Document:

exv10w6

 

Exhibit 10.6

FIRST AMENDMENT TO CREDIT AGREEMENT

     THIS
FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is
entered into as of March 8,
2005, by and between STERLING BANCSHARES, INC., a Texas corporation (“Borrower”), and WELLS
FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

     WHEREAS, Borrower and Bank have previously entered into that certain Credit Agreement between
Borrower and Bank dated as of October 1, 2004, as amended from time to time (“Credit Agreement”).

     WHEREAS, Bank and Borrower have agreed to certain changes in the terms and conditions set
forth in the Credit Agreement and have agreed to amend the Credit Agreement to reflect said
changes.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:

     1.       Section 5.5 is hereby deleted in its entirety, and the following substituted therefor:

“SECTION 5.5.   DIVIDENDS, DISTRIBUTIONS    Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower’s stock now or
hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of Borrower’s stock now or hereafter outstanding; provided,
however, that Borrower may take any of the foregoing actions including, without
limitation, the declaration and payment of dividends and the repurchase of
Borrower’s stock so long as the aggregate distributions or payments in any fiscal
year do not exceed ten percent of the equity capital of the Bank Subsidiary as shown
in the Call Reports for the end of the prior fiscal year.”

     2.       Except as specifically provided herein, all terms and conditions of the Credit Agreement remain
in full force and effect, without waiver or modification. All terms defined in the Credit
Agreement shall have the same meaning when used in this Amendment. This Amendment and the Credit
Agreement shall be read together, as one document.

     3.       Borrower hereby remakes all representations and warranties contained in the Credit Agreement and
reaffirms all covenants set forth therein. Borrower further certifies that as of the date of this
Amendment there exists no Event of Default as defined in the Credit Agreement, nor any condition,
act or event which with the giving of notice or the passage of time or both would constitute any
such Event of Default.

NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS CONSTITUTE A WRITTEN
LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL

-1-

 

AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO
THE INDEBTEDNESS.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day
and year first written above.

	 	 	 	 	 	 	 
	
STERLING BANCSHARES, INC.,	 	WELLS FARGO BANK,
      NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	By:
	 	/s/ Stephen C. Raffaele	 	By:	 	/s/ Michael W. Moses
	
	 	 	 	 	 	 
	
	 	Stephen C. Raffaele	 		 	Michael W. Moses
	
	 	Executive Vice President and

Chief Financial Officer	 		 	Vice President

- 2 -exv10w15

 

Exhibit 10.15

OUTSIDE DIRECTORS’ COMPENSATION

Each outside director of CVB Financial Corporation will receive the following compensation on an
annual basis for their services as a director as of March 9, 2005:

	 	 	 	 	 
	Chairman of the Board

	 	$	124,200	 
	 
	 	 	 	 
	All other outside directors

	 	$	43,464	 

These amounts are paid in equal monthly installments. In addition, the directors are eligible to
participate in the health plan of the Company and the Company pays a portion of that benefit
comparable to the other employees of the Company.

There is no additional compensation for the directors should they serve on a committee or chair a
committee.exv10w16

 

Exhibit 10.16

BASE SALARIES OF NAMED EXECUTIVE OFFICERS OF THE REGISTRANT

As of March 9, 2005, the following are the base salaries (on an annual basis) of the named
executive officers (as defined in Item 402(a)(3) of Regulations S-K) of CVB Financial Corporation:

	 	 	 	 	 
	D. Linn Wiley

President, Chief Executive Officer
	 	$	500,000	 
	 
	 	 	 	 
	Frank Basirico, Jr.

Executive Vice President, Chief Credit Officer
	 	$	235,000	 
	 
	 	 	 	 
	Edward J. Biebrich, Jr.

Executive Vice President, Chief Financial Officer
	 	$	235,000	 
	 
	 	 	 	 
	Jay W. Coleman

Executive Vice President, Sales and Service Division
	 	$	 235,000	 
	 
	 	 	 	 
	Edwin J. Pomplun

Executive Vice President, Wealth Management Group
	 	$	162,000	 

Each of the named executive officers will be eligible to receive a discretionary bonus for 2005
pursuant to the Citizens Business Bank (“CBB”) Discretionary Performance Compensation Plan upon
adoption of such plan by CBB.

In addition, each of the named executive officers receives the right to use a bank owned
automobile. CBB also pays the country club dues for Messrs. Wiley and Coleman.

Like all employees of CBB, each of the named executive officers is also eligible to receive an
allocation pursuant to CBB’s 401(k) and Profit Sharing Plan.<PAGE>

                                  Exhibit 10.10

                            VALERO ENERGY CORPORATION

                       2003 EMPLOYEE STOCK INCENTIVE PLAN

                  AMENDED AND RESTATED AS OF DECEMBER 31, 2004

<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                            <C>
SECTION 1. Purpose........................................................................................      1

