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                                                                  Exhibit 10.17

                              SERVICES AGREEMENT

This AGREEMENT is entered into as of May 1, 2003 by and between TEAM AMERICA,
INC., a company incorporated under the laws of Ohio, USA, with principal
business address at 130 E. Wilson Bridge Road, Worthington, Ohio 43085, USA
(the "Client"), and VSOURCE (MALAYSIA) SDN BHD, a company incorporated under
the laws of Malaysia, with principal business address at Level 12, Menara HLA,
No. 3 Jalan Kia Peng, 50450 Kuala Lumpur, Malaysia ("Vsource").

WHEREAS, the Client wishes to retain Vsource to provide certain services, and
Vsource wishes to provide such services to the Client.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, the parties hereto agree as follows:

1. Services. Vsource will provide those services as specified in Schedule A
   hereof (the "Services") to the Client in accordance with and subject to the
   terms and conditions of this Agreement.

2. Compensation.

   (a) As compensation for the Services, the Client will pay to Vsource the
       fees (the "Fees") set forth in Schedule B hereof. The Client shall
       reimburse Vsource for all reasonable expenses, including without
       limitation expenses for travel, accommodation and subsistence, incurred
       by Vsource and/or its sub-contractors (if any) in the course of
       providing the Services.

   (b) The Client acknowledges and agrees that the Fees in Schedule B do not
       include any Taxes (as defined below). "Taxes" shall mean taxes, charges,
       fees, levies or other assessments of any nature, including, without
       limitation, any consumption, sales, value added, use, excise,
       withholding, stamp or other taxes, customs, duties or landing fees or
       other government charges however designated, now or hereafter imposed,
       collected or assessed by, or payable to, any taxing authority of any
       country and shall include interest, penalties and additions imposed,
       collected or assessed or payable with respect to such amount. If the
       Client is or was required by law to make any deduction or withholding
       for Taxes or otherwise from any payment due under this Agreement to
       Vsource, then notwithstanding anything to the contrary in this
       Agreement, the gross amount payable by the Client to Vsource will be
       increased so that, after any such deduction or withholding, the net
       amount received by Vsource will not be less than the amount Vsource
       would have received had such deduction or withholding not been required.

   (c) Vsource will invoice the Client on a monthly basis for Fees incurred
       during the immediately preceding calendar month and reimbursement of
       expenses referred to in Section 2(a). Payment on each invoice is due
       within 30 days of the date of the invoice. Interest for late payment
       will accrue on overdue invoices at the rate of 1.5% per month from the
       due date until the date of payment (whether before or after judgment).
       Interest shall accrue notwithstanding termination of this Agreement or
       the provision of any Services hereunder. Unless otherwise agreed in
       Schedule B, Fees will be priced in US Dollars.

3. Service Quality; Cooperation of the Client.

   (a) Vsource shall use (and procure that its sub-contractors (if any) use)
       reasonable care and skill and shall perform the Services in a
       workmanlike manner in accordance with applicable professional standards.
       Vsource shall comply with all applicable laws, regulations and
       directions of competent authorities in the performance of its
       obligations under this Agreement.

   (b) Vsource shall ensure that all of the personnel assigned to the
       performance of its obligations under this Agreement (including the
       personnel provided by its sub-contractors (if any)) have all the
       requisite skill, experience, qualifications and knowledge necessary to
       perform the tasks assigned to them.

   (c) All deliverables with respect to the Services will be deemed to have
       been accepted by the Client when the acceptance criteria described in
       Schedule A, if any, have been met. Where no criteria are specified, such
       deliverables will be deemed to have been accepted upon delivery to the
       Client.

   (d) In performing its obligations under this Agreement, Vsource (and its
       sub-contractors, if any) will be entitled to rely upon any instructions,
       authorisations, approvals or other information provided to it by the
       Client and shall have no obligation to make any independent verification
       of the accuracy or completeness of any

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       such instructions, authorizations, approval or information. Unless
       Vsource knew of any error, incorrectness or inaccuracy in such
       instructions, authorisations, approvals or other information, Vsource
       will incur no liability or responsibility of any kind in relying on or
       complying with any such instructions or information.

   (e) The Client acknowledges that the support and co-operation of the Client
       and its affiliates is in the best interest of both the Client and
       Vsource so as to ensure efficient and effective delivery of the Services
       by Vsource. The Client therefore agrees to provide its, and shall
       procure that its affiliates provide their, full support and co-operation
       to Vsource, especially in ensuring that Vsource is able to gain access
       to key people and information.

4. Term and Termination.

   (a) The initial term of this Agreement will be as set forth in Schedule A
       (the "Initial Term") and thereafter will automatically renew for
       subsequent one year periods unless either party notifies the other party
       in writing at least 90 days prior to the expiration of the then-current
       term that it does not wish to renew the Agreement.

   (b) Either party may terminate this Agreement:

      (i) by delivering 90 days' written notice upon material breach of any of
          the terms of this Agreement by the other party and the failure of
          such other party to remedy the same within such 90-day period;

     (ii) immediately upon providing written notice if the other party has
          passed a resolution for its winding up, a court of competent
          jurisdiction has made an order for such other party's winding up or
          dissolution, a receiver has been appointed over the assets of such
          other party, such other party has made an arrangement or composition
          with its creditors generally or has made an application to a court of
          competent jurisdiction for protection from its creditors generally,
          or the other party is generally unable to meet its obligations as
          they become due; or

    (iii) for convenience at any time after the Initial Term by delivering 120
          days' written notice.

   (c) Without prejudice to its other remedies under this Agreement, and
       notwithstanding any provision in this Section 4 to the contrary, Vsource
       may terminate this Agreement or the provision of any Services hereunder
       immediately, if Vsource has given the Client 10 days written notice that
       all or any part of Fees, expenses or Taxes payable in accordance with
       Section 2 were not paid when due (except if payment was not made because
       of Vsource's breach of its obligations under this Agreement).

   (d) Upon termination of this Agreement, the Client shall promptly pay
       Vsource all accrued Fees and expenses incurred up through the effective
       date of termination.

   (e) The provisions of Sections 2 (with respect to accrued Fees, expenses and
       Taxes), 4(d), 5, 6, 7, 9(b), 13, 14, 18 and 19 shall survive any
       termination of this Agreement and shall continue in full force and
       effect.

5. Client Data.

   (a) The Client acknowledges that as a result of providing the Services,
       Vsource and its sub-contractors (if any) might collect, possess and have
       access to Personal Data (as defined below) relating to the Client, its
       affiliates, its customers and its and their directors, officers and
       employees. The parties agree that such Personal Data is confidential and
       will remain the property of the Client. Following expiration or
       termination of this Agreement for any reason, Vsource will, upon written
       request from the Client and at the Client's expense, return to the
       Client all such Personal Data in Vsource's possession. "Personal Data"
       means any information about a person that is subject to restrictions on
       public disclosure imposed by law or regulation or by contract.

   (b) The Client agrees that Vsource may use the Personal Data (i) as
       necessary in connection with the delivery and performance of the
       Services; (ii) as is required by law, including disclosing such Personal
       Data to governmental or regulatory authorities having jurisdiction over
       Vsource and/or its sub-contractors; and (iii) for any other purposes as
       may be agreed to by the parties.

   (c) The Client agrees that the Personal Data may be disclosed and
       transferred in Malaysia or in places outside Malaysia to Vsource's
       affiliates and sub-contractors and their respective agents and employees
       to use, disclose, hold, process, retain or transfer for the purposes
       listed in Section 5(b).

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   (d) Where the provision of the Services to the Client entails the collection
       by Vsource of Personal Data from the Client's customers, the Client
       hereby authorizes Vsource and its sub-contractors to obtain any consents
       from and provide any notices to such customers as may be required under
       any applicable laws or regulations. Where the provision of the Services
       to the Client requires or involves the transfer by the Client and/or its
       affiliates and sub-contractors to Vsource of, and the use by Vsource and
       its sub-contractors of, Personal Data, the Client hereby represents and
       warrants that such transfer and use is in compliance with all applicable
       laws and regulations, and the Client has obtained all consents,
       licenses, permits and authorisations necessary to permit such transfer
       and use.

6. Intellectual Property. Subject to any third party rights or restrictions and
   the other provisions of this Section 6, the Client will own all intellectual
   property rights relating to the deliverables that are (a) described in this
   Agreement or any Schedule thereto, (b) developed and delivered by Vsource
   and/or its sub-contractors hereunder and (c) paid for by the Client (the
   "Deliverables"). Each party will retain all intellectual property rights it
   possessed prior to the date of this Agreement. Notwithstanding anything to
   the contrary in this Agreement, Vsource (i) will retain all right, title and
   interest in and to all development tools, know-how, methodologies,
   processes, technologies or algorithms used in performing the Services and
   providing the Deliverables which are based on trade secrets or proprietary
   information of Vsource or its sub-contractors or are otherwise owned or
   licensed by Vsource or its sub-contractors, (ii) will be free to use the
   ideas, concepts and know-how which are developed in the course of performing
   the Services or providing the Deliverables and (iii) will retain ownership
   of any Code and Data (as defined below) that are used in producing the
   Deliverables and become embedded in the Deliverables; provided, that Vsource
   hereby grants to the Client a worldwide, non-exclusive, royalty-free,
   irrevocable license to use the Code and Data and any tools or
   functionalities not created by Vsource or its sub-contractors that are
   embedded in such Deliverables, to the extent that such Code and Data or
   tools or functionalities (x) are and remain embedded in the Deliverables and
   (y) are required for operation of the Deliverables or the Services. "Code
   and Data" means software, in object code form, and any data and/or tools
   created, acquired or licensed by or to Vsource either before or during the
   course of performing the Services for the Client, which is utilized by
   Vsource in performing the Services, is required for the operation and
   functioning of the Deliverables, and which is not specifically created,
   acquired or licensed by Vsource exclusively for the Client pursuant to the
   terms of this Agreement or a Schedule thereto.

7. Liability.

   (a) EXCEPT FOR THE WARRANTIES PROVIDED IN THIS AGREEMENT, VSOURCE DISCLAIMS
       ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
       IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
       PURPOSE.

   (b) The Client agrees with Vsource (contracting for itself, and as trustee
       for each of its directors, officers, employees, agents and
       sub-contractors from time to time) (Vsource and each of these persons
       being referred to as an "Indemnified Person") to indemnify each
       Indemnified Person against any third party losses, liabilities and costs
       incurred by such Indemnified Person arising as a result of or in
       connection with the Client's breach of this Agreement or the Client's
       negligent or willful act or omission.

