Document:

Exhibit 10.1

 

Axcelis
Technologies, Inc.

108 Cherry Hill Drive

Beverly, MA  10915

 

October 26, 2005

 

[Executive Officer]

c/o Axcelis Technologies, Inc. 

108 Cherry Hill Drive

Beverly, MA  01915

 

Dear
[          ]:

 

This letter agreement (this “Agreement”) is
being entered into by and between you and Axcelis Technologies, Inc. (the “Company”),
a Delaware corporation, in connection with certain stock options granted to you
pursuant to the Company’s 2000 Stock Plan that are “Underwater Options”, as
defined below.

 

1.     Background.   On October 24, 2005, the
Compensation Committee of the Board of Directors of the Company determined to
fully accelerate the vesting of each otherwise unvested stock option held by an
option holder employed by the Company as of December 15, 2005 if such
option had an exercise price that is greater than or equal to $10.00 (each an “Underwater
Option”).

 

In
the case of Underwater Options held by any employee who is an executive officer
of the Company under the U.S. securities laws (“an executive officer”),
the Compensation Committee conditioned such acceleration of vesting on a
requirement that the executive officer execute an agreement pursuant to which
he or she agrees to refrain from selling, transferring, pledging, or otherwise
disposing of any shares acquired upon the exercise of options so accelerated
(other than shares required to cover the exercise price and satisfy withholding
taxes) until the earliest of :

 

a)     the date on which the exercise would have
been permitted under such options’ pre-acceleration vesting terms;

b)    such executive officer’s last day of
employment; or

c)     the occurrence of a “change of control” as
defined in the Change of Control Agreement between the Company and such
executive officer to the extent such option would accelerate under such an
agreement.

 

Such
earliest date shall be referred to herein as the “Release Date.”  This Agreement is presented for your
signature in order to satisfy such condition.

 

2.     Lock-up Agreement.   In
consideration of the acceleration of the vesting of your Underwater Options, you
agree to refrain from selling, transferring, pledging, or otherwise disposing
of any shares acquired upon the exercise of your accelerated

 

 

Underwater
Options (other than shares required to cover the exercise price and satisfy
withholding taxes) until the Release Date applicable to such shares.

 

3.     Counterparts.      This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one in the
same instrument.

 

If this Agreement correctly sets forth our agreement
on the subject matter hereof, kindly sign and return to the Company the
enclosed copy of this Agreement which will then constitute our agreement on
this subject.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  AXCELIS TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

I acknowledge receipt and agree with the foregoing
terms and conditions.

 

 

	
   

  	
   

  
	
  Name:
  [                                                            ]Exhibit 10.1

 

AMENDMENT NO. 1

TO

AMENDED AND RESTATED

REINSURANCE AND POOLING AGREEMENT

 

WHEREAS,
Zenith Insurance Company (“Zenith”), ZNAT Insurance Company (“ZNAT”) and Zenith
Star Insurance Company (“Zenith Star”) have previously entered into an Amended
and Restated Reinsurance and Pooling Agreement, effective April 1, 2005, and;

 

WHEREAS,
effective June 30, 2005 Zenith Star has merged with Zenith, and no longer
exists as a corporate entity;

 

NOW,
THEREFORE, Zenith and ZNAT agree as follows:

 

1.                                       Article
V – Proportionate Shares – is deleted and the following substituted therefor:

 

“V.                             Proportionate
Shares.

 

The results of underwriting operations will be apportioned
cumulatively, without restatement of prior periods.  The proportionate shares of the Companies are
as follows:

 

	
  Zenith Insurance Company

  	
   

  	
  98.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  ZNAT
  Insurance Company

  	
   

  	
  2.0

  	
  %

  

 

The proportionate shares of Zenith and ZNAT may be changed from time to
time by mutual consent as of the close of any calendar year quarter.  Such changes shall be set forth in an
amendment to this Agreement.”

 

IN WITNESS
WHEREOF, each of the undersigned parties has caused this Amendment to be
executed on its behalf this 15th day of September, 2005.

 

 

	
   

  	
   

  	
  ZENITH
  INSURANCE COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Diane
  Heidenreich

  	
   

  	
  By:

  	
  /s/ Jack D. Miller

  	
   

  
	
  Witness –
  Diane Heidenreich

  	
   

  	
   

  	
  Jack D. Miller, President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ZNAT INSURANCE COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Diane
  Heidenreich

  	
   

  	
  By:

  	
  /s/ Jack D. Miller

  	
   

  
	
  Witness –
  Diane Heidenreich

  	
   

  	
   

  	
  Jack D. Miller, PresidentExhibit 10.01

 

VALERO
ENERGY CORPORATION

2005
OMNIBUS STOCK INCENTIVE PLAN

 

Amended and Restated as of October 1,
2005

 

The
Valero Energy Corporation 2005 Omnibus Stock Incentive Plan (hereinafter called
the “Plan”) was adopted by the Board of Directors of Valero Energy Corporation,
a Delaware corporation (hereinafter called the “Company”) on March 10,
2005.  The Plan was approved by the
Company’s stockholders on April 28, 2005, and the Plan became effective on
May 1, 2005.

 

ARTICLE 1.          PURPOSE

 

The
purpose of the Plan is to attract and retain the services of able persons as
employees and non-employee directors of the Company and its Subsidiaries, to
provide such persons with a proprietary interest in the Company through the
granting of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, or other forms of incentive awards, and
to motivate such persons using performance-related incentives linked to
longer-range performance goals and the interests of the Company’s stockholders,
whether granted singly, or in combination, or in tandem, that will (a) increase
the interest of such persons in the Company’s welfare, and (b) furnish an
incentive to such persons to continue their services for the Company.