SECTION 2. Definitions....................................................................................      1
     (a)   "Affiliate.....................................................................................      1
     (b)   Award..........................................................................................      1
     (c)   Award Agreement................................................................................      1
     (d)   Board..........................................................................................      1
     (e)   Cause..........................................................................................      1
     (f)   Change of Control..............................................................................      1
     (g)   Code...........................................................................................      1
     (h)   Committee......................................................................................      1
     (i)   Company........................................................................................      1
     (j)   Employee.......................................................................................      2
     (k)   Exchange Act...................................................................................      2
     (l)   Exercisable Award..............................................................................      2
     (m)   Exercise Notice................................................................................      2
     (n)   Fair Market Value..............................................................................      2
     (o)   Notice Date....................................................................................      2
     (p)   Option.........................................................................................      2
     (q)   Other Stock-Based Award........................................................................      2
     (r)   Participant....................................................................................      2
     (s)   Performance Award..............................................................................      2
     (t)   Person.........................................................................................      2
     (u)   Preference Share Purchase Right................................................................      2
     (v)   Reorganization Event...........................................................................      2
     (w)   Restricted Stock...............................................................................      2
     (x)   Rights Agreement...............................................................................      2
     (y)   SAR or stock appreciation right................................................................      3
     (z)   SEC............................................................................................      3
     (aa)  Settlement Date................................................................................      3
     (bb)  Share" or "Shares..............................................................................      3
     (cc)  Stock Compensation.............................................................................      3
     (dd)  Tax Payment....................................................................................      3

SECTION 3. Administration.................................................................................      3

SECTION 4. Shares and Other Property Available For Awards.................................................      4
     (a)   Shares Available...............................................................................      4
     (b)   Sources of Shares Deliverable Under Awards.....................................................      4
     (c)   Adjustments....................................................................................      4
     (d)   Share Counting.................................................................................      6
</TABLE>

                                       -i-

<PAGE>
<TABLE>
<S>                                                                                                            <C>
SECTION 5.  Eligibility....................................................................................     6

SECTION 6.  Awards.........................................................................................     6
     (a)    Options........................................................................................     6
     (b)    Stock Appreciation Rights......................................................................     6
     (c)    Restricted Stock...............................................................................     7
     (d)    Performance Awards.............................................................................     7
     (e)    Stock Compensation.............................................................................     8
     (f)    Other Stock-Based Awards.......................................................................     8
     (g)    Exercise of Option or SAR Awards...............................................................     8
     (h)    General........................................................................................     9

SECTION 7.  Amendment and Termination......................................................................    12
     (a)    Amendments to the Plan.........................................................................    12
     (b)    Amendments to Awards...........................................................................    12
     (c)    Unusual or Nonrecurring Events.................................................................    12

SECTION 8.  Change Of Control..............................................................................    12
     (a)    Effect.........................................................................................    12
     (b)    Defined........................................................................................    12
     (c)    Actions of Committee...........................................................................    14

SECTION 9.  General Provisions.............................................................................    14
     (a)    No Rights to Awards............................................................................    14
     (b)    Delegation.....................................................................................    14
     (c)    Withholding....................................................................................    14
     (d)    No Limit on Other Compensation Arrangements....................................................    15
     (e)    No Right to Employment.........................................................................    15
     (f)    Governing Law..................................................................................    15
     (g)    Severability...................................................................................    15
     (h)    NYSE Listing and Other Laws and Regulations....................................................    15
     (i)    No Trust or Fund Created.......................................................................    15
     (j)    No Fractional Shares...........................................................................    16
     (k)    Headings.......................................................................................    16
     (l)    Construction...................................................................................    16

SECTION 10. Effective Date of the Plan.....................................................................    16

SECTION 11. Term of the Plan...............................................................................    16
</TABLE>

                                      -ii-

<PAGE>

                       2003 EMPLOYEE STOCK INCENTIVE PLAN

SECTION 1. PURPOSE.

      The purpose of this 2003 Employee Stock Incentive Plan (the "Plan") is to
promote the interests of the Company and its stockholders by (i) attracting and
retaining employees of the Company and its affiliates; (ii) motivating these
employees by using performance-related incentives to achieve longer range
performance goals; and (iii) enabling these employees to participate in the
long-term growth and financial success of the Company.

SECTION 2. DEFINITIONS.

      As used in the Plan, the following terms shall have the meanings set forth
below:

            (a) "Affiliate" shall mean (i) any entity that, directly or through
      one or more intermediaries, is controlled by the Company and (ii) any
      entity in which the Company has a significant equity interest, as
      determined by the Committee.

            (b) "Award" shall mean any Option, Stock Appreciation Right,
      Restricted Stock, Performance Award, Stock Compensation Award or Other
      Stock-Based Award.

            (c) "Award Agreement" shall mean any written agreement, contract, or
      other instrument or document evidencing any Award, which may, but need
      not, be executed or acknowledged by a Participant.

            (d) "Board" shall mean the Board of Directors of the Company.

            (e) "Cause" shall mean the (i) conviction of the Participant by a
      state or federal court of a felony involving moral turpitude, (ii)
      conviction of the Participant by a state or federal court of embezzlement
      or misappropriation of funds of the Company, (iii) negligence or
      misconduct of the Participant which causes material loss, damage or injury
      to the Company, any of its Affiliates or their respective employees, or
      (iv) Participant's failure to satisfactorily perform the material stated
      duties of Participant's position with the Company or any of its
      Affiliates.

            (f) "Change of Control" is defined in Section 8(b) of the Plan.

            (g) "Code" shall mean the Internal Revenue Code of 1986, as amended
      from time to time.

            (h) "Committee" shall mean the Committee appointed to administer the
      Plan, as further described in Section 3 of the Plan.

            (i) "Company" shall mean Valero Energy Corporation, a Delaware
      corporation, formerly known as "Valero Refining and Marketing Company".