   (c) Subject to Section 7(b), neither party to this Agreement will be liable
       to the other party, whether for negligence, breach of contract,
       misrepresentation or otherwise, for: (i) loss or damage incurred by the
       other party as a result of third party claims or (ii) any special,
       indirect, consequential or incidental damages, including without
       limitation, any lost profits, lost savings, lost business opportunity,
       downtime, lost or damaged files or data, or loss of goodwill, resulting
       from any cause whatsoever, including negligence or other torts, product
       defects or malfunctions or the breach of this Agreement, in either case
       regardless of the form of legal action and even if the other party has
       been notified of the possibility of such damages.

   (d) Vsource shall not be liable to the Client for any failure by Vsource to
       perform its obligations under this Agreement to the extent that such
       failure arises from or relates to: (i) any failure by the Client to
       perform its obligations under this Agreement or any other default or
       negligence by the Client or (ii) any event beyond the reasonable control
       of Vsource including, without limitation, strike, lock-out, labour
       dispute (but excluding strike, lock-out and labour dispute involving the
       employees of Vsource), act of God, war, riot, civil commotion, malicious
       damage (but excluding malicious damage involving the employees of
       Vsource), accident, fire, flood, earthquake, typhoon, hurricane, storm,
       power outage, telecommunication outage or degradation, or compliance
       with a law or governmental order, rule, regulation or direction.

   (e) Except as set out in this Agreement and any document referred to in this
       Agreement, all conditions, warranties and representations, expressed or
       implied by (i) statute, (ii) common law or (iii) otherwise, in relation
       to the Services are excluded.

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   (f) The entire liability of Vsource under or in connection with this
       Agreement whether for negligence, breach of contract, misrepresentation
       or otherwise (but excluding the categories of liability referred to in
       Section 7(f)) shall not in aggregate exceed an amount equal to twelve
       months' Fees actually paid by the Client to Vsource under this
       Agreement, regardless of the number or extent of claims made on the
       Client.

   (g) Nothing in this Agreement shall operate to exclude or restrict either
       party's liability for death or personal injury resulting from negligence
       or from fraud.

8. Covenants of Client. Client agrees to the following:

   (a) Any Affiliate of the Client for whom Vsource performs any of the
       Services, including any Affiliate with respect to which Vsource will
       perform Services relating to such Affiliate's employees, is hereby
       defined as a "Relevant Affiliate".

   (b) If any of the Services require Vsource to make payments to any persons
       on behalf of the Client or a Relevant Affiliate (each, a "Payee"),
       including employees of the Client or such Relevant Affiliate, the Client
       shall, and shall procure that each such Relevant Affiliate shall: (a)
       first obtain a signed authorization, in a form approved by Vsource, from
       each such Payee (a "Payee Authorization") authorizing the initiation of
       credits to such Payee's account and debit of such account to recover
       funds credited to such Payee's account in error and setting forth the
       bank account details, address or other relevant information of the Payee
       required by Vsource to make such payments (the "Payee Details"); (b)
       retain a copy of each Payee Authorization during the period such Payee
       Authorization is in effect and for two years thereafter; (c) promptly
       furnish a copy of any Payee Authorization to Vsource upon written
       request; (d) not, to the extent payment to a Payee is made by a check
       issued by Vsource (a "Vsource Check"), distribute such check to such
       Payee prior to the relevant pay date; and (e) cooperate with Vsource to
       recover funds erroneously included in any Vsource Check or credited to a
       Payee's account in error. The Client authorizes, and shall procure that
       each Relevant Affiliate authorizes, Vsource to rely on the Payee Details
       in making payments to a Payee and sending to such Payee any advice,
       acknowledgements and reports required in connection with the Services.
       If the Client or any Relevant Affiliate desires to stop payment on any
       Vsource Check, the Client or such Relevant Affiliate must provide
       Vsource with a written stop payment request in the form provided from
       time to time to the Client by Vsource. The Client shall not, and shall
       procure that the Relevant Affiliates shall not, request Vsource to stop
       payment on any Vsource Check that represents funds to which a Payee is
       rightfully entitled.

   (c) If any of the Services require funds of the Client or a Relevant
       Affiliate to either be remitted by the Client or such Relevant Affiliate
       to Vsource or debited by Vsource directly from a bank account of the
       Client or such Relevant Affiliate in order for Vsource to make payments
       to third parties on behalf of the Client or such Relevant Affiliate, the
       Client hereby:

      (i) authorizes, and shall procure that such Relevant Affiliate
          authorizes, Vsource to commingle such funds with other funds, whether
          of Vsource or other clients of Vsource, and all amounts earned on
          such funds while held by Vsource will be for the sole account of
          Vsource,

     (ii) represents and warrants, and shall procure that such Relevant
          Affiliate represents and warrants, that it has obtained all required
          authorizations and consents from the bank from which the Client's or
          the Relevant Affiliate's funds will be debited in order for Vsource
          to make such debits;

    (iii) undertakes, and shall procure that such Relevant Affiliate
          undertakes, to have sufficient funds in such account, within the
          deadline established by Vsource, to satisfy in full the payments due
          to such third parties, or in the case where the Client or such
          Relevant Affiliate will remit funds to Vsource, to remit to Vsource
          an amount sufficient to satisfy in full the payments due to such
          third parties;

     (iv) authorizes Vsource, and shall procure that such Relevant Affiliate
          authorizes Vsource, if the funds made available by the Client or such
          Relevant Affiliate to Vsource are in a currency different from the
          currency in which payment will be made to the third party, to convert
          at any time such funds into the appropriate currency of payment to
          the third party at such time and rate of exchange in accordance with
          Vsource's prevailing practice, and the Client or such Relevant
          Affiliate, as the case may be, shall bear all exchange risks, losses,
          commission and other bank charges which may thereby arise; and

      (v) represents and warrants, and shall procure that such Relevant
          Affiliate represents and warrants, to Vsource and any bank
          originating debit/credit instructions on behalf of Vsource (an
          "Originating Bank"), if applicable, that (i) each credit and debit to
          the account of a Payee is timely and has been authorized pursuant to
          a Payee Authorization signed by such Payee and held by the Client or
          such Relevant Affiliate, (ii) at the time any credit or debit is made
          with respect to a Payee, the Client and

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       such Relevant Affiliate has no actual knowledge of the revocation or
       termination of such Payee's Payee Authorization, and (iii) each debit
       from the account of a Payee is for a sum which is due and owing to the
       Client or such Relevant Affiliate, and the Client or such Relevant
       Affiliate has notified such Payee of such debit prior to its initiation.

   (d) If any of the Services require Vsource to debit funds from a Payee's
       account, the Client agrees that it shall be liable for any such debit
       initiated by Vsource and shall indemnify Vsource in full against any
       loss, liability, expenses or damage arising from: (a) any fraudulent or
       criminal acts of the Client's or any Relevant Affiliate's employees or
       agents or (b) any claim by such Payee or any other third party against
       Vsource in connection with such debit, unless such claim was the result
       of Vsource's gross negligence or willful misconduct.

   (e) The Services are designed to assist the Client and its Relevant
       Affiliates in complying with applicable laws and government regulations.
       Nevertheless, the Client acknowledges and agrees that it, and not
       Vsource, will be responsible for: (a) compliance by the Client and the
       Relevant Affiliates with all relevant laws and government regulations
       relating to the Client's and the Relevant Affiliates' business and (b)
       for any use the Client or any Relevant Affiliate may make of the
       Services to assist it in complying with such laws and government
       regulations. The Client will indemnify Vsource in full against any loss,
       liability, expenses or damage arising from the Client's or any Relevant
       Affiliate's breach of the foregoing obligations.

   (f) Vsource will take reasonable precautions to prevent the loss of or
       alteration to the Client's and the Relevant Affiliates' data files in
       Vsource's possession, but Vsource does not undertake to guarantee
       against any loss or alteration to such files. The Client acknowledges
       and agrees, and shall procure that each such Relevant Affiliate
       acknowledges and agrees, that Vsource is not and will not be the
       Client's or such Relevant Affiliate's official record keeper.
       Accordingly, the Client will, to the extent it deems necessary, keep or
       cause such Relevant Affiliates to keep copies of all source documents of
       the information delivered to Vsource.

   (g) Neither Vsource nor any Originating Bank shall be liable for any damages
       to the Client or any Relevant Affiliate arising from any decision to
       refrain from or delay issuing any credit or debit instructions with
       respect to, or a Vsource Check to, a third party if: (a) Vsource is
       unable, after reasonable efforts, to verify such debit or credit
       instructions in accordance with an agreed upon security procedure or (b)
       Vsource has not received timely funds from the Client or any Relevant
       Affiliate as required under Section 8(c) of this Agreement. The Client
       shall be, and shall procure that its Relevant Affiliates shall be, bound
       by any debit/credit instructions issued in respect of the Client or such
       Relevant Affiliate and received and verified by the Originating Bank in
       accordance with agreed upon security procedures, and neither Vsource nor
       such Originating Bank will be liable for any loss sustained from any
       instructions which are not authentic if such security procedures have
       been followed in good faith. The Client agrees, and shall procure that
       its Relevant Affiliates agree, that Vsource shall not be liable for any
       loss or damages arising from any act or omission of any clearing house,
       correspondent bank or agent required to be used to provide the Services
       under this Agreement.

   (h) If any of the Services provided under this Agreement are terminated by
       the Client, the Client shall immediately (a) become solely responsible
       for all of its third-party payment obligations covered by such Services
       then or thereafter due and (b) reimburse Vsource for all payments made
       by Vsource hereunder on the Client's or a Relevant Affiliate's behalf to
       any third party.

   (i) To the extent permitted by applicable law and in addition to any other
       remedy which Vsource may have, Vsource may at any time at its
       discretion, without prior notice to the Client or any Relevant
       Affiliate, deduct from, set-off, appropriate, combine, consolidate
       and/or apply any monies owing by Vsource to the Client or any Relevant
       Affiliate under this Agreement, in any currency, in or towards
       settlement or discharge of any sums payable or due to Vsource from the
       Client or such Relevant Affiliate under this Agreement. This Clause
       shall without limitation apply to any amount previously overpaid by
       Vsource to the Client or such Relevant Affiliate under this Agreement,
       any claim that Vsource may have against the Client or any Relevant
       Affiliate and all sums payable or due to Vsource from the Client or any
       Relevant Affiliate under this Agreement. Where any deduction, set-off,
       appropriation, combination, consolidation and/or application of monies
       under this Section 8(i) requires the conversion of one currency into
       another, Vsource shall be entitled to effect such conversion at such
       time and rate of exchange in accordance with its prevailing practice and
       the Client and its Relevant Affiliates shall bear all exchange risks,
       losses, commission and other bank charges which may thereby arise;
       provided, that Vsource acts in a reasonable and responsible manner.

