding Stock Options or SAR’s or cancel outstanding Stock Options or SAR’s in exchange for cash, other awards or Stock Options or SAR’s having an exercise price that is less than the exercise price of the original Stock Option or SAR.
		
	(iv)
	Not more than 70 percent of the available shares pursuant to Awards under the Plan may be in the form of time-lapse Restricted Stock, time-lapse Restricted Stock Units, Stock Units, Performance Shares, Performance Units, Performance Cash, and Dividend Equivalents.

		
	(v)
	No Participant may receive during any calendar year (A) Stock Options or SARs covering an aggregate of more than 1,000,000 shares or (B) Awards that are intended to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code (other than Stock Options or SARs) covering an aggregate of more than 1,000,000 shares.

		
	(vi)
	No Participant may receive during any calendar year Awards that are to be settled in cash covering an aggregate of more than $20,000,000.

		
	(vii)
	The term of Awards may not exceed 10 years.

		
	(b)
	Limited SAR’s granted in tandem with Stock Options or other Awards shall not be counted towards the maximum individual grant limitation set forth in this Section, as the Limited SAR will expire based on conditions described in Section 6.5(b), below.

		
	6.3.
	Rights as Stockholder.  Except as provided in Section 6.4 of this Plan, until the issuance of the shares of Common Stock (as evidenced by the appropriate entry on the books of the Company or its transfer agent), no right to vote or receive dividends or any other rights as a stockholder of the Company shall exist with respect to such shares, notwithstanding the exercise of any Incentive or Award.  No adjustment will be made for a dividend or other rights for which the record date is prior to the date shares are issued, except as otherwise provided in this Plan.

		
	6.4.
	Restricted Stock/Restricted Stock Units.  If Restricted Stock and/or Restricted Stock Units are granted to a Participant under an Award, the Committee shall establish:  (i) the number of shares of Restricted Stock and/or the number of Restricted Stock Units awarded, (ii) the price, if any, to be paid by the Participant for such Restricted Stock and/or Restricted Stock Units, (iii) the time(s) within which such Award may be subject to forfeiture, (iv) specified Performance Goals of the Company, a Subsidiary, any division thereof or any group of Employees of the Company, or other criteria, if any, which the Committee determines must be met in order to remove any restrictions (including vesting) on such Award, and (v) all other terms of the Restricted Stock and/or Restricted Stock Units, which shall be consistent with this Plan.  The provisions of Restricted Stock and/or Restricted Stock Units need not be the same with respect to each Participant.

		
	(a)
	Record of Shares.  Each Participant who is awarded Restricted Stock shall be issued the number of shares of Common Stock specified in the Award Agreement for such Restricted Stock, and such shares shall be recorded in the share transfer records of the Company and ownership of such shares shall be evidenced by a book entry notation in the share transfer records of the Company’s transfer agent.  Such shares shall be registered in the name of the Participant, subject to any restrictions in effect for the Award.

		
	(b)
	Restrictions and Conditions.  Shares of Restricted Stock and Restricted Stock Units shall be subject to the following restrictions and conditions:

Page 9

		
	(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 (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock and/or Restricted Stock Units.  Except with respect to issuances hereunder representing no greater than five percent of the Share Limit, any Restricted Stock or Restricted Stock Units not granted pursuant to a Performance Award shall have a minimum Restriction Period of three years from the Date of Grant, provided that the Committee may provide for earlier vesting following a Change in Control or upon an Employee’s termination of employment by reason of death, disability or Retirement.  Except for these limitations, the Committee may in its sole discretion, remove any or all of the restrictions on such Restricted Stock and/or Restricted Stock Units 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 subparagraph (i) above and subject to the terms of a Participant’s 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 or other evidence of ownership of 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.  Each Participant, by his or her acceptance of Restricted Stock, shall irrevocably grant to the Company a power of attorney to transfer any forfeited shares to the Company and agrees to execute any documents requested by the Company in connection with such forfeiture and transfer.

		
	(iii)
	The Restriction Period of Restricted Stock and/or Restricted Stock Units shall commence on the Date of Grant and, subject to Article 14 of the Plan, unless otherwise established by the Committee in the Award Agreement setting forth the terms of the Restricted Stock and/or Restricted Stock Units, shall expire upon satisfaction of the conditions set forth in the Award Agreement; such conditions may provide for vesting based on (i) length of continuous service, (ii) achievement of specific business objectives, (iii) increases in specified indices, (iv) attainment of specified growth rates, or (v) other comparable Performance Measurements, as may be determined by the Committee in its sole discretion.