                                      -1-

<PAGE>
            (j) "Employee" shall mean any employee of the Company or of any
      Affiliate other than officers and directors within the meaning of Rule
      16(a)-1(f) of the Exchange Act.

            (k) "Exchange Act" shall mean the Securities Exchange Act of 1934,
      as amended.

            (l) "Exercisable Award" is defined in Section 6(h)(vii)(A).

            (m) "Exercise Notice" is defined in Section 6(g)(i) of the Plan.

            (n) "Fair Market Value" shall mean the average of the "high" and
      "low" reported sales price per Share (as reported in the NYSE - Composite
      Transactions listing) as of the relevant measuring date, or if there are
      no sales on the NYSE on that measuring date, then as of the next day on
      which there were sales.

            (o) "Notice Date" is defined in Section 6(g)(i) of the Plan.

            (p) "Option" shall mean an option granted under Section 6(a) of the
      Plan that is not intended to be an Incentive Stock Option, within the
      meaning of Section 422 of the Code or any successor provision thereto.

            (q) "Other Stock-Based Award" shall mean any right granted under
      Section 6(f) of the Plan.

            (r) "Participant" shall mean any Employee granted an Award under the
      Plan.

            (s) "Performance Award" shall mean any right granted under Section
      6(d) of the Plan.

            (t) "Person" shall mean any individual, corporation, partnership,
      association, joint-stock company, trust, unincorporated organization,
      government or political subdivision thereof or other entity.

            (u) "Preference Share Purchase Right" shall mean one of the rights
      distributed pursuant to the Rights Agreement to purchase 1/100 share of
      the Junior Participating Preferred Stock, Series I, of Valero.

            (v) "Reorganization Event" is defined in Section 4(c) of the Plan.

            (w) "Restricted Stock" shall mean any Share, prior to the lapse of
      restrictions thereon, granted under Section 6(c) of the Plan.

            (x) "Rights Agreement" shall mean the Rights Agreement, dated as of
      June 18, 1997, between the Company and Computershare Investor Services,
      L.L.C., as Rights Agent (successor Rights Agent to Harris Trust and
      Savings Bank), as amended.

                                        2

<PAGE>

            (y) "SAR" or "stock appreciation right" is further described in
      Section 6(b) of the Plan and shall mean the right, subject to the
      provisions of this Plan, to receive a payment in cash equal to the
      difference between the specified exercise price of the SAR and the Fair
      Market Value of one Share.

            (z) "SEC" shall mean the Securities and Exchange Commission.

            (aa) "Settlement Date" is defined in Section 6(g)(i) of the Plan.

            (bb) "Share" or "Shares" shall mean the common stock of the Company,
      $0.01 par value, and other securities or property that may become the
      subject of Awards or become subject to Awards pursuant to an adjustment
      made under Section 4(c) of the Plan.

            (cc) "Stock Compensation" shall mean any right granted under Section
      6(e) of the Plan.

            (dd) "Tax Payment" is defined in Section 6(g)(ii) of the Plan.

SECTION 3. ADMINISTRATION.

      The Plan shall be administered by a committee of the Board appointed by
the Board to act for purposes of administering this Plan. Subject to the terms
of the Plan and applicable law, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
authority to:

            (a) designate Participants;

            (b) determine the type or types of Awards to be granted to an
      Employee;

            (c) determine the number of Shares to be covered by, or with respect
      to which payments, rights, or other matters are to be calculated in
      connection with, Awards;

            (d) determine the terms and conditions of any Award and any
      subsequent amendments thereto;

            (e) determine to what extent and under what circumstances Awards may
      be settled or exercised in cash, Shares, other securities, other Awards or
      other property, or canceled, forfeited, or suspended, and the method or
      methods by which Awards may be settled, exercised, canceled, forfeited, or
      suspended;

            (f) provide for the acceleration of any time period relating to the
      vesting, exercise or realization of any Award so that the Award may be
      exercised or realized in full on or before a date fixed by the Committee;
      the Committee may, in its discretion, include other provisions and
      limitations in any Award Agreement as the Committee may deem equitable and
      in the best interests of the Company;

                                       3

<PAGE>

            (g) interpret and administer the Plan and any instrument or
      agreement relating to the Plan, including Award Agreements;

            (h) establish, amend, suspend, or waive any rules or regulations
      regarding the Plan, and appoint any agent the Committee shall deem
      appropriate for the proper administration of the Plan; and

            (i) make any other determination and take any other action that the
      Committee deems necessary or desirable for the administration of the Plan.
      Unless otherwise expressly provided in the Plan, all designations,
      determinations, interpretations, and other decisions with respect to the
      Plan or any Award shall be within the sole discretion of the Committee,
      may be made at any time, and shall be final, conclusive, and binding upon
      all Persons, including the Company, any Affiliate, any Participant, any
      holder or beneficiary of any Award, any stockholder of the Company and any
      Employee.

SECTION 4. SHARES AND OTHER PROPERTY AVAILABLE FOR AWARDS.

      (a) Shares Available. Subject to adjustment as provided in Section 4(c),
the number of Shares with respect to which Awards may be granted under the Plan
shall be 5,000,000.

      (b) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares, Shares held by the Company in its treasury or Shares purchased
by the Company on the open market or otherwise.