   (j) Vsource shall not be liable for any loss arising from an error of
       judgment or mistake of law, by it or any officer or employee, made in
       the course of its performance of the Services unless such loss was the
       result of Vsource's gross negligence or willful misconduct. No provision
       of this Agreement shall require Vsource to do anything which may be
       illegal or contrary to applicable law or regulation or expend or risk

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       its own funds or otherwise incur any financial liability in the
       performance of its duties if it shall have grounds for believing that
       repayment of such funds or adequate indemnity against such risk or
       liability is not assured to it. Without prejudice to the generality of
       the foregoing, nothing contained in this Agreement shall impose any
       obligation on Vsource to borrow any moneys or to maintain, protect or
       preserve any moneys of the Client or any Relevant Affiliate.

   (k) The Client will use, and shall procure that its Relevant Affiliates will
       use, the Services in accordance with the instructions and reasonable
       policies established by Vsource from time to time and communicated to
       the Client. The Client will use, and shall procure that its Relevant
       Affiliates will use, the Services only for the internal business
       purposes of the Client or such Relevant Affiliates and will not provide,
       directly or indirectly, any of the Services or any portion thereof to
       any other person.

   (l) The Client acknowledges and agrees that any equipment to be used by the
       Client in order to accept any Service must be compatible with Vsource's
       required standards and must be approved by Vsource. Vsource shall not be
       liable to the Client for any breach by it or any Sub-contractor under
       this Agreement caused by failure of any of the Client's software or
       hardware.

   (m) The Client will promptly notify Vsource in writing of any changes in
       Client policies that affect the provision of the Services, such as the
       Client's expense claim policies or accounting policies, with sufficient
       detail to enable Vsource to reflect such changes in the Services. The
       Client and Vsource will mutually agree on the time schedule for when
       such changes need to be reflected in the Services.

   (n) To the extent that any codes or numbers used by the Client in connection
       with the Services are allocated to it by Vsource, then Vsource may
       change any such codes or numbers if a telecommunications carrier being
       used by Vsource in connection with the Services requires Vsource to
       change any of such codes or numbers.

9. Advance.

   (a) Upon execution of this Agreement, Vsource will advance the amount of
       US$500,000 (the "Advance Amount") to Client to assist Client with the
       working capital expenditures that Client will need to incur in order to
       meet its obligations during implementation of the Services.

   (b) If the Detailed Project Definition (as described in Schedule A) is not
       completed and mutually agreed upon by the parties on or prior to May 31,
       2003, then Client shall repay the Advance Amount in full on May 31,
       2003. If the Detailed Project Definition is successfully completed and
       mutually agreed upon by the parties on or prior to May 31, 2003, then
       the Advance Amount shall be repaid in 11 equal monthly installments
       starting on June 30, 2003. No interest shall accrue if the Advance
       Amount (or installment thereof, as the case may be) is repaid in full by
       the applicable due date(s), but any overdue unpaid amount shall accrue
       interest in accordance with Section 2(c) of this Agreement. Client
       agrees that its obligation to repay the Advance Amount ranks senior to
       all of its currently outstanding debt obligations, except any secured
       debt obligations and debt obligations which by their terms shall rank
       senior to any subsequently incurred debt obligation unless the lender
       thereunder agrees to either be pari passu or be subordinated to such
       subsequent debt obligation. Client further agrees that it shall not
       incur any debt obligation subsequent to the Advance Amount that is pari
       passu or senior to the Advance Amount, or pledge, place a lien on or
       otherwise encumber any of its assets, without the written consent of
       Vsource. For purposes of this Section 9(b), "debt obligation" means any
       debt incurred by Client and also includes any guarantee or surety
       provided by Client with respect to another party's, including an
       Affiliate's, debt obligations.

   (c) Client represents and warrants that it has all authorizations, consents
       and permits required for it to execute and deliver this Agreement and
       perform all of its obligations hereunder, and such execution, delivery
       and performance will not (i) contravene, conflict with, or constitute or
       result in a breach or violation of, or a default under any of its
       charter or constitution documents or any law, regulation or court order
       to which it or any of its subsidiaries is subject, or (ii) contravene,
       conflict with, or constitute or result in a breach or violation of, or a
       default under, or the acceleration of, or the triggering of any payment
       or other obligations (including the creation of a lien on any properties
       or assets owned or used by Client or any of its subsidiaries) pursuant
       to, any provision of any contract, indenture, mortgage, deed of trust,
       loan or credit agreement, note, lease or other agreement or instrument
       to which it or any of its subsidiaries is a party or by which it or its
       subsidiaries may be bound, or to which any of its or its subsidiaries'
       property or assets is subject.

10. Amendments; Waiver.

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   (a) No alteration, amendment, assignment or modification of any of the terms
       or provisions of this Agreement shall be valid unless made pursuant to
       an instrument in writing signed by each of the parties hereto; provided,
       that the waiver by a party hereto of compliance with the provisions
       hereof or of any breach or default by the other party hereto need be
       signed only by the party waiving such provision, breach or default.

   (b) Either party to this Agreement may request changes to the Services.
       Changes must be supported by sufficient details to enable the other
       party to assess the impact of the requested change on the cost,
       timetable or any other aspect of this Agreement. The parties agree to
       work together to consider, and if appropriate, agree on any such
       changes. Until a change is agreed in writing, the parties to this
       Agreement will continue to act in accordance with this Agreement.

   (c) No failure or delay on the part of any of the parties in exercising any
       right or power hereunder shall operate as a waiver thereof, nor shall
       any single or partial exercise of any such right or power preclude any
       other right or power.

11. Assignment. Neither party may assign this Agreement nor any of the rights
    or obligations hereunder without the prior written consent of the other,
    except that the rights and obligations of Vsource under this Agreement may
    be assigned or otherwise transferred to one of the affiliates of Vsource.
    Vsource shall provide to the Client prior written notice of any such
    assignment or transfer. This Agreement shall inure to the benefit of and be
    binding upon the parties hereto and their respective legal successors and
    permitted assigns.

12. Independent Contractor. Vsource will perform the Services as an independent
    contractor, and not as an employee, officer or agent of the Client or of
    its general partner. In addition, nothing in this Agreement will constitute
    the parties an association, joint venture or partnership.

13. Confidentiality. Each party hereto agrees that it, its employees, agents
    and sub-contractors will keep confidential and will not disclose or divulge
    the terms of the transactions contemplated by this Agreement and all
    information concerning the other party which such other party treats as
    confidential, including, but not limited to, Personal Data, proprietary
    intellectual property, information concerning customers, marketing plans,
    technical information, and possible new products or services; provided,
    however, that each party shall not be required to keep such information
    confidential (i) after such information otherwise becomes generally
    available to the public in the absence of a breach of this Agreement by the
    disclosing party, or (ii) if such information is required to be disclosed
    by law, rule, regulatory authority or stock exchange on request of any
    governmental body, court of law, regulatory authority or stock exchange.
    The parties acknowledge that monetary damages may not be a sufficient
    remedy for unauthorized disclosure of confidential information and a
    disclosing party of confidential information shall be entitled, without
    waiving any other rights or remedies, to such injunctive or equitable
    relief as may be deemed proper by a court of competent jurisdiction.

14. Publicity. The Client agrees that Vsource and its parent company may
    publicly refer to the Client, orally and in writing, as a customer and may
    use the Client's logo, trade name, trademark or service mark in connection
    therewith. Vsource agrees that the Client may publicly refer to Vsource,
    orally and in writing, as a vendor and may use Vsource's logo, trade name,
    trademark or service mark in connection therewith. Any other reference to
    the other party by either party, including any details of this Agreement or
    the Services, whether in the form of press release or otherwise, may be
    made only with such other party's prior written consent except as required
    by law, regulation or rules of the stock exchange on which a party's shares
    are listed.

15. Notices. All notices, requests and other communications hereunder must be
    in writing and will be deemed to have been duly given only if delivered
    personally or by facsimile transmission or mailed (prepaid first class
    certified mail, return receipt requested) to the parties at the following
    addresses or facsimile numbers:

If to Vsource, to:

Vsource (Malaysia) Sdn Bhd
No. 3 Jalan Kia Peng
50450 Kuala Lumpur
Malaysia
Attn: Chief Operating Officer
Telefacsimile No.: 60-3-7490-8000

If to the Client, to:
130 E. Wilson Bridge Road
Worthington, Ohio 43085

                                      7

<PAGE>

USA
Attn: CEO
Telefacsimile No.: 1-614-848-7639

   All such notices, requests and other communications will (i) if delivered
   personally against written receipt to the address as provided in this
   Section, be deemed given upon delivery, (ii) if delivered by facsimile
   transmission to the facsimile number as provided in this Section, be deemed
   given upon receipt or upon the next business day in Malaysia ("Business
   Day") if received after normal business hours or on a holiday, a Saturday or
   a Sunday, and (iii) if delivered by mail in the manner described above to
   the address as provided in this Section, be deemed given upon receipt (in
   each case regardless of whether such notice is received by any other person
   to whom a copy of such notice, request or other communication is to be
   delivered pursuant to this Section). Any party from time to time may change
   its address, facsimile number or other information for the purpose of
   notices to that party by giving notice specifying such change to the other
   party hereto.

16. Severability. If any provision of this Agreement is held to be invalid,
    illegal, unenforceable, in whole or in part, the remaining provisions shall
    be unimpaired, and the invalid, illegal or unenforceable provision shall be
    replaced by a mutually acceptable provision, which being valid, legal and
    enforceable, comes closest to the economic effect and intention of the
    parties hereto underlying the invalid, illegal or unenforceable provision.

17. Entire Agreement. This Agreement, together with the Schedules and any other
    attachments hereto, constitutes the entire Agreement between the parties
    hereto and supersedes all previous agreements, including, without
    limitation, promises, proposals, representations, understanding and
    negotiations, whether written or oral, between the parties respecting the
    subject matter hereof. Except as expressly provided in this Agreement, the
    rights and remedies contained in the Agreement are cumulative and not
    exclusive of rights or remedies provided by law.