		
	(c)
	Forfeiture.  Except as otherwise determined by the Committee (to the extent permitted by applicable law or the listing standards of the NYSE) the Chief Executive Officer, the provisions of Article 8 shall apply with respect to Restricted Stock granted hereunder.

		
	6.5.
	SAR’s and Limited SAR’s.

		
	(a)
	An SAR shall entitle the Participant at his or her election to surrender to the Company the SAR, or portion thereof, as the Participant shall choose, and to receive from the Company in exchange therefore 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 over the SAR Price per share specified in such SAR, multiplied by the total number of shares of the SAR being surrendered.  In the discretion of the Committee, the Company may satisfy its obligation upon exercise of an SAR by the distribution of that number of shares of Common Stock having an aggregate 

Page 10

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.
		
	(b)
	A Limited SAR shall allow the Participant to receive from the Company cash in an amount equal to the excess (if any) of the Fair Market Value (as of the date of the exercise of the Limited SAR) per share over the Limited SAR Price per share specified in such Limited SAR, multiplied by the total number of shares of the Limited SAR being surrendered.  The Company will satisfy its obligation with a cash settlement to be made for any fractional Limited SAR.  Limited SAR’s will expire without consideration upon the vesting, exercise, or settlement, in shares and/or in cash, of Awards for which the Limited SAR was granted in tandem.

		
	6.6.
	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 an SAR are issued in a 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.

		
	6.7.
	Performance Based Awards.

		
	(a)
	Grant of Performance Awards.  The Committee may issue Performance Awards in the form of Performance Units, Performance Shares, Performance Cash, or Dividend Equivalents to Participants subject to the Performance Goals and Performance Period as it shall determine.  The terms and conditions of each Performance Award will be set forth in the Award Agreement.  The Committee shall have complete discretion in determining the number and/or value of Performance Awards granted to each Participant.  Any Performance Units or Performance Shares granted under the Plan shall have a minimum Restriction Period of one year from the Date of Grant, provided that the Committee may provide for earlier vesting following a Change in Control or upon a Participant’s termination of service by reason of death, disability or Retirement.  Participants receiving Performance Awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services.

		
	(b)
	Value of Performance Awards.  The Committee shall set Performance Goals in its discretion for each Participant who is granted a Performance Award.  Such Performance Goals may be particular to a Participant, may relate to the performance of the Subsidiary or division which employs him or her, may be based on the performance of the Company generally, or a combination of the foregoing.  The Performance Goals may be based on achievement of financial statement objectives, or any other objectives established by the Committee.  The Performance Goals may be absolute in their terms or measured in relationship to other companies similarly or otherwise situated.  The extent to which such Performance Goals are met will determine the number and/or value of the Performance Award to the Participant.

		
	(c)
	Form of Payment.  Payment of the amount to which a Participant shall be entitled upon the settlement of a Performance Award shall be made in a lump sum or installments in cash, shares of Common Stock, or a combination thereof as determined by the Committee.  Dividend Equivalents may not be paid on unvested Performance Shares.

		
	6.8.
	Other Stock Based Awards.

Page 11

		
	(a)
	Grant of Other Stock Based Awards.  The Committee may issue to Participants, either alone or in addition to other Awards made under the Plan, Stock Unit Awards which may be in the form of Common Stock or other securities.  The value of each such Award shall be based, in whole or in part, on the value of the underlying Common Stock or other securities.  The Committee, in its discretion, may determine that an Award, either in the form of a Stock Unit Award under this Section or as an Award granted pursuant to the other provisions of this Article, may provide to the Participant (i) dividends or Dividend Equivalents (payable on a current or deferred basis, except not for Stock Options and unvested SAR’s) and (ii) cash payments in lieu of or in addition to an Award.  The Committee shall determine the terms, restrictions, conditions, vesting requirements, and payment rules (all of which are sometimes hereinafter collectively referred to as “rules”) of the Award and shall set forth those rules in the related Award Agreement.

		
	(b)
	Rules for Stock Unit Awards.  The Committee, in its sole and complete discretion, may grant a Stock Unit Award subject to the following rules:

		
	(i)
	All rights with respect to such Stock Unit Awards granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or his or her guardian or legal representative.