      (c) Adjustments.

            (i) If all or any portion of an Award vests or is exercised
      subsequent to any stock dividend, rights distribution, split-up,
      recapitalization, combination or exchange of shares, merger,
      consolidation, acquisition of property or stock, spin-off or separation,
      reorganization, liquidation or other similar event (any one of which being
      hereafter referred to as a "Reorganization Event"), as a result of which
      shares or other securities of any class or rights shall be issued in
      respect of outstanding Shares, or Shares shall be changed into the same or
      a different number of shares of the same or another class or classes or
      other securities, the person exercising or otherwise entitled to such
      Award shall receive, except as may be otherwise determined by the
      Committee:

                  (A) for the aggregate price payable upon such exercise of an
            Option, or upon vesting of an Award (other than an Option)
            denominated in Shares (1) the aggregate number and class of shares,
            rights or other securities for which a recognized market exists, and
            (2) a cash amount equal to the fair market value (as reasonably
            determined by the Committee) on such exercise or vesting date of any
            other property (other than regular cash dividend payments) and of
            any shares, rights or other securities for which no recognized
            market exists, which, if Shares (as authorized at the date of the
            granting of such Award) had been

                                       4

<PAGE>

            acquired at the date of granting of the Award for the same aggregate
            price (on the basis of the price per share, if any, provided in the
            Award) and had not been disposed of, such person or persons would be
            holding at the time of such exercise or vesting as a result of such
            acquisition and any such Reorganization Event, and

                  (B) a cash amount upon the exercise of any SARs equal to the
            difference between the aggregate grant price of such SARs and the
            aggregate of (1) the fair market value on the exercise date of any
            whole shares, rights or other securities for which a recognized
            market exists, and (2) the fair market value (as reasonably
            determined by the Committee) on such date of any other property
            (other than regular cash dividend payments) which the holder of a
            number of Shares equal to the number of such SARs, if such Shares
            had been purchased at the date of granting of such SARs and not
            otherwise disposed of, would be holding at the time of exercise of
            such SARs as a result of such purchase and any such Reorganization
            Event;

provided, however, that no fractional Share, fractional right or other
fractional security shall be issued upon any such exercise or vesting, and the
aggregate price paid shall be appropriately reduced to reflect any fractional
Share, fractional right or other fractional security not issued; and provided
further, however, that if the exercise or vesting of any Award subsequent to any
Reorganization Event would, pursuant to clause (A) of this Section 4(c)(i),
require the delivery of shares, rights or other securities that the Company is
not then authorized to issue or that in the sole judgment of the Committee
cannot be issued without undue effort or expense, the person exercising or
vesting in such Award shall receive, in lieu of such shares, rights or other
securities, a cash payment equal to the Fair Market Value on the exercise or
vesting date, as the case may be, as reasonably determined by the Committee, of
such shares, rights or other securities. For purposes of applying the provisions
of this Plan, the Preference Share Purchase Rights distributed to stockholders
of the Company pursuant to the Rights Agreement shall be deemed not to have been
distributed until the Distribution Date (as defined in the Rights Agreement).

            (ii) In the event of any change in the number of Shares outstanding
      resulting from a Reorganization Event, the aggregate number and class of
      Shares remaining available to be awarded under this Plan shall be that
      number and class which a person, to whom an Award had been granted for all
      of the available Shares under this Plan on the date preceding such change,
      would be entitled to receive as provided in Section 4(c)(i).

            (iii) Upon the occurrence of any Reorganization Event, the Committee
      shall be entitled (but shall not be required) to determine that new Award
      Agreements shall be entered into with Participants reflecting such event.

                                       5

<PAGE>

      (d) Share Counting. For purposes of determining at any time the number of
Shares that remain available for grant under this Plan, the number of Shares
then authorized pursuant to Section 4 of the Plan shall be (i) decreased by the
"gross" number of Shares issued pursuant to exercised Awards, (ii) decreased by
the "gross" number of Shares issuable pursuant to outstanding unexercised
Awards, and (iii) increased by the number of Shares to which a Participant shall
have forfeited, voluntarily surrendered or otherwise permanently lost his or her
right to exercise or vest in an Award under any provision of this Plan or
otherwise. As used herein, the "gross" number of Shares refers to the maximum
number of Shares that may be issued upon the exercise of an Award. Should the
exercise price of an Award under the Plan be paid with Shares or should Shares
otherwise issuable under the Plan be withheld by the Company in satisfaction of
the withholding taxes incurred in connection with the exercise or vesting of an
Award, then the number of Shares available for issuance under the Plan shall be
reduced by the net number of Shares issued to the holder of such option. In the
event that property other than Shares is tendered for payment of the exercise
price, the number of Shares available for issuance under the Plan shall be
reduced by the gross number of Shares for which the Award is exercised or which
vest under the stock issuance, and not the net number of Shares issued to the
holder of such option.

SECTION 5. ELIGIBILITY.

      Any Employee shall be eligible to be designated a Participant by the
Committee.

SECTION 6. AWARDS.

      (a) Options. In determining that an eligible Employee shall be granted an
Option, the Committee shall determine, subject to the provisions of the Plan,
the number of Shares to be covered by each Option, the exercise price therefor
and the conditions and limitations applicable to the exercise of the Option. The
exercise price per Share purchasable under an Option shall be determined by the
Committee at the time each Option is granted; provided, that the exercise price
per Share shall not be less than 100% of Fair Market Value on the date of such
grant, and once established, the exercise price under an Option shall not be
reduced.