18. Governing Law. This Agreement shall be governed by and interpreted in
    accordance with the laws of Hong Kong. Each party irrevocably submits to
    the non-exclusive jurisdiction of the courts of Hong Kong.

19. Non-solicitation. The Client agrees that it and its affiliates will not
    during the term of this Agreement, and for one year after the completion
    thereof, employ, solicit, entice away from Vsource or its affiliates any
    officer or employee thereof.

20. Counterparts. This Agreement may be executed in several counterparts, each
    of which shall be deemed to be an original, and all of which, when taken
    together, shall constitute one and the same instrument.

                                      8

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

                                           VSOURCE (MALAYSIA) SDN BHD

                                           By:        /s/  DENNIS M. SMITH
                                                  -----------------------------
                                           Name:  Dennis M. Smith
                                           Title: Vice Chairman and Chief
                                                    Financial Officer

                                           TEAM AMERICA, INC.

                                           By:       /s/  S. CASH NICKERSON
                                                  -----------------------------
                                           Name:  S. Cash Nickerson
                                           Title: Chief Executive Officer

                                      9

<PAGE>

                                  SCHEDULE A

                            DESCRIPTION OF SERVICES

Part I. Requested Services/Products:

Section 1 Description Of Services

Client operates primarily as a Professional Employer Organization ("PEO")
throughout the United States. Client, through its subsidiaries, provides
comprehensive human resource services, including payroll and payroll
administration, benefits administration, on-site and on-line employee and
employer communications, employment practices and human resource risk
management and workforce compliance administration. Client provides these
services by becoming co-employer of its clients employees. As of December 28,
2002, Client served approximately 1,500 clients and approximately 12,750
worksite employees. In addition, Client had 150 corporate employees located at
its headquarters in Worthington, Ohio and at its offices around the United
States.

Client has engaged Vsource to provide general outsourcing services to support
its PEO operations across the United States. Vsource will support Client from
its Shared Services Center in Kuala Lumpur, Malaysia, and will provide services
in the following functional areas:

  .   Payroll services
  .   Customer support
  .   IT hosting and maintenance
  .   Corporate financial services

1.1 Payroll services

Vsource will provide payroll services to all Client Work Site Employees (WSEs).
Key tasks will include the following:

  .   Payroll, Checks & Journals Processing
  .   Complete Employment Tax Processing, FIT, FICA, FUTA, SUTA, State & City
      Income Taxes
  .   W-2, W-4, W-5, & I-9 Processing
  .   Administration of Wage Garnishments & Tax Liens
  .   Payroll Record Storage
  .   All Required Payroll Reports

1.2 Customer Support Services

Client will migrate certain customer support functionality currently performed
by its Human Resources Associates (HRA) and Human Resources Consultant (HRC) to
Vsource's Shared Services Center in Kuala Lumpur, Malaysia.

Based on past indicators, Vsource expects that it will provide answers (both
inbound and outbound) to Client's customers as well as WSE in the areas of
payroll (80%) and benefits (20%). Vsource will also establish a knowledge
database to log, track, and analyze inquiries and their associated actions,
escalations, and resolutions.

1.3 IT Host And Maintenance

Vsource will provide hardware maintenance and support for Client's corporate
database (in Oracle) and core customer application, Team Direct. Vsource will
host a version of the application and database in its Shared Services Center in
Kuala Lumpur. Key tasks performed will include:

         .   Perform daily database backup and weekly system backup of Client
             data and files on the Oracle Servers. System backup includes
             operating system and applications.
         .   Perform network and security configuration and support within
             Vsource
         .   Provide patch management for operating system
         .   Replace faulty hardware components
         .   Provide database administration which includes monitoring,
             performance management and storage space management
         .   Schedule downtime for system maintenance

                                      10

<PAGE>

         .   Diagnose and attempt to resolve connectivity and system problems

1.4 Corporate Financial Services

Vsource will also perform certain Client's corporate finance functions as a
part of this outsourcing initiative, more specifically:

    1. General Ledger
    2. Fixed Asset
    3. Accounts Receivables
    4. Accounts Payables
    5. Reporting

Section 2 Assumptions

Vsource has based this scope of Services, and the pricing therefor, on the
following assumptions:

  .   Payroll services will be carried out at the back office level. Client and
      WSE "onboarding" will still be performed by Client staff in the region.

  .   HRC will still perform majority of the customer support function that
      require in-person presence as well as specific industry knowledge.
      Malaysia based Vsource agents will support Client clients and WSE's based
      on pre-defined FAQs and knowledge base. Non-standard inquiries will be
      escalated to the regional HRCs for resolution.

  .   While back office IT functions will be maintained in Vsource's Shared
      Services Center in Malaysia, client-facing functions such as corporate
      web pages and web-input forms will need to be hosted in the US to reduce
      overall latency and improve performance

Section 3 Project Schedule

           Phase 1: Detailed Project Definition    May 1-May 31
           Phase 2: Setup and system testing       June 1-July 31
           Live                                    August 1

Section 4 Initial Term

The initial term of this Agreement shall be two years from the date hereof.

                                      11

<PAGE>

                                  SCHEDULE B

                               SCHEDULE OF FEES

The minimum Fees for the Services shall be US$166,667 per month, payable
beginning on May 31, 2003. The Fees have been determined based on the nature
and size of Client's business, number of WSEs and number of corporate employees
as of December 28, 2002, as described in Client's Form 10-K for the year ended
December 28, 2002 (the "Variables"). During the Project Definition phase,
Vsource and Client will jointly quantify expected Service volume and develop
and agree upon a more complete recurring Fees structure based on Vsource
standard corporate pricing table. In the event that any of the Variables
increases, thereby requiring Vsource to perform a greater number of
transactions or provide a greater volume of the Services, such agreed-upon
pricing table shall go into effect and monthly Fees shall be increased in
accordance therewith.

Currently, Vsource utilizes the following methodology in determining overall
project pricing with consideration for volume:

  .   Payroll-based on number of pay-slips as well as initial setup charges
  .   Customer support: number of agents or number of inquiries plus relevant
      setup charges
  .   IT support: usually time and material or functionality based
  .   Corporate finance: transaction based plus all necessary setup charge

                                      12<PAGE>

                                                                   EXHIBIT 4.2.1

                           CERTIFICATE OF DESIGNATION

                            VALERO ENERGY CORPORATION

                           CERTIFICATE OF DESIGNATION
                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware

                  We, the undersigned, John D. Gibbons, Executive Vice President
and Chief Financial Officer, and Jay D. Browning, Vice President and Corporate
Secretary of Valero Energy Corporation, a Delaware corporation (herein called
the "corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, do hereby make this Certificate of
Designation and do hereby state and certify that pursuant to the authority
expressly vested in the Board of Directors of the corporation by the Restated
Certificate of Incorporation, the Board of Directors, at a meeting thereof duly
called and held on March 20, 2003, at which meeting a quorum was present,
appointed a special committee of directors (the "Special Committee") to
designate the terms of an issue of preferred stock of the corporation in
connection with a proposed acquisition by the corporation approved at such
meeting and pursuant to a meeting of the Special Committee held on April 23,
2003, the Special Committee duly adopted the following resolutions providing for
the issuance of a series of shares of Preferred Stock as hereinafter referred
to, and further providing for the powers, designations, preferences and
relative, participating, optional or other special rights thereon, and the
qualifications, limitations or restrictions thereof, in addition to those set
forth in said Restated Certificate of Incorporation, all in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware:

                  RESOLVED, that pursuant to the authority expressly granted to
and vested in the Board of Directors of the corporation by the provisions of the
Restated Certificate of Incorporation of the corporation, as amended, out of the
authorized but unissued shares of Preferred Stock of the corporation, this
corporation hereby creates a series of the Preferred Stock, par value $.01 per
share, of the corporation, and authorizes the issuance thereof, and hereby fixes
the powers, designations, preferences and relative, participating, optional or
other special rights of the shares of such series, and the qualifications,
limitations, or restrictions thereof (in addition to the powers, designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, set forth in the
Restated Certificate of Incorporation of the corporation, as amended, which are
applicable to Preferred Stock of all series) as follows:

                    2% MANDATORY CONVERTIBLE PREFERRED STOCK

1.       Designation and Amount. The designation of the series of Preferred
Stock created by this resolution shall be 2% Mandatory Convertible Preferred
Stock (hereinafter called the "Preferred Stock"), and the number of shares
constituting such series shall initially be 10 million shares with a stated
value of $25.00 per share. The number of authorized but unissued shares of
Preferred Stock may be reduced by further resolution duly adopted by the Board
of Directors of the corporation or a duly authorized committee thereof and by
the filing of a certificate pursuant to the provisions of the General
Corporation Law of the State of Delaware stating that such

<PAGE>

2.       reduction has been so authorized, but the number of authorized shares
of Preferred Stock shall not be increased.

3.       Dividend.

                  (a)      The holders of the Preferred Stock shall be entitled
         to receive, when and as declared by the Board of Directors out of the
         funds of the corporation legally available therefor, dividends in cash
         at the rate per annum of $0.50 per share. Dividends on the Preferred
         Stock, will accrue from the date of original issuance and will be paid
         (when and as declared by the Board of Directors of the corporation)
         quarterly, in arrears, on the last day of each March, June, September
         and December (each, a "Dividend Payment Date"), commencing on September
         30, 2003, except that if such Dividend Payment Date is not a business
         day, then such dividend shall be payable on the first immediately
         succeeding business day (as used herein, the term "business day" shall
         mean any day except a Saturday, Sunday or day on which banking
         institutions are legally authorized to close in the City of New York).
         The first dividend on the Preferred Stock paid on the last day of the
         calendar quarter during which the Preferred Stock is issued will
         reflect an accrual of dividends from the date of issuance to the end of
         such quarter at the annual dividend rate. The amount of dividends
         payable on each share of Preferred Stock for each full quarterly period
         thereafter shall be computed by dividing the annual dividend rate by
         four. The amount of dividends payable for any other period that is
         shorter or longer than a full quarterly dividend period will be
         computed on the basis of a 360-day year consisting of twelve 30-day
         months. Notwithstanding the foregoing and subject to the following
         sentence, dividends on the Preferred Stock shall be non-cumulative,
         shall not accrue and shall not be payable with respect to any calendar
         quarter (a "Non-Accruing Quarter") in any calendar year if between the
         first day of such calendar quarter and the last day of such calendar
         quarter the Board of Directors shall not have declared a dividend on
         the Common Stock. If the Board of Directors announces a change in
         dividend policy to suspend quarterly dividends and pay dividends on a
         semiannual or annual basis, any dividend that would have otherwise
         accrued on the Preferred Stock during any Non-Accruing Quarter in the
         period covered by such policy but for the operation of the immediately
         preceding sentence shall accrue and shall become payable in accordance
         with the terms of this Certificate of Designation. Each such dividend
         shall be paid to the holders of record of shares of the Preferred Stock
         as they appear on the stock register of the corporation on the first
         business day of the calendar month in which the applicable Dividend
         Payment Date falls. Dividends in arrears on any Preferred Stock not
         declared for payment or paid on any Dividend Payment Date (or, as
         applicable, next business day) may be declared by the Board of
         Directors of the corporation and paid on any date fixed by the Board of
         Directors of the corporation, whether or not a Dividend Payment Date
         (or, as applicable, the next business day) to the holders of record of
         the shares of Preferred Stock as they appear on the stock register of
         the corporation on such record date, not exceeding 30 days preceding
         the payment date thereof, as shall be fixed by the Board of Directors
         of the corporation.