		
	(ii)
	Stock Unit Awards may require the payment of cash consideration by the Participant in receipt of the Award or provide that the Award, and any Common Stock or other securities issued in conjunction with the Award be delivered without the payment of cash consideration.

		
	(iii)
	The Committee, in its sole and complete discretion, may establish certain Performance Criteria that may relate in whole or in part to receipt of the Stock Unit Awards.

		
	(iv)
	Stock Unit Awards may be subject to a deferred payment schedule and/or vesting over a specified employment period.

		
	(v)
	The Committee as a result of certain circumstances may waive or otherwise remove, in whole or in part, any restriction or condition imposed on a Stock Unit Award at the time of Award.

ARTICLE 7
AWARD PERIOD; VESTING
		
	7.1.
	Award Period.  Subject to the other provisions of this Plan, no Incentive granted under the Plan may be exercised at any time after the end of its Award Period.

		
	7.2.
	Vesting.  The Committee, in its sole discretion, may determine that an Incentive will be immediately exercisable or the restrictions thereon will immediately lapse, in whole or in part, or that all or any portion may not be exercised or the restrictions thereon will not lapse 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 exercise or the lapsing of restrictions, 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 exercised or the restrictions may lapse, consistent with the terms of this Plan.

Page 12

ARTICLE 8
TERMINATION OF SERVICE
		
	8.1.
	Termination of Service.

		
	(a)
	Vesting and Exercise.  Except as otherwise provided in the Plan, or otherwise determined by the Committee and included in the applicable Award Agreement, a Stock Option, SAR or other Award having an exercise provision (each, an “Exercisable Award”) vests in and may be exercised by a Participant only while the Participant is and has continually been since the date of the grant of the Exercisable Award an Employee or Non-Employee Director.

		
	(b)
	Voluntary Termination by Participant (Exercisable Awards).  If a Participant’s employment or service as a Non-Employee Director is voluntarily terminated by the Participant (other than through Retirement, death or disability; see Section 8.3 below), then:  (i) that portion of any Exercisable Award that has not vested on or prior to such date of termination shall automatically lapse and be forfeited, and (ii) all vested but unexercised Exercisable Awards previously granted to that Participant under the Plan shall automatically lapse and be forfeited at the close of business on the 30th day following that date of such Participant’s termination, unless an Exercisable Award expires earlier according to its original terms.

		
	(c)
	Involuntary Termination for Cause (Exercisable Awards).  If a Participant’s employment or service as a Non-Employee director is involuntarily terminated by the Company for Cause:  (i) that portion of any Exercisable Award that has not vested on or prior to such date of termination shall automatically lapse and be forfeited, and (ii) all vested but unexercised Exercisable Awards previously granted to that Participant under the Plan shall automatically lapse and be forfeited at the close of business on the 30th day following that date of such Participant’s termination, unless an Exercisable Award expires earlier according to its original terms.

		
	(d)
	Involuntary Termination Other Than For Cause (Exercisable Awards).  If a Participant’s employment or service as a Non-Employee Director is involuntarily terminated by the Company other than for Cause:  (i) that portion of any Exercisable Award that has not vested on or prior to such date of termination shall automatically lapse and be forfeited, and (ii) all vested but unexercised Exercisable Awards previously granted to that Participant under the Plan shall automatically lapse and be forfeited at the close of business on the last business day of the twelfth month following the date of the Participant’s termination, unless an Exercisable Award expires earlier according to its original terms.

		
	8.2.
	Awards Other Than Exercisable Awards.  Except as otherwise provided in the Plan, or otherwise determined by the Committee and included in the applicable Award Agreement, if a Participant’s employment or service as a Non-Employee Director is voluntarily terminated by the Participant (other than through Retirement, death or disability; see Section 8.3 below), or is terminated by the Company with or without Cause, then any Award other than an Exercisable Award previously granted to that Participant under the Plan which remains unvested shall automatically lapse and be forfeited at the close of business on the date of such Participant’s termination of employment or service.