      (b) Stock Appreciation Rights. Subject to the provisions of the Plan, in
determining that an eligible Employee shall be awarded SARs, the Committee shall
determine the number of Shares to be covered by each SAR Award, the grant price
thereof and the conditions and limitations applicable to the exercise thereof.
SAR Awards shall be payable in cash or in stock, as determined by the Committee,
and may be granted in tandem with another Award, in addition to another Award,
or freestanding and unrelated to another Award. SARs granted in tandem with or
in addition to another Award may be granted either at the same time as the other
Award or at a later time.

            (i) Grant Price. The grant price (strike price) of an SAR shall be
      determined by the Committee, provided, that the grant price shall not be
      less than 100% of Fair Market Value on the date of such grant, and, once
      established, the grant price shall not be reduced.

                                       6

<PAGE>

            (ii) Other Terms and Conditions. Subject to the terms of the Plan
      and any applicable Award Agreement, the Committee shall determine, at or
      after the grant of an SAR, the term, methods of exercise, and any other
      terms and conditions of any SAR.

      (c) Restricted Stock. Subject to the provisions of the Plan, in
determining that an eligible Employee shall be awarded Restricted Stock, the
Committee shall determine the number of Shares of Restricted Stock to be granted
to each Participant, the duration of the restriction period during which, and
the conditions under which, the Restricted Stock may be forfeited to the
Company, and the other terms and conditions of the Awards.

            (i) Dividends. Unless otherwise determined by the Committee, a
      Restricted Stock Award shall provide for the payment of dividends during
      its restriction period. Dividends paid on Restricted Stock may be paid
      directly to the Participant, may be subject to risk of forfeiture, or may
      be subject to transfer restrictions during any period established by the
      Committee, all as determined by the Committee in its discretion.

            (ii) Registration. Any Restricted Stock may be evidenced in any
      manner deemed appropriate by the Committee, including book-entry
      registration or the issuance of stock certificates. If any stock
      certificate is issued with respect to Restricted Stock, the certificate
      shall be registered in the name of the Participant and may bear an
      appropriate legend referring to the terms, conditions, and restrictions
      applicable to the Restricted Stock. The Participant shall be entitled to
      exercise all voting rights with respect to the Restricted Stock during the
      restriction period.

            (iii) Forfeiture. Except as otherwise determined by the Committee or
      the Chief Executive Officer, subject to Section 6(h)(vii)(D), upon
      termination of a Participant's employment with the Company for any reason,
      the provisions of Section 6(h)(vii)(B) and (C) shall apply with respect to
      Restricted Stock granted hereunder.

            (iv) Issuance of Shares. Unrestricted Shares, evidenced in any
      manner as the Committee shall deem appropriate, shall be nonforfeitable
      and shall be issued to the Participant promptly after the applicable
      restrictions have lapsed or otherwise terminated or been satisfied.

      (d) Performance Awards. The Committee shall have authority to determine
the Employees who may receive a Performance Award, which shall consist of a
right, denominated or payable in cash, Shares, other securities or other
property (including Restricted Stock), and that shall confer on the holder
thereof, rights valued at an amount determined by the Committee and payable to
or exercisable by the holder thereof, in whole or in part, upon the achievement
of prescribed performance goals during prescribed performance periods as the
Committee shall establish. Performance Awards shall be based upon achievement of
a specified performance goal or goals established by the Committee. The
Committee, in its sole discretion, may provide for a reduction in the value of a
Performance Award during the performance period and prior to certification that
the established performance goal(s) has been met. When earned, Performance
Awards may be paid in a lump sum or in installments following the close

                                       7

<PAGE>

of the performance period or, in accordance with procedures established by the
Committee, on a deferred basis.

      (e) Stock Compensation. The Committee shall have authority to pay in
Shares all or any portion of the amounts payable under any compensation program
of the Company. The number and type of Shares to be distributed in lieu of the
cash compensation applicable to any Award, as well as the terms and conditions
of any bonus awards, shall be determined by the Committee.

      (f) Other Stock-Based Awards. The Committee is hereby authorized to grant
to eligible Employees an "Other Stock-Based Award," which shall consist of a
right

            (i) that is not an Award or right described in Section 6(a), (b),
      (c), (d), or (e) above, and

            (ii) that is denominated or payable in, valued in whole or in part
      by reference to, or otherwise based on or related to, Shares (including
      securities convertible into Shares), as are deemed by the Committee to be
      consistent with the purposes of the Plan. Subject to the terms of the Plan
      and any applicable Award Agreement, the Committee shall determine the
      terms and conditions of any Other Stock-Based Award.

      (g) Exercise of Option or SAR Awards.

            (i) Notice. Unless otherwise prescribed by the Committee, Awards may
      be exercised only by written notice of exercise (the "Exercise Notice"),
      in the form prescribed by the Committee, delivered to the Company to the
      Financial Benefit Plan Administration Manager or other Company official
      administering the Plan, and signed by the Participant or the
      representative or transferee thereof. The date on which the Exercise
      Notice is delivered to the Company shall be the "Notice Date." The
      Exercise Notice shall specify a date (the "Settlement Date"), not less
      than three business days nor more than ten business days following the
      Notice Date, upon which the Shares or other rights shall be issued or
      transferred to the Participant (or other person entitled to exercise the
      Award) and the Award's exercise price shall be paid to the Company.