                  (b)      If all accrued but unpaid dividends on the Preferred
         Stock have not been declared and paid or irrevocably set apart for
         payment when due, then the corporation shall not (i) declare or pay any
         dividend on any Dividend Pari Passu Security or

                                       2
<PAGE>

         Dividend Junior Security (each as defined below), (ii) redeem,
         purchase, retire or otherwise acquire for consideration shares of any
         Dividend Junior Security (or rights, options or warrants to purchase
         such Dividend Junior Security), other than (w) purchases or
         acquisitions of shares of any Dividend Junior Security in connection
         with any employee benefit or incentive plan, including the purchase of
         Common Stock to prevent dilution of outstanding Common Stock in the
         administration of such plans, (x) as a result of a reclassification of
         any Dividend Junior Security or the exchange or conversion of one class
         or series of any Dividend Junior Security for another class or series
         of any Dividend Junior Security, (y) redemptions or purchases of any
         Preference Share Purchase Rights (as defined below) or the declaration
         and payment of a dividend or distribution of similar share purchase
         rights in the future or (z) the purchase of fractional interests in
         shares of any Dividend Junior Security pursuant to the conversion or
         exchange provisions of such Dividend Junior Security, (iii) redeem,
         purchase, retire or otherwise acquire for consideration any Dividend
         Pari Passu Security (or rights, options or warrants to purchase such
         Dividend Pari Passu Security) or (iv) permit any subsidiary of the
         corporation to purchase or otherwise acquire for consideration any
         shares of stock of the corporation unless the corporation could,
         pursuant to the foregoing, purchase or otherwise acquire such shares at
         such time and in such manner. The preceding sentence, however, shall
         not apply to, or prohibit (i) dividends or distributions of any
         Preference Share Purchase Rights, (ii) dividends or distributions of
         similar share purchase rights in the future, (iii) dividends or
         distributions in shares of Common Stock or another class or series of
         capital stock of the corporation that is junior to the Preferred Stock
         as to the payment of dividends and the distribution of assets upon
         liquidation, dissolution or winding-up of the corporation or (iv)
         dividends, distributions, redemptions and other payments under the
         Premium Equity Participating Security Units and the Trust Originated
         Preferred Securities issued by subsidiaries of the corporation and
         outstanding on the date of the issuance of the Preferred Stock. The
         term "Dividend Pari Passu Security" means any preference stock or
         preferred stock or other capital stock of the corporation ranking pari
         passu with the Preferred Stock as to the payment of dividends.
         "Dividend Junior Security" means Common Stock and any other class or
         series of capital stock of the corporation ranking junior to the
         Preferred Stock as to the payment of dividends.

4.       Redemption. The shares of Preferred Stock are not redeemable by the
corporation.

5.       Regarding Voting Rights.

                  (a)      The holders of the Preferred Stock shall not, except
         as otherwise provided by subsections (b) or (c) of this Section 4 or as
         required by law or as set forth in the Restated Certificate of
         Incorporation of the corporation, have any right or power to vote on
         any question or in any proceeding or to be represented at or to receive
         notice of any meeting of stockholders. Except as otherwise provided in
         subsection (b) of this Section 4, on any matters on which the holders
         of the Preferred Stock shall be entitled to vote, they shall be
         entitled to one vote for each share held.

                  (b)      Each holder of shares of Preferred Stock shall have a
         number of votes per share of Preferred Stock as to all matters voted
         upon by the holders of Common Stock

                                       3
<PAGE>

         equal to the Voting Ratio in effect on the record date for determining
         the holders of Common Stock entitled to vote on such matters, and shall
         be entitled to vote on all such matters together with the holders of
         the Common Stock, and together with the holders of any other classes or
         series of stock who are entitled to vote thereon and, except as
         provided in subsection (c), not as a separate class. The "Voting
         Ratio," in effect on a particular date, shall mean the Conversion Ratio
         that would have been in effect if the Conversion Date occurred on such
         date.

                  (c)      So long as any shares of Preferred Stock remain
         outstanding, the approval of the holders of at least two-thirds of the
         outstanding shares of Preferred Stock voting together as a separate
         class, given in person or by proxy, at any special or annual meeting
         called for such purpose, or by written consent as permitted by
         applicable law and the Restated Certificate of Incorporation and Bylaws
         of the corporation, shall be necessary to permit, effect or validate
         any amendment, alteration or repeal, by merger or otherwise, of any of
         the provisions of the Restated Certificate of Incorporation or of this
         Certificate of Designation which would adversely affect any power,
         preference or special right of the Preferred Stock provided that such
         an adverse effect shall not be deemed to have occurred solely as a
         result of the authorization, designation or issuance of any class of
         equity security.

6.       Priority in Event of Dissolution. In the event of any liquidation,
dissolution, or winding up of the affairs of the corporation, after payment or
provision for payment of the debts and other liabilities of the corporation, the
holders of the Preferred Stock shall be entitled to receive, out of the
remaining assets of the corporation, the amount of $25.00 in cash for each share
of Preferred Stock, plus in each case an amount equal to all dividends accrued
and unpaid on each such share (whether or not declared) up to the date fixed for
distribution, before any distribution shall be made to the holders of the Common
Stock or to the holders of any other class of stock ranking junior to the
Preferred Stock as to distribution of assets upon the liquidation, dissolution
or winding up of the affairs of the corporation. If upon any liquidation,
dissolution or winding up of the affairs of the corporation, the assets
distributable among the holders of Preferred Stock shall be insufficient to
permit the payment in full to the holders of all of the Preferred Stock of all
preferential amounts payable to all such holders, then the entire assets of the
corporation thus distributable shall be distributed ratably among the holders of
the Preferred Stock in proportion to the respective amounts that would be
payable per share if such assets were sufficient to permit payment in full.

7.       Conversion.

                  (a)      On July 1, 2006 (the "Conversion Date"), each share
         of Preferred Stock will be automatically converted (unless previously
         converted at the option of the holder of such Preferred Stock in
         accordance with Section 6(b) or a Change of Control Early Conversion
         has occurred in accordance with Section 6(c)) into (i) the number of
         shares of Common Stock, $.01 par value, of the corporation ("Common
         Stock") as provided below and (ii) the right to receive an amount in
         cash equal to all accrued and unpaid dividends on such share of
         Preferred Stock to and including the day immediately prior to the
         Conversion Date, whether or not earned or declared, out of funds
         legally available therefor provided, that for purposes of this clause
         (ii) any dividends that would have

                                       4
<PAGE>

         been accrued and unpaid as of the Conversion Date in respect of the
         quarter in which the Conversion Date occurs but for the fact that the
         corporation shall not have declared a dividend on the Common Stock
         during such quarter and prior to the Conversion Date, such dividends
         shall be treated as accrued and unpaid unless prior to the Conversion
         Date the corporation shall have publicly announced an intention to not
         declare a dividend on the Common Stock during such quarter. The number
         of shares of Common Stock to be received for each share of Preferred
         Stock (the "Conversion Ratio") shall be based on the Applicable Market
         Value in accordance with the following table, in each case subject to
         adjustment as provided in this Section 6:

<TABLE>
<CAPTION>
                                                                  Conversion Ratio
                                                             ---------------------------
                                                             Shares of Common Stock for
      Applicable Market Value                               each share of Preferred Stock
---------------------------------------                     -----------------------------
<S>                                                         <C>
(1)   Less than or equal to $37.37                                      .6690

(2)   Greater than $37.37 but less than                                $25.00
      or equal to  $50.45                                      -----------------------
                                                               Applicable Market Value
(3)   Greater than $50.45                                               .4955
</TABLE>

                  Subject to any adjustment pursuant to this Section 6, the
         "Applicable Market Value" means the average of the Closing Prices (as
         defined in subsection (j) below) per share of Common Stock on each of
         the twenty (20) consecutive Trading Days (as defined in subsection (j)
         below) ending on the second Trading Day immediately preceding the
         Conversion Date or the applicable Change of Control Early Conversion
         Date (as defined herein) as the case may be.

                  (b)      Each share of Preferred Stock is convertible, at the
         option of the holder thereof ("Optional Conversion"), at any time or
         from time to time, before the Conversion Date into a number of shares
         of Common Stock equal to the conversion ratio set forth in clause (3)
         of the definition of Conversion Ratio (as may be adjusted pursuant to
         this Section 6) (the "Optional Conversion Ratio"). Optional Conversion
         of shares of Preferred Stock may be effected by delivering written
         notice of conversion and the certificates and instruments required by
         subsection (d) to the office of the corporation set forth in subsection
         (d). Each Optional Conversion shall be deemed to have been effected
         immediately before the close of business on the date on which the
         foregoing requirements shall have been satisfied. The Optional
         Conversion shall be at the Optional Conversion Ratio in effect at such
         time and on such date. Holders of shares of Preferred Stock at the
         close of business on the record date for any payment of declared
         dividends shall be entitled to receive the dividend payable on such
         share of Preferred Stock on the corresponding dividend payment date
         notwithstanding the Optional Conversion of such shares of Preferred
         Stock following such record date and on or prior to such dividend
         payment date. Except as provided above, upon any Optional Conversion of
         shares of Preferred Stock, the corporation shall make no payment of or
         allowance for unpaid dividends, whether or not in arrears, on such
         shares of Preferred Stock as to which

                                       5
<PAGE>

         Optional Conversion has been effected or for previously declared
         dividends or distributions on the shares of Common Stock issued upon
         Optional Conversion.