		
	8.3.
	Retirement, Death, Disability.  Except as otherwise provided in the Plan, or otherwise determined by the Committee and included in the applicable Award Agreement, if a Participant’s employment or service as a Non-Employee Director is terminated because of Retirement, death or disability (with the determination of disability to be made within the sole discretion of the Committee), any Award 

Page 13

held by the Participant shall remain outstanding and vest or become exercisable according to the Award’s original terms, provided that any Restricted Stock or Restricted Stock Units held by the Participant that remain unvested as of the date of Retirement, death or disability shall be forfeited as of such date.
		
	8.4.
	Amendment.  Subject to the limitations set forth in Section 6.2 above, the Committee or the Chief Executive Officer may prescribe new or additional terms for the vesting, exercise or realization of any Award, provided that no such action shall deprive a Participant or beneficiary, without his or her consent, of the right to any benefit accrued to his or her credit at the time of such action.

ARTICLE 9
EXERCISE OF INCENTIVE
		
	9.1.
	In General.

		
	(a)
	A vested Incentive may be exercised during its Award Period, subject to limitations and restrictions set forth therein and in Article 8.  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 and conditions of the Plan.

		
	(b)
	An Incentive may not 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.  No Incentive may be exercised for a fractional share of Common Stock.

		
	9.2.
	Stock Options.

		
	(a)
	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 (the “Exercise Notice”) and the date of exercise thereof (the “Exercise Date”) in accordance with procedures established by the Company.  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 follows:  (a) cash, 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, (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 and promptly deliver to the Company the amount of sale proceeds necessary to pay such purchase price, and/or (d) in any other form of valid consideration that is acceptable to the Company in its sole discretion.  If 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 submitted, as well as any additional restrictions that may be imposed by the Committee.

		
	(b)
	Upon payment of all amounts due from the Participant, the Company shall cause shares of the Common Stock then being purchased to be delivered as directed by the Participant (or 

Page 14

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 possession of 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 or desirable 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 acceptable to the Committee.
		
	(c)
	If the Participant fails to pay for any of the Common Stock specified in such notice or fails to accept delivery thereof, the Participant’s right to purchase such Common Stock may be terminated by the Company.

		
	9.3.
	SAR’s.  Subject to the conditions of this Section and such administrative regulations as the Committee may from time to time adopt, an 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 in accordance with procedures established by the Company.  On the SAR exercise date, the Participant shall receive from the Company in exchange therefore 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.  In the discretion of the Committee, the Company may satisfy its obligation upon exercise of an SAR by the distribution of 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.

		
	9.4.
	Tax Payment Election.  Subject to the approval of the Committee, and to any rules and limitations as the Committee may adopt, a person exercising an Incentive may make the payment of the amount of any taxes required to be collected or withheld by the Company in connection with such exercise in whole or in part by electing, at or before the time of exercise, either (i) to have the Company withhold from the number of shares otherwise deliverable a number of shares whose value equals the amount of the applicable supplemental wage withholding required plus any required state, local or employment tax withholdings, or (ii) to deliver certificates for other shares owned by the person exercising the Award, endorsed in blank with appropriate signature guarantee, having a value equal to the amount otherwise to be collected or withheld.

		
	9.5.
	Valuation.  Any calculation with respect to a Participant’s income, required tax withholding or other matters required to be made by the Company upon the exercise of an Incentive shall be made using the Fair Market Value of the shares of Common Stock on the Exercise Date, whether or not the Exercise Notice is delivered to the Company before or after the close of trading on that date, unless otherwise specified by the Committee.  Notwithstanding the foregoing, for Stock Option exercises using the Company’s “same-day-sale for cash method” or “broker sale for stock method,” a 

Page 15

Participant’s taxable gain and related tax withholding on the exercise will be calculated using the actual market price at which shares were sold in the transaction.
ARTICLE 10
SPECIAL PROVISIONS APPLICABLE 
TO COVERED PARTICIPANTS
Awards subject to Performance Criteria paid to Covered Participants under this Plan shall be governed by the conditions of this Article 10 in addition to the requirements of Article 6, above.  If the conditions set forth under this Article 10 conflict with the requirements of Article 6, the conditions of this Article 10 shall prevail.  In the event an Award is intended to comply with Code Section 162(m), then the provisions of this Article 10 shall apply. Notwithstanding any other provision in this Plan to the contrary, the Committee may grant Awards that do not fully comply with the requirements of Code Section 162(m) to any Participant, and such non-compliant Awards will not be subject to the limitations of this Article 10.
		