            (ii) Payment. Unless otherwise prescribed by the Committee, on the
      Settlement Date, the person exercising an Award shall tender to the
      Company full payment for the Shares or other rights with respect to which
      the Award is exercised, together with an additional amount equal to the
      amount of any taxes required to be collected or withheld by the Company in
      connection with the exercise of the Award (the "Tax Payment").

            (iii) Tax Payment Election. Subject to the approval of the
      Committee, and to any rules and limitations as the Committee may adopt, a
      person exercising an Award may make the Tax Payment in whole or in part by
      electing, at or before the time of exercise of the Award, either (A) to
      have the Company withhold from the number of Shares otherwise deliverable
      a number of Shares whose value equals the Tax Payment,

                                       8

<PAGE>

      or (B) to deliver certificates for other Shares owned by the person
      exercising the Award, endorsed in blank with appropriate signature
      guarantee, having a value equal to the amount otherwise to be collected or
      withheld.

            (iv) Payment with Stock. Subject to approval by the Committee, a
      person exercising an Award for the receipt of Shares may pay for the
      Shares by tendering to the Company other Shares legally and beneficially
      owned by that person at the time of the exercise of the Award. The
      certificate(s) representing any Shares tendered in payment of an Award's
      exercise price must be accompanied by a stock power duly executed with
      appropriate signature guarantees. The Committee may, in its sole
      discretion, refuse any tender of Shares. If the person elects to rescind
      his or her Exercise Notice, the person may again (subject to the other
      terms of this Plan) deliver an Exercise Notice with respect to the Award
      at any time prior to its expiration date.

            (v) Valuation. Any calculation with respect to a Participant's
      income, required tax withholding or other matters required to be made by
      the Company upon the exercise of an Award shall be made using the Fair
      Market Value of the Shares on the Notice Date, whether or not the Exercise
      Notice is delivered to the Company before or after the close of trading on
      that date, unless otherwise specified by the Committee. Notwithstanding
      the foregoing, for Option exercises using the Company's "same-day-sale for
      cash method" or "broker sale for stock method," a Participant's taxable
      gain and related tax withholding on the exercise will be calculated using
      the actual market price at which Shares were sold in the transaction.

            (vi) Rights as Stockholder . Except as provided in Section 6(c) of
      this Plan, until the issuance of the stock certificate(s) for Shares
      purchased hereunder (as evidenced by the appropriate entry on the books of
      the Company or any authorized transfer agent of the Company), no right to
      vote or receive dividends or any other rights as a stockholder of the
      Company shall exist with respect to such Shares, notwithstanding the
      exercise of any Award. No adjustment will be made for a dividend or other
      rights for which the record date is prior to the date the stock
      certificates evidencing such Shares are issued, except as otherwise
      provided in this Plan.

      (h) General.

            (i) Grants. Awards may be granted, in the discretion of the
      Committee, either alone or in addition to, in tandem with, or in
      substitution for any other Award granted under the Plan or any award
      granted under any other plan of the Company or any Affiliate. Awards
      granted in addition to or in tandem with other Awards or awards granted
      under any other plan of the Company or any Affiliate may be granted either
      at the same time as or at a different time from the grant of other Awards
      or awards. The Committee shall not have the authority to reprice an Award
      once granted, or to cancel and reissue an Award at a lower price.

                                       9

<PAGE>

            (ii) Forms of Payment by Company. Subject to the terms of the Plan
      and of any applicable Award Agreement, payments or transfers to be made by
      the Company or an Affiliate upon the grant, exercise or payment of an
      Award may be made in any form as the Committee shall determine, including
      cash, Shares, other securities, other Awards or other property, or any
      combination thereof, and shall be made in a single payment.

            (iii) Nonassignability. Without prior written approval from the
      Committee, no Award granted under this Plan shall be transferable by the
      Participant, except upon Participant's death and then the same shall be
      transferred to the Participant's beneficiary designated under the Valero
      Energy Corporation Beneficiary Designation Form, or if there is no such
      designation, then the same shall be transferred pursuant to the will of
      the Participant and if there is no will, then pursuant to the applicable
      laws of descent and distribution, and no Participant or other person
      claiming by, through or under a Participant shall have any right to sell,
      assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
      transfer, hypothecate or convey in advance of actual receipt any Award
      payable hereunder, or any part thereof, all of which are, and all rights
      in and to which are, hereby expressly declared to be nonassignable and
      nontransferable; any such purported sale, assignment or conveyance without
      the Committee's prior approval shall be void and of no force or effect. No
      Award shall, prior to actual payment or delivery, be subject to seizure or
      sequestration for the payment of any debts, judgments, alimony or separate
      maintenance owed by a Participant, or other person claiming by, through or
      under a Participant, or be transferable by operation of law in the event
      of bankruptcy or insolvency.

            (iv) Term of Awards. The term of each Award shall be for the period
      determined by the Committee, provided, that, in no event shall the term of
      any Award exceed a period of 10 years.