                  (c)      Upon a Change of Control (as defined below) that is
         not a Common Stock Transaction (as defined below) and that occurs no
         later than the fifth business day immediately preceding the Conversion
         Date, each holder of Preferred Stock shall have the right, at the
         holder's option, for a period of 30 days after the mailing of a notice
         by the corporation to the holders of the Preferred Stock pursuant to
         this subsection (c) that a Change of Control has occurred, to convert
         all or any portion of such holder's shares of Preferred Stock (a
         "Change of Control Early Conversion") into Common Stock (or other
         securities or property pursuant to an adjustment to the Conversion
         Ratio including in respect of such Change of Control) at the Conversion
         Ratio in effect (after giving effect to any adjustments in respect of
         such Change of Control) on the effective date of such conversion (the
         "Change of Control Early Conversion Date"). Within 20 days after the
         occurrence of the Change of Control, the corporation shall mail written
         notice to each holder of Preferred Stock of the occurrence of the
         Change of Control, which notice shall be made by certified or
         registered mail and shall specify the deadline for submitting a notice
         of an election to convert pursuant to this subsection (c), the date on
         which such Change of Control shall have occurred, the applicable
         Conversion Ratio and the amount per share of Preferred Stock or cash,
         securities and other consideration receivable by the holder upon
         conversion if an election is made pursuant to the immediately preceding
         sentence. In addition, if a holder of Preferred Stock effects a Change
         of Control Early Conversion of some or all of such holder's Preferred
         Stock, such holder shall be entitled to receive, on the Change of
         Control Early Conversion Date, the aggregate amount of any accrued and
         unpaid dividends to and including the day immediately prior to the
         Change of Control Early Conversion Date on such shares of Preferred
         Stock that are so converted, whether or not earned or declared, out of
         funds legally available therefor. The Change of Control Early
         Conversion of shares of Preferred Stock may be effected by delivering
         written notice of conversion and certificates and instruments required
         by subsection (d) to the office of the corporation as set forth in
         subsection (d). Each Change of Control Early Conversion shall be deemed
         to have been effected immediately before the close of business on the
         date on which the foregoing requirements shall have been satisfied.

                  "Change of Control" means any of the following events: (i) the
         sale, lease, transfer, conveyance or other disposition (other than by
         way of merger or consolidation), in one or a series of related
         transactions, of all or substantially all of the assets of the
         corporation and its subsidiaries taken as a whole to any "person" or
         group of related persons (a "Group") (as such term is used in Sections
         13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
         "Exchange Act")); (ii) the consummation of any transaction (including,
         without limitation, any purchase, sale, acquisition, disposition,
         merger or consolidation) the result of which is that any "person" or
         Group becomes the "beneficial owner" (as such term is defined in Rule
         13d-3 and Rule 13d-5 under the Exchange Act) of more than 50% of the
         aggregate voting power of all classes of capital stock of the
         corporation having the right to elect directors under ordinary
         circumstances; (iii) any consolidation or merger of the corporation
         with or into another corporation (other than a merger or consolidation
         in which the Common Stock outstanding

                                       6
<PAGE>

         immediately prior to the merger or consolidation is not exchanged for
         cash, securities or other property of the corporation or another entity
         except an entity created for such transaction in which each share of
         Common Stock is converted into one share of common stock of such
         entity) or (iv) the adoption of a plan relating to the liquidation or
         dissolution of the corporation.

                  "Common Stock Transaction" means any transaction in which more
         than 50% of the value (as determined in good faith by the Board of
         Directors of the corporation) of the consideration received by holders
         of the Common Stock consists of common stock that for each of the ten
         consecutive Trading Days prior to the effective date of the transaction
         has been admitted for listing or admitted for listing subject to notice
         of issuance on a national securities exchange or quoted on the Nasdaq
         National Market.

                  (d)      As promptly as practicable following the Conversion
         Date or, in the case of an Optional Conversion or a Change of Control
         Early Conversion, after the surrender of a certificate representing
         shares of Preferred Stock which have been converted to the corporation
         at the principal offices of the corporation located at One Valero
         Place, San Antonio, Texas 78212, Attention: Shareholder Services
         Department (or at such other place as the corporation shall hereafter
         designate in writing to the registered holders of the Preferred Stock),
         accompanied by a written instrument in form reasonably satisfactory to
         the corporation duly executed by the registered holder or his duly
         authorized legal representative specifying the name or names (with
         address) in which the Common Stock is to be issued, the corporation
         shall deliver or cause to be delivered at the offices set forth above
         to or upon the written order of the holder of such shares of Preferred
         Stock so surrendered a certificate or certificates representing the
         number of fully paid and nonassessable shares of Common Stock or other
         cash, securities or property into which such shares of Preferred Stock
         have been converted in accordance with the provisions of this Section
         6. Conversion shall be deemed to have been made immediately prior to
         the close of business on the Conversion Date or the date specified in
         subsection (b) and (c), as applicable, so that the rights of the
         holders of such shares as holders of Preferred Stock shall cease with
         respect to such shares at such time, and the person or persons entitled
         to receive the shares of Common Stock upon conversion of shares of
         Preferred Stock shall be treated for all purposes as having become the
         record holder or holders of such shares of Common Stock at such time.
         Except as otherwise expressly provided herein, no adjustments in
         respect of cash dividends on Common Stock or Preferred Stock shall be
         made upon the conversion of any shares provided that if a record date
         for dividends on the Preferred Stock shall have occurred prior to the
         close of business on the Conversion Date or such other date as the
         conversion is deemed to have been effected, holders of Preferred Stock
         shall be entitled to receive such dividend, irrespective of whether
         conversion of such Preferred Stock into Common Stock has occurred prior
         to such dividend payment date.

                  (e)      If the corporation shall (i) pay a stock dividend or
         stock dividends or otherwise make a distribution or distributions on
         shares of its Common Stock in each case payable in shares of its Common
         Stock, (ii) subdivide outstanding shares of Common Stock into a larger
         number of shares, (iii) combine outstanding shares of Common Stock into
         a smaller number of shares, or (iv) issue by reclassification of shares

                                       7
<PAGE>

         of Common Stock any shares of capital stock of the corporation of any
         class or classes, the Conversion Ratio applicable prior to such action
         shall be adjusted so that the holder of any Preferred Stock thereafter
         surrendered for conversion shall be entitled to receive the Conversion
         Ratio in effect immediately prior to such action times the number and
         class or classes of shares of the capital stock of the corporation
         which a holder of one share of Common Stock would have owned or have
         been entitled to receive immediately after the happening of any of the
         events described above. An adjustment made pursuant to this subsection
         (e) shall become effective immediately after the record date for
         determination of stockholders entitled to receive such dividend or
         distribution in the case of a dividend or distribution and shall become
         effective immediately after the effective date in the case of a
         subdivision, combination or reclassification.

                  (f)      In case the corporation shall issue rights or
         warrants to all holders of Common Stock entitling them (for a period
         expiring within 45 days after the record date mentioned below) to
         subscribe for or purchase shares of Common Stock at a price per share
         less than the then Current Market Price per share of Common Stock (as
         defined in subsection (j) below) at the record date mentioned below,
         the Conversion Ratio in effect immediately prior to such record date
         shall be increased by multiplying the Conversion Ratio applicable prior
         to such record date by a fraction, of which the numerator shall be the
         number of shares of Common Stock (excluding treasury shares, if any)
         outstanding on such record date plus the number of additional shares of
         Common Stock offered for subscription or purchase, and of which the
         denominator shall be the number of shares of Common Stock (excluding
         treasury shares, if any) outstanding on such record date plus the
         number of shares of Common Stock which the aggregate offering price of
         the total number of shares so offered for subscription or purchase
         would purchase at such Current Market Price. Such adjustment shall
         become effective immediately after the record date for the
         determination of stockholders entitled to receive such rights or
         warrants. However, upon the expiration of any right or warrant to
         purchase Common Stock the issuance of which resulted in an adjustment
         in the Conversion Ratio pursuant to this subsection (f), if any such
         right or warrant shall expire and shall not have been exercised, the
         Conversion Ratio shall immediately upon such expiration be recomputed
         and effective immediately upon such expiration be increased to the
         ratio which it would have been (but reflecting any other adjustments in
         the Conversion Ratio made pursuant to the provisions of this Section 6
         after the issuance of such rights or warrants) had the adjustment of
         the Conversion Ratio made upon the issuance of such rights or warrants
         been made on the basis of offering for subscription or purchase only
         that number of shares of Common Stock actually purchased upon the
         exercise of such rights or warrants actually exercised.

                  (g)      In case the corporation shall distribute, by dividend
         or otherwise, to all holders of Common Stock evidences of its
         indebtedness, cash or other assets (excluding any dividend or
         distribution referred to in subsection (e) above and Excluded
         Dividends) or rights to subscribe (excluding those referred to in
         subsection (f) above) or if the Distribution Date (as defined below)
         with respect to the Preference Share Purchase Rights shall occur, then
         in each such case the Conversion Ratio shall be adjusted by multiplying
         the Conversion Ratio in effect immediately prior to the record date
         fixed for determination of stockholders entitled to receive such
         distribution by a fraction, of which

                                       8
<PAGE>

         the numerator shall be the Current Market Price per share of Common
         Stock determined as of the record date mentioned above, and of which
         the denominator shall be such Current Market Price per share of the
         Common Stock less the then fair market value (as determined by the
         Board of Directors of the corporation in good faith, whose
         determination shall be conclusive if made in good faith and shall be
         described in a statement provided to all registered holders of
         Preferred Stock) of the portion of cash, other assets or evidences of
         indebtedness so distributed or such subscription rights or Preference
         Share Purchase Rights applicable to one share of the Common Stock. Such
         adjustment shall become effective immediately after the record date
         mentioned above. "Excluded Dividends" shall mean any quarterly cash
         dividend on the Common Stock to the extent that the aggregate cash
         dividend per share of Common Stock in any fiscal quarter does not
         exceed the greater of (A) the amount per share of Common Stock of the
         immediately preceding quarterly cash dividend on the Common Stock to
         the extent that such preceding quarterly dividend did not require an
         adjustment of the Conversion Ratio pursuant to this subsection (g) (as
         adjusted to reflect subdivisions or combinations of Common Stock), and
         (B) 3.5% of the arithmetic average of the Closing Prices (as defined
         below) of the Common Stock during the ten consecutive Trading Days
         immediately prior to the date of declaration of such dividend.