	10.1.
	Establishment of Performance Measures, Goals or Criteria.  All Performance Measures, Goals, or Criteria relating to Covered Participants for a relevant Performance Period shall be established by the Committee in writing prior to the beginning of the Performance Period, or by such other later date for the Performance Period as may be permitted under Section 162(m) of the Code.  The Performance Goals may be identical for all Participants or, at the discretion of the Committee, may be different to reflect more appropriate measures of individual performance.

		
	10.2.
	Performance Goals.  The Committee shall establish the Performance Goals relating to Covered Participants for a Performance Period in writing.  Performance Goals may include alternative and multiple Performance Goals and may be based on one or more business and/or financial criteria.  In establishing the Performance Goals for the Performance Period, the Committee in its discretion may include one or any combination of the following criteria in either absolute or relative terms, for the Company or any Subsidiary:

		
	(a)
	Increased revenue;

		
	(b)
	Net income measures (including but not limited to income after capital costs and income before or after taxes);

		
	(c)
	Stock price measures (including but not limited to growth measures and total stockholder return);

		
	(d)
	Market share;

		
	(e)
	Earnings per share (actual or targeted growth);

		
	(f)
	Earnings before interest, taxes, depreciation, and amortization (“EBITDA”);

		
	(g)
	Economic value added (“EVA”);

		
	(h)
	Cash flow measures (including but not limited to net cash flow and net cash flow before financing activities);

		
	(i)
	Return measures (including but not limited to return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity);

		
	(j)
	Operating measures (including but not limited to operating income, funds from operations, cash from operations, after-tax operating income and sales volumes);

		
	(k)
	Expense measures (including but not limited to general and administrative expense);

Page 16

		
	(l)
	Margins;

		
	(m)
	Stockholder value;

		
	(n)
	Total stockholder return;

		
	(o)
	Proceeds from dispositions;

		
	(p)
	Total market value; and

		
	(q)
	Corporate values measures (including but not limited to ethics compliance, environmental, and safety).

		
	10.3.
	Compliance with Section 162(m).  The Performance Goals must be objective and must satisfy third party “objectivity” standards under Section 162(m) of the Code, and the regulations promulgated thereunder.  In interpreting Plan provisions relating to Awards subject to Performance Goals paid to Covered Participants, it is the intent of the Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulation §1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. 

		
	10.4.
	Adjustments.  The Committee is authorized to make adjustments in the method of calculating attainment of Performance Goals in recognition of:  (i) extraordinary or non-recurring items, (ii) changes in tax laws, (iii) changes in generally accepted accounting principles or changes in accounting principles, (iv) charges related to restructured or discontinued operations, (v) restatement of prior period financial results, and (vi) any other unusual, non-recurring gain or loss that is separately identified and quantified in the Company’s financial statements. Notwithstanding the foregoing, the Committee may, at its sole discretion, reduce the performance results upon which Awards are based under the Plan, to offset any unintended result(s) arising from events not anticipated when the Performance Goals were established, or for any other purpose, provided that such adjustment is permitted by Section 162(m) of the Code.

		
	10.5.
	Discretionary Adjustments.  The Performance Goals shall not allow for any discretion by the Committee as to an increase in any Award, but discretion to lower an Award is permissible.

		
	10.6.
	Certification.  The Award and payment of any Award under this Plan to a Covered Participant with respect to a relevant Performance Period shall be contingent upon the attainment of the Performance Goals that are applicable to such Covered Participant.  The Committee shall certify in writing prior to payment of any such Award that such applicable Performance Goals relating to the Award are satisfied.  Approved minutes of the Committee may be used for this purpose.

		
	10.7.
	Other Considerations.  All Awards to Covered Participants under this Plan shall be further subject to such other conditions, restrictions, and requirements as the Committee may determine to be necessary to carry out the purpose of this Article 10.

ARTICLE 11
AMENDMENT OR DISCONTINUANCE
		
	11.1.
	In General.  Subject to the limitations set forth in this Article 11, the Committee 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 that no amendment that requires stockholder approval under the rules of the national exchange on which the shares of Common Stock are listed (or in order for the Plan and Incentives awarded under the Plan to continue to comply with Section 162(m) of the Code, including any successors to such Section), shall be effective unless such amendment shall be approved by the requisite vote of the stockholders of the Company entitled to 

Page 17

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.
		