            (v) Share Certificates. All certificates for Shares or other
      securities of the Company or any Affiliate delivered under the Plan
      pursuant to any Award or the exercise thereof shall be subject to (A) all
      stop transfer orders and other restrictions as the Committee may deem
      advisable under the Plan, (B) the rules, regulations, and other
      requirements of the SEC and any stock exchange upon which the Shares or
      other securities are then listed and (C) any applicable federal or state
      laws. The Committee may cause a legend or legends to be put on any stock
      certificates to make appropriate reference to applicable restrictions.

            (vi) Delivery of Shares or Other Securities and Payment of
      Consideration. No Shares or other securities shall be delivered pursuant
      to any Award until payment in full of any amount required to be paid
      pursuant to the Plan or the applicable Award Agreement is received by the
      Company. Payment may be made in any form or method prescribed by the
      Committee, including cash, Shares, other securities, other Awards or other
      property, or any combination thereof, provided that the combined value, as
      determined by the Committee, of all cash and cash equivalents and the Fair
      Market

                                       10

<PAGE>

      Value of any Shares or other property tendered to the Company as of the
      date of such tender, is at least equal to the full amount required to be
      paid.

            (vii) Termination of Employment.

                  (A) Except as otherwise provided in the Plan, or otherwise
            determined by the Committee and included in the applicable Award
            Agreement, an Option, SAR or Other Stock-Based Award having an
            exercise provision (each, an "Exercisable Award") vests in and may
            be exercised by a Participant only while the Participant is and has
            continually been since the date of the grant of the Exercisable
            Award an Employee. If a Participant's employment with the Company is
            voluntarily terminated by the Participant (other than through
            retirement, death or disability; see subsection (C) below), or is
            terminated by the Company for Cause, then any Exercisable Award
            previously granted to that Participant under the Plan which remains
            unexercised, whether vested or unvested, shall automatically lapse
            and be forfeited at the close of business on the date of the
            Participant's termination of employment. If a Participant's
            employment is involuntarily terminated by the Company other than for
            Cause, (1) that portion of any Exercisable Award which has not
            vested on or prior to such date of termination shall automatically
            lapse and be forfeited, and (2) all vested but unexercised
            Exercisable Awards previously granted to that Participant under the
            Plan shall automatically lapse and be forfeited at the close of
            business on the last business day of the twelfth month following the
            date of the Participant's termination, unless an Exercisable Award
            sooner expires according to its original terms.

                  (B) Except as otherwise provided in the Plan, or otherwise
            determined by the Committee and included in the applicable Award
            Agreement, if a Participant's employment with the Company is
            voluntarily terminated by the Participant (other than through
            retirement, death or disability; see subsection (C) below), or is
            terminated by the Company with or without Cause, then any Restricted
            Stock or Performance Award previously granted to that Participant
            under the Plan which remains unvested shall automatically lapse and
            be forfeited at the close of business on the date of the
            Participant's termination of employment.

                  (C) Except as otherwise provided in the Plan, or otherwise
            determined by the Committee and included in the applicable Award
            Agreement, if a Participant's employment is terminated because of
            retirement, death or disability (with the determination of
            disability to be made within the sole discretion of the Committee),
            any Award held by the Participant shall remain outstanding and vest
            or become exercisable according to the Award's original terms;
            provided, however, that any Restricted Stock held by the Participant
            which remains unvested as of the date of retirement, death or
            disability shall immediately vest and become non-forfeitable as of
            such date.

                                       11

<PAGE>

                  (D) The Committee or the Chief Executive Officer may prescribe
            new or additional terms for the vesting, exercise or realization of
            any Award; provided, however, that no such action shall deprive a
            Participant or beneficiary, without his or her consent, of the right
            to any benefit accrued to his or her credit at the time of such
            action.

            (viii) Award Agreements. Awards shall be evidenced by Award
      Agreements having terms and conditions, not inconsistent with the Plan, as
      prescribed by the Committee. Award Agreements need not be uniform.

SECTION 7. AMENDMENT AND TERMINATION.

      Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:

      (a) Amendments to the Plan. The Committee or the Board may amend, suspend
or terminate the Plan without the consent of any stockholder, Participant, other
holder or beneficiary of an Award, or other Person.

      (b) Amendments to Awards. The Committee may waive any conditions or rights
under, amend any terms of, or alter any Award theretofore granted; provided
that, no change in any Award shall reduce the benefit accruing to any
Participant without the consent of the Participant.

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

SECTION 8. CHANGE OF CONTROL.

      (a) Effect. If a Change of Control shall occur, each Award held by a
Participant pursuant to the Plan shall remain in full force and effect until the
earlier of (i) the expiration date of the Award, or (ii) 90 days following the
Participant's date of termination of employment with the Company.