                  (h)      In case of a tender or exchange offer (other than any
         odd-lot tender offer) made by the corporation or any subsidiary of the
         corporation for all or any portion of the Common Stock and upon
         expiration of such tender or exchange offer, the corporation or its
         subsidiary shall be required to pay to the stockholders based on
         acceptance (up to any maximum specified in the terms of the tender or
         exchange offer) of Corporation Purchased Shares (as herein defined) any
         consideration, then if the sum of (i) the fair market value of the
         aggregate consideration to be paid in such tender offer or exchange
         offer (as determined by the Board of Directors of the corporation in
         good faith, whose determination shall be conclusive if made in good
         faith and shall be described in a statement provided to all registered
         holders of Preferred Stock) plus (ii) the aggregate of the cash plus
         the fair market value (as determined by the Board of Directors of the
         corporation in good faith, whose determination shall be conclusive if
         made in good faith and shall be described in a statement provided to
         all registered holders of Preferred Stock), as of the expiration of
         such tender or exchange offer, of consideration payable in respect of
         any other tender or exchange offer (other than consideration payable in
         respect of any odd-lot tender offer), by the corporation or any
         subsidiary of the corporation for all or any portion of Common Stock
         expiring within the 12 months preceding the expiration of such tender
         or exchange offer and in respect of which no adjustment pursuant to
         this subsection (h) has been made, plus (iii) the aggregate amount of
         any distributions (other than regular quarterly cash dividends) to all
         holders of Common Stock made exclusively in cash within the 12 months
         preceding the expiration of such tender or exchange offer and in
         respect of which no adjustment pursuant to subsection (g) has been
         made, exceeds 15% of the product of the Current Market Price per share
         of Common Stock as of the last time (the "Corporation Expiration Time")
         tenders or exchanges may be made pursuant to such tender or exchange
         offer (as it shall have been amended) times the number of shares of
         Common Stock outstanding (including any tendered shares but excluding
         treasury shares, if any) on the Corporation Expiration Time, the
         Conversion Ratio shall be increased so that the same shall equal the
         rate determined by multiplying the Conversion

                                       9
<PAGE>

         Ratio in effect immediately prior to the Corporation Expiration Time by
         a fraction of which the numerator shall be the product of (a) the
         Current Market Price per share of Common Stock as of the Corporation
         Expiration Time and (b) the number of shares of Common Stock
         outstanding (including any tendered shares but excluding treasury
         shares, if any) as of the Corporation Expiration Time less the number
         of all shares validly tendered and not withdrawn as of the Corporation
         Expiration Time (the shares deemed so accepted up to any such maximum,
         being referred to as the "Corporation Purchased Shares") and the
         denominator of which shall be equal to (x) the product of (1) the
         Current Market Price per share of Common Stock on the date of the
         Corporation Expiration Time and (2) the number of shares of Common
         Stock outstanding (including any tendered shares but excluding treasury
         shares, if any) on the date of the Corporation Expiration Time less (y)
         the amount of cash plus the fair market value (determined as aforesaid)
         of the aggregate consideration payable to stockholders based on the
         transactions described in clauses (i), (ii) and (iii) above (assuming
         in the case of clause (i) the acceptance, up to any maximum specified
         in the terms of the tender or exchange offer, of Corporation Purchased
         Shares), such adjustment to become effective at the opening of business
         on the date following the date of the Corporation Expiration Time.

                  (i)      In case of a tender or exchange offer made by a
         person other than the corporation or any subsidiary of the corporation
         for an amount which increases the offeror's ownership of Common Stock
         by more than 25% of the Common Stock outstanding (excluding treasury
         shares, if any) and shall involve the payment by such person of
         consideration per share of Common Stock having a fair market value (as
         determined by the Board of Directors of the corporation in good faith,
         whose determination shall be conclusive if made in good faith and shall
         be described in a statement provided to all registered holders of
         Preferred Stock) at the last time (the "Expiration Time") tenders or
         exchanges may be made pursuant to such tender or exchange offer (as it
         shall have been amended) that exceeds the Current Market Price of the
         Common Stock on the Trading Day next succeeding the Expiration Time,
         and in which, as of the Expiration Time, the Board of Directors is
         recommending acceptance of the offer, the Conversion Ratio shall be
         increased so that the same shall equal the rate determined by
         multiplying the Conversion Ratio in effect immediately prior to the
         Expiration Time by a fraction of which the numerator shall be the sum
         of (x) the fair market value (determined as aforesaid) of the aggregate
         consideration payable to stockholders based on the acceptance (up to
         any maximum specified in the terms of the tender or exchange offer) of
         all shares validly tendered or exchanged and not withdrawn as of the
         Expiration Time (the shares deemed so accepted, up to any such maximum,
         being referred to as the "Purchased Shares") and (y) the product of the
         number of shares of Common Stock outstanding (less any Purchased Shares
         and excluding treasury shares, if any) on the Expiration Time and the
         Current Market Price of the Common Stock on the Trading Day next
         succeeding the Expiration Time, and the denominator shall be the number
         of shares of Common Stock outstanding (including any tendered or
         exchanged shares but excluding treasury shares, if any) on the
         Expiration Time multiplied by the Current Market Price of the Common
         Stock on the Trading Day next succeeding the Expiration Time, such
         increase to become effective immediately prior the opening of business
         on the day following the Expiration Time. In the event that such person
         is obligated to purchase shares pursuant to any such tender or exchange
         offer, but such

                                       10
<PAGE>

         person is permanently prevented by applicable law from effecting any
         such purchases or all such purchases are rescinded, the Conversion
         Ratio shall again be adjusted to the Conversion Ratio which would be in
         effect if such tender or exchange offer had not been made.
         Notwithstanding the foregoing, the adjustment described in this
         subsection (i) shall not be made if, as of the Expiration Time, the
         offering documents with respect to such offer disclose a plan or
         intention to cause the corporation to engage in a consolidation or
         merger of the corporation or a sale of all or substantially all of the
         assets of the corporation.

                  (j)      For purposes of this Section 6, the "Current Market
         Price" per share of Common Stock of the corporation at any date shall
         be deemed to be equal to the average Closing Price of the Common Stock
         for the twenty (20) consecutive Trading Days ending on the second
         trading day prior to the date of determination. As used herein the
         "Closing Price" per share of Common Stock on any day shall mean the
         closing sales prices for such shares as reported in the Wall Street
         Journal's NYSE-Composite Transaction listing for such day (corrected
         for typographical errors), or if such shares are not reported in such
         listing, then the closing sales prices reported on the largest exchange
         (based on the aggregate dollar value of securities listed) on which
         such shares are listed, or if such shares are not listed or traded on
         any exchange, then the closing sales prices for such shares in the
         over-the-counter market, as reported on the National Association of
         Securities Dealers Automated Quotations System, or, if such price shall
         not be reported thereon, the average of the means between the closing
         bid and asked prices so reported, or, if such prices shall not be
         reported thereon, as the same shall be reported by the National
         Quotation Bureau Incorporated, or, in all other cases, the market value
         of the Common Stock on such date as determined by a recognized
         independent investment banking firm retained for this service by the
         corporation. A "Trading Day" means a day on which the Common Stock (A)
         is not suspended from trading on any national or regional securities
         exchange or association or over-the-counter market at the close of
         business and (B) has traded at least once on the national or regional
         securities exchange or association or over-the-counter market that is
         the primary market for the trading of the Common Stock.

                  (k)      No adjustment otherwise required in the Conversion
         Ratio shall be required unless such adjustment would require an
         increase or decrease of at least 1% in such ratio; provided, however,
         that any adjustment which by reason of this subsection (k) is not
         required to be made shall be carried forward and taken into account in
         any subsequent adjustment. All calculations under this Section 6 shall
         be made to the nearest 1/100th of a share.

                  (l)      If an adjustment is made to the Conversion Ratio
         pursuant to subsections (e), (f), (g), (h) or (i), an adjustment shall
         also be made to the Applicable Market Value solely to determine which
         of clauses (1), (2) or (3) of the definition of Conversion Ratio in
         subsection (a) shall apply on the Conversion Date or the applicable
         Change of Control Early Conversion Date, as the case may be. Such
         adjustment shall be made by multiplying the Applicable Market Value by
         a fraction of which the numerator shall be the Conversion Ratio
         immediately after such adjustment pursuant to subsections (e), (f),
         (g), (h) or (i) and the denominator shall be the Conversion Ratio

                                       11
<PAGE>

         immediately before such adjustment; provided, however, that if such
         adjustment to the Conversion Ratio is required to be made pursuant to
         the occurrence of any of the events contemplated by subsections (e),
         (f), (g), (h) or (i) during the period taken into consideration for
         determining the Applicable Market Value, appropriate and customary
         adjustments shall be made to the Conversion Ratio.

                  (m)      Whenever the Conversion Ratio is adjusted, as herein
         provided, the corporation shall promptly mail to each registered holder
         of Preferred Stock a notice setting forth the Conversion Ratio after
         such adjustment and setting forth a brief statement of the facts
         requiring such adjustment. The Conversion Ratio as most recently
         adjusted pursuant to this Section 6 shall then apply to the conversion
         of Preferred Stock pursuant to subsections (a), (b) or (c) of this
         Section 6.

                  (n)      For the purposes of this Section 6 the term "Common
         Stock" shall mean (i) the class of stock designated as the Common Stock
         of the corporation at the date of this certificate, or (ii) any other
         class of stock resulting from successive changes or reclassifications
         of such Common Stock consisting solely of changes in par value or from
         par value to no par value, or from no par value to par value. Unless
         the context otherwise specifies or requires, all references in this
         certificate to "Common Stock" include the Common Stock and the
         Preference Share Purchase Rights trading therewith. As used herein, all
         references to "Preference Share Purchase Rights" in this certificate
         shall mean the Preference Share Purchase Rights issued pursuant to that
         certain Rights Agreement, dated as of July 17, 1997, between the
         corporation and Computershare Investors Services L.L.C., as Rights
         Agent, as the same may hereafter be amended or supplemented (the
         "Rights Agreement"), and any similar rights issued in exchange for,
         upon conversion of or in substitution for such Preference Share
         Purchase Rights. As used herein, all references to the term
         "Distribution Date" shall have the meaning set forth in the Rights
         Agreement or in any successor agreement pertaining to any similar
         rights issued in exchange for, upon conversion of or in substitution
         for the Preference Share Purchase Rights. In the event that at any
         time, as a result of an adjustment made pursuant to this Section 6, the
         holder of any Preferred Stock thereafter surrendered for conversion
         shall become entitled to receive any shares of the corporation other
         than shares of Common Stock, thereafter the number of such other shares
         so receivable upon conversion of any Preferred Stock shall be subject
         to adjustment from time to time in a manner and on terms as nearly
         equivalent as practicable to the provisions with respect to the Common
         Stock contained in subsections (a) to (m) inclusive above and
         subsections (o) and (p) below, and the provisions of said subsections
         (a) to (m) above and of subsections (o) and (p) below shall apply on
         like terms to any such other shares.