	11.2.
	Amendments to Awards.  Subject to the limitations set forth in the Plan, the Committee may waive any conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided that, unless required by law, no action contemplated or permitted by this Article 11 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.

		
	11.3.
	Unusual or Nonrecurring Events.  The Committee is hereby authorized to make adjustments in the terms, conditions, and criteria of Awards in recognition of unusual or nonrecurring events (including the events described in Section 13 of the Plan) affecting the Company, any Subsidiary, or the financial statements of the Company, or in recognition of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

ARTICLE 12
EFFECTIVE DATE AND TERM
The Plan shall become effective on the date of its approval by the stockholder of the Company, and shall continue in existence and force for a period of 10 years thereafter, subject to earlier termination as prescribed under Article 11 above.  After termination of the Plan, no future Awards may be granted hereunder, but any Awards or Incentives granted before the date of termination will continue to be in effect in accordance with their terms and conditions.
ARTICLE 13
CAPITAL ADJUSTMENTS
		
	13.1.
	In General.  If at any time while the Plan is in effect, or Incentives are outstanding, there shall be any stock dividend, stock split, reverse stock split, separation, spinoff, reorganization, extraordinary dividend of cash or other property, share combination, or recapitalization or similar event affecting the capital structure of the Company, then:

		
	(a)
	An appropriate adjustment shall be made in the maximum number of shares of Common Stock then subject to being awarded under the Plan and in the maximum number of shares of Common Stock that may be awarded to a Participant to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock shall continue to be subject to being so awarded.

		
	(b)
	Appropriate adjustments shall be made in the number of shares of Common Stock and the Option Price thereof then subject to purchase pursuant to each such Stock Option previously granted and unexercised, to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock in each such instance shall remain subject to purchase at the same aggregate Option Price.

Page 18

		
	(c)
	Appropriate adjustments shall be made in the number of SAR’s and the SAR Price thereof then subject to exercise pursuant to each such SAR previously granted and unexercised, 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.

		
	(d)
	Appropriate adjustments shall be made in the number of outstanding shares of Restricted Stock with respect to which restrictions have not yet lapsed prior to any such change.

		
	(e)
	Appropriate adjustments shall be made with respect to shares of Common Stock applicable to any other Incentives previously awarded under the Plan as the Committee, in its sole discretion, deems appropriate, consistent with the event.

		
	13.2.
	Issuance of Stock or Other Convertible Securities.  Except as otherwise expressly provided herein, the issuance by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to (i) the number of or Option Price of shares of Common Stock then subject to outstanding Stock Options granted under the Plan, (ii) the number of or SAR Price or SAR’s then subject to outstanding SAR’s granted under the Plan, (iii) the number of outstanding shares of Restricted Stock, or (iv) the number of shares of Common Stock otherwise payable under any other Incentive.

		
	13.3.
	Notification.  Upon the occurrence of each event requiring an adjustment with respect to any Incentive, the Company shall notify each affected Participant its computation of such adjustment, which shall be conclusive and shall be binding upon each such Participant.

ARTICLE 14 
RECAPITALIZATION, MERGER AND 
CONSOLIDATION; CHANGE OF CONTROL
		
	14.1.
	Adjustments, Recapitalizations, Reorganizations, or Other Adjustments.  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 issue 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.

		
	14.2.
	Acquiring Entity.  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 Participant would have been entitled.

		
	14.3.
	Acquired Entity.  In the event of any merger, consolidation or share exchange pursuant to which the Company is not the surviving or resulting corporation, there shall be substituted for each share of Common Stock subject to the unexercised portions of such outstanding Incentives, that number of shares of each class of stock or other securities or that amount of cash, property, or assets of the 

Page 19

surviving, resulting or consolidated company that 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.
		
	14.4.
	Change of Control.  Unless otherwise specifically prohibited under applicable laws, or by the rules of any governing governmental agency or authority or national securities exchange, the Committee may, in its sole discretion, at the time an Award is made or granted hereunder or at any time prior to, coincident with, or after the time of a Change of Control, take one of the following actions which shall apply only upon the occurrence of a Change of Control or, if later, upon the action being taken:

		
	(a)
	Provide for the acceleration of any time periods, or the waiver of any other conditions, relating to the vesting, exercise, payment, or distribution of an Award so that any Award to a Participant whose employment has been terminated as a result of a Change in Control may be vested, exercised, paid, or distributed in full on or before a date fixed by the Committee, and in connection therewith the  Committee may (i) provide for an extended period to exercise Options (not to exceed the original term) and (ii) determine the level of attainment of any applicable performance goals;

		
	(b)
	Provide for the purchase of any Awards from a participant whose employment has been terminated as a result of a Change of Control, upon the Participant’s request, for an amount of cash equal to the amount that could have been obtained upon the exercise, payment, or distribution of such rights had such Award been currently exercisable or payable; or

		
	(c)
	Cause the Awards then outstanding to be assumed, or new rights substituted therefore, by the surviving corporation in such Change of Control.