      (b) Defined. A Change of Control shall be deemed to occur when:

            (i) the stockholders of the Company approve any agreement or
      transaction pursuant to which: (A) the Company will merge or consolidate
      with any other Person (other than a wholly owned subsidiary of the
      Company) and will not be the surviving entity (or in which the Company
      survives only as the subsidiary of another entity); (B) the Company will
      sell all or substantially all of its assets to any other Person (other

                                       12

<PAGE>

      than a wholly owned subsidiary of the Company); or (C) the Company will be
      liquidated or dissolved; or

            (ii) any "person" or "group" (as these terms are used in Section
      13(d) and 14(d) of the Exchange Act) other than the Company, any
      subsidiary of the Company, any employee benefit plan of the Company or its
      subsidiaries, or any entity holding Shares for or pursuant to the terms of
      such employee benefit plans, is or becomes an "Acquiring Person" as
      defined in the Rights Agreement (or any successor rights agreement) (or,
      if no Rights Agreement is then in effect, such person or group acquires or
      holds such number of shares as, under the terms and conditions of the most
      recent such rights agreement to be in force and effect, would have caused
      such person or group to be an "Acquiring Person" thereunder); or

            (iii) any "person" or "group" shall commence a tender offer or
      exchange offer for 15% or more of the Shares then outstanding, or for any
      number or amount of Shares which, if the tender or exchange offer were to
      be fully subscribed and all Shares for which the tender or exchange offer
      is made were to be purchased or exchanged pursuant to the offer, would
      result in the acquiring person or group directly or indirectly
      beneficially owning 50% or more of the Shares then outstanding; or

            (iv) individuals who, as of any date, constitute the Board (the
      "Incumbent Board") thereafter cease for any reason to constitute at least
      a majority of the Board; provided, however, that any individual becoming a
      director whose election, or nomination for election by the Company's
      stockholders, was approved by a vote of at least a majority of the
      directors then comprising the Incumbent Board shall be considered as
      though such individual were a member of the Incumbent Board, but
      excluding, for this purpose, any such individual whose initial assumption
      of office occurs as a result of an actual or threatened election contest
      with respect to the election or removal of directors or other actual or
      threatened solicitation of proxies or consents by or on behalf of a person
      or group other than the Board; or

            (v) the occurrence of the Distribution Date (as defined in the
      Rights Agreement); or

            (vi) any other event determined by the Board or the Committee to
      constitute a "Change of Control" hereunder.

                                       13

<PAGE>

      (c) Actions of Committee. In addition to the Committee's authority set
forth in Section 7(c) of the Plan, in order to maintain the Participants' rights
in the event of any Change of Control, the Committee, as constituted before the
Change of Control, is hereby authorized, and has sole discretion, as to any
Award, either at the time the Award is made hereunder or any time thereafter, to
take any one or more of the following actions:

            (i) provide for the acceleration of any time periods relating to the
      vesting, exercise or realization of the Award so that the Award may be
      exercised or realized in full on or before a date fixed by the Committee;

            (ii) provide for the purchase of any Award, upon the Participant's
      request, for an amount of cash equal to the amount that could have been
      attained upon the exercise of the Award or realization of the
      Participant's rights in the Award had the Award been currently exercisable
      or payable;

            (iii) adjust any outstanding Award as the Committee deems
      appropriate to reflect the Change of Control; or

            (iv) cause any outstanding Award to be assumed, or new rights
      substituted therefor, by the acquiring or surviving corporation after the
      Change of Control. The Committee may in its discretion include other
      provisions and limitations in any Award Agreement as it may deem equitable
      and in the best interests of the Company.

SECTION 9. GENERAL PROVISIONS.

      (a) No Rights to Awards. No Employee, Participant or other Person shall
have any claim to be granted any Award. The Committee is not required to treat
uniformly the Employees, Participants, or holders or beneficiaries of Awards
when making grants of Awards under the Plan. The terms and conditions of Awards
are not required to be the same with respect to each recipient.

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

      (c) Withholding. The Company or any Affiliate is hereby authorized to
withhold from any Award, from any payment due or transfer made under any Award
or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, Shares, other securities, other Awards or other
property) of any applicable withholding taxes with respect to an Award, its
exercise, the lapse of restrictions thereon, payment or transfer under an Award
or under the Plan, and to take any other action necessary in the opinion of the
Company to satisfy all obligations for the payment of the taxes.

                                       14

<PAGE>

      (d) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect any other compensation arrangements.

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

      (f) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Texas and applicable federal law.

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

      (h) NYSE Listing and Other Laws and Regulations. Notwithstanding anything
to the contrary contained in this Plan, in any Award, or any Award Agreement or
other agreement entered into under this Plan, the grant or making of any Award
shall be conditional and shall be granted or awarded subject to acceptance of
the Shares deliverable pursuant to the Award for listing on the NYSE. The
Committee may refuse to issue or transfer any Shares or other consideration
under an Award if, acting in its sole discretion, it determines that the
issuance or transfer of the Shares or other consideration might violate any
applicable law or regulation, violate any regulation for admission or trading on
the NYSE, or entitle the Company to recover any consideration or proceeds under
Section 16 of the Exchange Act, and any payment tendered to the Company by a
Participant, other holder or beneficiary in connection with the exercise of such
Award shall be promptly refunded.

      (i) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or any fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.

                                       15

<PAGE>

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

      (k) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. The headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

      (l) Construction. Use of the term "including" in this Plan shall be
construed to mean "including but not limited to."

SECTION 10. EFFECTIVE DATE OF THE PLAN.

      The Plan shall be effective April 23, 2003, following its approval by the
Compensation Committee of the Board.

SECTION 11. TERM OF THE PLAN.

      The Plan shall expire on April 23, 2013. However, unless otherwise
expressly provided in the Plan or in an applicable Award Agreement, any Award
made prior to, and outstanding on such date, shall remain valid in accordance
with its terms and conditions, and the authority of the Board or the Committee
to amend, suspend, or terminate any such Award or to waive any conditions or
rights under any such Award in accordance with the Plan, shall extend beyond
such date.

                                       16

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