                  (o)      No fractional shares or scrip representing fractional
         shares shall be issued upon the conversion of Preferred Stock. If more
         than one share of Preferred Stock shall be surrendered for conversion
         at one time by the same holder, the number of full shares of Common
         Stock issuable upon conversion thereof shall be computed by multiplying
         the aggregate number of shares of Preferred Stock so surrendered by the
         Conversion Ratio in effect at the time of conversion. If the conversion
         of any shares of Preferred Stock results in a fraction, an amount equal
         to such fraction multiplied by the Current Market Price of the Common
         Stock as of the time of conversion shall be paid promptly to such
         holder in

                                       12
<PAGE>

         cash by the corporation. All shares of Preferred Stock delivered to the
         corporation pursuant to this Section 6 shall be imprinted with a legend
         indicating such conversion, and such converted shares shall be held by
         the corporation and restored to authorized but unissued shares of
         preferred stock of the Corporation.

                  (p)      In case of (i) any consolidation or merger of the
         corporation with or into another entity (other than a merger or
         consolidation in which the corporation is the continuing corporation
         and in which the Common Stock outstanding immediately prior to the
         merger or consolidation is not exchanged for cash, securities or other
         property of the corporation or another entity created for such
         transaction in which each share of Common Stock is converted into one
         share of common stock of such entity), (ii) any sale or transfer to
         another entity of the property of the corporation as an entirety or
         substantially as an entirety or (iii) any statutory exchange of
         securities of the corporation with another entity (other than in
         connection with a merger or acquisition) (any such event, a
         "Reorganization Event"), the Conversion Ratio shall be adjusted to
         provide that each holder of Preferred Stock shall receive upon
         conversion thereof, the kind and amount of securities, cash and other
         property (the "Event Consideration") receivable upon consummation of
         the Reorganization Event by a holder of one share of Common Stock
         multiplied by the Conversion Ratio, assuming such holder of Common
         Stock is not a person or entity with which the Corporation consolidated
         or into which the corporation merged or that merged into the
         corporation or to which such sale or transfer was made, as the case may
         be ("Constituent Person"), or an affiliate of a Constituent Person, and
         that such holder failed to exercise such holder's rights of election,
         if any, as to the kind or amount of securities, cash and other property
         receivable upon such Reorganization Event (provided that if the kind or
         amount of securities, cash and other property receivable upon such
         Reorganization Event is not the same for each share of Common Stock
         held immediately prior to such Reorganization Event by other than a
         Constituent Person or an affiliate thereof and in respect of which such
         rights of election shall not have been exercised ("non-electing
         share"), then for the purpose of this subsection (p) the kind and
         amount of securities, cash and other property receivable upon such
         Reorganization Event by each non-electing share shall be deemed to be
         the kind and amount so receivable per share by a plurality of the
         non-electing shares). Following a Reorganization Event, the Applicable
         Market Value shall equal the value of the Event Consideration
         receivable in respect of one share of Common Stock, determined in the
         following manner: (i) for any Event Consideration consisting of cash,
         the amount of such cash; (ii) for any Event Consideration consisting of
         Marketable Common Stock, the average of the Closing Prices per share of
         such Marketable Common Stock on each of the twenty (20) consecutive
         Trading Days ending on the second Trading Day immediately preceding the
         Conversion Date or the applicable Change of Control Early Conversion
         Date, as the case may be; and (iii) for any Event Consideration
         consisting of securities or other property other than cash or
         Marketable Common Stock, an amount equal to the fair market value of
         such Event Consideration on the Conversion Date or the applicable
         Change of Control Early Conversion Date, as the case may be (as
         determined by the Board of Directors of the corporation in good faith,
         whose determination shall be conclusive if made in good faith and shall
         be described in a statement provided to all registered holders of
         Preferred Stock). "Marketable Common Stock" means any common equity
         securities listed on a U.S. national exchange or automated quotation
         system. In the event of and as a condition

                                       13
<PAGE>

         to such a Reorganization Event, the person or entity formed by such
         consolidation, merger or exchange shall expressly provide for (x) the
         rights of the Preferred Stock provided by this subsection (p), (y)
         adjustments to the Conversion Ratio for events subsequent to the
         effective date of such Reorganization Event that shall be as nearly
         equivalent as may be practicable to the adjustments provided for in
         this Section 6, and (z) such modifications to the definition of "Common
         Stock" and such other provisions hereof and of the Preferred Stock as
         shall be necessary to carry out the economic intent of this Certificate
         of Designations. This provision shall similarly apply to successive
         Reorganization Events.

                  (q)      The issuance of certificates for shares of Common
         Stock upon the conversion of shares of Preferred Stock shall be made
         without charge to the converting stockholders for such certificates or
         for any tax in respect of the issuance of such certificates, and such
         certificates shall be issued in the respective names of, or in such
         names as may be directed by, the holders of the shares so converted;
         provided, however, that the corporation shall not be required to pay
         any tax which may be payable in respect of any transfer involved in the
         issuance and delivery of any such certificate in a name other than that
         of the holder of the shares converted, and the corporation shall not be
         required to issue or deliver any such certificate unless and until the
         person or persons requesting the issuance thereof shall have paid to
         the corporation the amount of such tax or shall have established to the
         satisfaction of the corporation that such tax has been paid, and
         provided further, that the corporation shall not be required to pay or
         reimburse the holder for any income tax payable by such holder as a
         result of such issuance. Upon conversion of the Preferred Stock, the
         corporation may withhold the payment of dividends on Common Stock for
         the account of any holder who has not surrendered its certificate(s) of
         Preferred Stock until such time as such holder shall have done so.

                  (r)      In case:

                           (i)      the corporation shall declare a dividend (or
                  any other distribution) on the Common Stock other than
                  Excluded Dividends; or

                           (ii)     the corporation shall declare a special
                  nonrecurring cash dividend on or a redemption of its Common
                  Stock; or

                           (iii)    the corporation shall authorize the granting
                  to the holders of the Common Stock of rights or warrants to
                  subscribe for or purchase any shares of capital stock of any
                  class or of any other rights; or

                           (iv)     the approval of any stockholders of the
                  corporation shall be required in connection with any
                  reclassification of the Common Stock (other than a subdivision
                  or combination of the outstanding shares of Common Stock), any
                  consolidation or merger to which the corporation is a party,
                  any sale or transfer of all or substantially all of the assets
                  of the corporation or any statutory share exchange involving
                  the Common Stock; or

                                       14
<PAGE>

                           (v)      of the voluntary or involuntary dissolution,
                  liquidation or winding up of the affairs of the corporation;

         then the corporation shall cause to be filed at each office or agency
         maintained for the purpose of conversion of the Preferred Stock, and
         shall cause to be mailed to the holders of record of the Preferred
         Stock, at their last addresses as they shall appear upon the stock
         books of the corporation, at least 10 days prior to the applicable
         record date hereinafter specified, a notice stating (x) the date on
         which a record is to be taken for the purpose of such dividend,
         distribution, redemption, rights or warrants, or, if a record is not to
         be taken, the date as of which the holders of Common Stock of record to
         be entitled to such dividend, distribution, redemption, rights or
         warrants are to be determined, or (y) the date on which such
         reclassification, consolidation, merger, sale, transfer, dissolution,
         liquidation or winding up is expected to become effective, and the date
         as of which it is expected that holders of Common Stock of record shall
         be entitled to exchange their shares of Common Stock for securities or
         other property deliverable upon such reclassification, consolidation,
         merger, sale, transfer, dissolution, liquidation or winding up (but no
         failure to mail such notice or any defect therein or in the mailing
         thereof shall affect the validity of the corporate action required to
         be specified in such notice).

                  (s)      The corporation shall at all times reserve and keep
         available out of its authorized but unissued Common Stock, solely for
         the purpose of effecting the conversion of the shares of Preferred
         Stock, the full number of shares of Common Stock then issuable upon the
         conversion of all outstanding shares of Preferred Stock. For the
         purpose of this subsection (s), the full number of shares of Common
         Stock issuable upon the conversion of all outstanding shares of
         Preferred Stock shall be computed as if at the time of computation of
         such number of shares of Common Stock, all outstanding shares of
         Preferred Stock were held by a single holder. The corporation shall
         from time to time, in accordance with the laws of the State of
         Delaware, increase the authorized amount of its Common Stock if at any
         time the authorized amount of its Common Stock remaining unissued shall
         not be sufficient to permit the conversion of all shares of Preferred
         Stock at the time outstanding.

8.       Sinking Fund. The Preferred Stock shall not be entitled to any
mandatory redemption or prepayment (except on liquidation, dissolution or
winding up of the affairs of the corporation) or to the benefit of any sinking
fund.

                  RESOLVED FURTHER, that, before the corporation shall issue any
shares of the Preferred Stock, a certificate pursuant to Section 151 of the
General Corporation Law of the State of Delaware, to be entitled a "Certificate
of Designation," shall be made, executed, acknowledged, filed and recorded in
accordance with the provisions of said Section 151; and that the proper officers
of the corporation are hereby authorized and directed to do all acts and things
which may be necessary or proper in their opinion to carry into effect the
purposes and intent of this and the foregoing resolutions.

                                       15
<PAGE>

                  IN WITNESS WHEREOF, this Certificate of Designation has been
made under the seal of the corporation and the hands of the undersigned, said
John D. Gibbons, Executive Vice President and Chief Financial Officer, and said
Jay D. Browning, Vice President and Corporate Secretary, respectively, of the
corporation, this 30th day of June, 2003.

                                            /s/ John D. Gibbons
                                            ------------------------------------
                                            John D. Gibbons
                                            Executive Vice President and
                                            Chief Financial Officer

/s/ Jay Browning
---------------------------------------
Jay D. Browning
Vice President and Corporate Secretary

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