For purposes of sub‐paragraphs (a) and (b) above, any Participant whose employment is either (i) terminated by the Company other than for “Cause,” or (ii) terminated by the Participant for “Good Reason” (each as defined in this Plan) in either case upon, or on or prior to the second anniversary of a Change of Control, shall be deemed to have been terminated as a result of the Change of Control.
ARTICLE 15
LIQUIDATION OR DISSOLUTION
In case the Company shall, at any time while any Incentive under this Plan shall be in force and remain unexpired, sell all or substantially all of its property, or dissolve, liquidate, or wind up its affairs (each, a “Dissolution Event”), then each Participant shall be thereafter 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) then in such event the Option Prices or SAR Prices then in effect with respect to each Stock Option or SAR shall be reduced, on the payment date of such distribution, in proportion to the percentage reduction in the tangible book value of the shares of the Company’s Common Stock (determined in accordance with generally accepted accounting principles) resulting by reason of such distribution.

Page 20

ARTICLE 16
ADDITIONAL AUTHORITY OF COMMITTEE
In addition to the Committee’s authority set forth elsewhere in this Plan, in order to maintain a Participant’s rights in the event of any Change of Control or Dissolution Event described under Articles 15 and 16, the Committee, as constituted before the Change of Control or Dissolution Event, is hereby authorized, and has sole discretion, as to any Incentive, either at the time the Award is made hereunder or any time thereafter, to take any one or more of the following actions:
		
	(a)
	provide for the purchase of any Incentive, upon the Participant’s request, for an amount of cash equal to the amount that could have been attained upon the exercise of the Incentive or realization of the Participant’s rights in the Incentive had the Incentive been currently exercisable or payable;

		
	(b)
	adjust any outstanding Incentive as the Committee deems appropriate to reflect the Change of Control or Dissolution Event; or

		
	(c)
	cause any outstanding Incentive to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation after a Change of Control or successor following a Dissolution Event.

		
	(d)
	The Committee may in its discretion include other provisions and limitations in any Award Agreement as it may deem equitable and in the best interests of the Company.

ARTICLE 17
INCENTIVES IN SUBSTITUTION FOR 
INCENTIVES GRANTED BY OTHER CORPORATIONS
Incentives may be granted under the Plan from time to time in substitution for similar instruments held by employees of a corporation who become or are about to become Employees of the Company or any Subsidiary as a result of a merger or consolidation of the employing corporation with the Company or the acquisition by the Company of stock of the employing corporation.  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 Board 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 18
MISCELLANEOUS PROVISIONS
		
	18.1.
	Code Section 409A.  Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under the Plan would result in the imposition of an applicable tax under Section 409A of the Internal Revenue Code of 1986, as amended and related regulations and Treasury pronouncements (“Section 409A”), that Plan provision or Award may be reformed to avoid imposition of the applicable tax and no action taken to comply with Section 409A shall be deemed to adversely affect the Participant’s rights to an Award.  This Plan is intended to comply, and shall be administered consistently in all respects, with Section 409A, and the regulations and additional guidance promulgated thereunder to the extent applicable.  Accordingly, the Company shall have the authority to take any action, or refrain from taking any action, with respect to this Plan or any Award hereunder that is reasonably necessary to ensure compliance with Code Section 409A (provided that 

Page 21

the Company shall choose the action that best preserves the value of payments and benefits provided to Participant that is consistent with Code Section 409A); this Plan shall be interpreted in a manner that is consistent with Code Section 409A.  In furtherance, but not in limitation of the foregoing:
		
	(a)
	in no event may Participant designate, directly or indirectly, the calendar year of any payment to be made hereunder;

		
	(b)
	to the extent the Participant is a “specified employee” within the meaning of Code Section 409A, payments, if any, that constitute a “deferral of compensation” under Code Section 409A and that would otherwise become due during the first six months following Participant’s termination of employment shall be delayed and all such delayed payments shall be paid in full in the seventh month after such termination date, provided that the above delay shall not apply to any payment that is excepted from coverage by Code Section 409A, such as a payment covered by the short-term deferral exception described in Treasury Regulations Section 1.409A-1(b)(4).

		
	18.2.
	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.

		
	18.3.
	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.

		
	18.4.
	Delegation.  Subject to the terms of the Plan and applicable law, the Committee may delegate to one or more officers or managers of the Company or any Affiliate, or to a committee of such officers or managers, the authority, subject to the terms and limitations the Committee shall determine, to grant Awards or to cancel, modify or waive rights with respect to, or to amend, suspend, or terminate Awards.

		
	18.5.
	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 or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the fullest extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination, or interpretation.

		
	18.6.
	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.

		
	18.7.
	Compliance with 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 Exchange Act and 162(m) of the Code), and, as a condition of any sale or issuance of shares of Common Stock under an Incentive, 

Page 22

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, and the grant or making of any Award shall be conditional and shall be granted or awarded subject to acceptance of the shares deliverable pursuant to the Award for listing on the NYSE.
		
	18.8.
	Severability.  If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

		
	18.9.
	Tax Requirements, Withholding.  The Company or any Affiliate is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, shares, other securities, other Awards or other property) of any applicable withholding taxes with respect to an Award, its exercise, the lapse of restrictions thereon, payment or transfer under an Award or under the Plan, and to take any other action necessary in the opinion of the Company to satisfy all obligations for the payment of the taxes.  Notwithstanding the foregoing, in the event of an assignment of a Non-qualified Stock Option or SAR, the Participant who assigns the Non-qualified Stock Option or SAR shall remain subject to withholding taxes upon exercise of the Non-qualified Stock Option or SAR by the transferee to the extent required by the Code or the rules and regulations promulgated thereunder.  Such payments shall be required to be made prior to the delivery of any shares of Common Stock.  Such payment may be made in cash, by check, or through the delivery of shares of Common Stock owned by the Participant (which may be effected by the actual delivery of shares of Common Stock by the Participant or by the Company’s withholding a number of shares to be issued upon the exercise of a Stock Option, if applicable), which shares have an aggregate Fair Market Value equal to the required minimum withholding payment, or any combination thereof.

		
	18.10.
	Assignability.

		
	(a)
	Incentive Stock Options may not be transferred or assigned 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 18.10 that is not required for compliance with Section 422 of the Code.

		
	(b)
	The Committee may, in its discretion, authorize all or a portion of a Non-qualified Stock Option or SAR to be granted to a Participant to be on terms which permit transfer by such Participant to (i) the spouse, children or grandchildren of the Participant (“Immediate Family Members”), (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, or (iii) a partnership in which such Immediate Family Members are the only partners, (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 

Page 23

described in Section 2522(c)(2) of the Code or any successor provision, provided that (a) there shall be no consideration for any such transfer, (b) the Award Agreement pursuant to which such Non-qualified 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 (c) subsequent transfers of transferred Non-qualified Stock Options or SAR’s shall be prohibited except those by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended.  Following transfer, any such Non-qualified 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 10, 12, 14, 16 and 18 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 Non-qualified Stock Options and SAR’s 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 Non-qualified Stock Option or SAR of any expiration, termination, lapse or acceleration of such Option.  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 Non-qualified Stock Option or SAR that has been transferred by a Participant under this Section 18.10.
		
	18.11.
	No Trust or Fund Created.  Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or any fiduciary relationship between the Company or any Affiliate and a Participant or any other Person.  To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

		
	18.12.
	Governing Law.  The validity, construction and effect of the Plan and any actions taken or relating to the Plan shall be determined in accordance with the laws of the State of Texas and applicable federal law.

		
	18.13.
	Successors and Assigns.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, expressly to assume and agree to perform the Company’s obligations under this Plan in the same manner and to the same extent that the Company would be required to perform them if no such succession had taken place.  As used herein, the “Company” shall mean the Company as herein before defined and any aforesaid successor to its business and/or assets.

		
	18.14.
	No Fractional Shares.  No fractional shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares or whether fractional shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

Page 24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00213-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00213-of-00352.parquet"}]]