 

ARTICLE 2.          DEFINITIONS

 

For
the purpose of the Plan, unless the context requires otherwise, the following
terms shall have the meanings indicated:

 

2.1           “Annual Incentive Plan” means the annual
bonus program or successor plans of the Company, its subsidiaries or its
successors.

 

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

 

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

 

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

 

2.5           “Board” means the Board of Directors of the
Company.

 

2.6           “Cause” 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) the
Company’s (or applicable Affiliate’s) reasonable determination that the
Participant has committed an act of fraud, embezzlement, theft, or
misappropriation of funds in connection with such Participant’s duties in the
course of his or her employment with the Company (or applicable Affiliate), (iv) the
Company’s (or its applicable Affiliate’s) reasonable determination that the
Participant has engaged in gross mismanagement, negligence or misconduct which
causes or could potentially cause material loss, damage or injury to the
Company, any of its Affiliates or their respective employees, or (v) the
Company’s (or applicable Affiliate’s) reasonable determination that (a) the
Participant has violated any policy of the Company (or applicable Affiliate),
including but not limited to, policies regarding sexual harassment, insider
trading, confidentiality, substance abuse and/or conflicts of interest, which
violation could result in the termination of the Participant’s employment or service
as a non-employee Director of the Company (or applicable Affiliate), or (b) the
Participant 

 

1

 

has
failed to satisfactorily perform the material duties of Participant’s position
with the Company or any of its Affiliates.

 

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

 

(a)                                  the stockholders of the Company approve any
agreement or transaction pursuant to which: (i) 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); (ii) the Company will sell all
or substantially all of its assets to any other Person (other than a wholly
owned subsidiary of the Company); or (iii) the Company will be liquidated
or dissolved; or

 

(b)                                 any “person” or “group” (as these terms are
used in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934) 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

 

(c)                                  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

 

(d)                                 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

 

(e)                                  the Distribution Date (as defined in the
Rights Agreement) occurs; or

 

(f)                                    any other event occurs that is or has been
determined by the Board or the Committee to constitute a “Change of Control”
hereunder.

 

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

 

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

 

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

 

2.11         “Company” means Valero Energy Corporation, a
Delaware corporation, and any successor entity and any affiliate companies or
subsidiaries thereto.

 

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

 

2

 

2.13         “Date of Grant” means the effective date on
which an Award is made to a Participant as set forth in the applicable Award
Agreement.

 

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

 

2.15         “Employee” means common law employee (as
defined in accordance with the Regulations and Revenue Rulings then applicable
under Section 3401(c) of the Code) of the Company or any Subsidiary
of the Company, or an individual who has agreed to become an employee of the
Company or any Subsidiary of the Company and actually becomes such an employee
within the following six months.

 

2.16         “Executive Stock Incentive Plan” means the
2001 Executive Stock Incentive Plan, which is a stockholder approved stock
incentive plan from which the Company has granted equity or equity-based
incentive awards to its employees.  Because
the Plan was approved by stockholders, no future awards will be made from the
Executive Stock Incentive Plan and it will be terminated.

 

2.17         “Fair Market Value” of a share of Common
Stock is the mean of the highest and lowest prices per share on the New York
Stock Exchange Consolidated Tape, or such reporting service as the Board may
select, on the appropriate date, or in the absence of reported sales on such
day, then on the next following day for which sales were reported.

 

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

 

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

 

2.20         “Limited SAR” or “Limited Stock Appreciation
Right” means an Award designated as an SAR as defined by Section 2.37 of Article 2,
which is granted with certain limiting features as determined by the Committee
and as set forth in the Award Agreement at the time of grant.

 

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

 

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

 

2.23         “Option Price” means the price which must be
paid by a Participant upon exercise of a Stock Option to purchase a share of
Common Stock.

 

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

 

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

 

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

 

2.27         “Performance Criteria” or “Performance Goals”
or “Performance Measures” mean the objectives established by the Committee for
a Performance Period, for the purpose of determining when an Award subject to
such objectives is earned.

 

3

 

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

 

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

 

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

 

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

 

2.32         “Plan” means the Valero Energy Corporation
2005 Omnibus Stock Incentive Plan, as amended from time to time.

 

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

 

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

 

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

 

2.36         “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.

 

2.37         “SAR” or “Stock Appreciation Right” means the
right to receive a payment, in cash and/or Common Stock, equal to the excess of
the Fair Market Value of a specified number of shares of Common Stock on the
date the SAR is exercised over the SAR Price for such shares, and may be
granted as a Limited SAR.

 

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

 

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

 

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

 

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

 

2.42         “Subsidiary” means (i) any corporation
in an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing a majority of the total combined voting power of all classes of
stock in one of the other corporations in the chain, (ii) any limited
partnership, if the Company or any corporation described in item (i) above
owns a majority of the general partnership interest and a majority of the
limited partnership interests entitled to vote on the removal and replacement
of the general partner, and (iii) any partnership or limited liability
company, if the partners or 

 

4

 

members
thereof are composed only of the Company, any corporation listed in item (i) above
or any limited partnership listed in item (ii) above. “Subsidiaries” means
more than one of any such corporations, limited partnerships, partnerships or
limited liability companies.

 

ARTICLE 3.          ADMINISTRATION

 

3.1           The Committee shall administer the Plan
unless otherwise determined by the Board. 
If said Committee does not so serve, the Committee shall consist of not
fewer than two persons; any member of the Committee may be removed at any time,
with or without cause, by resolution of the Board; and any vacancy occurring in
the membership of the Committee may be filled by appointment by the Board.

 

3.2           The Committee shall select one of its members
to act as its Chairman.  A majority of
the Committee shall constitute a quorum, and the act of a majority of the
members of the Committee present at a meeting at which a quorum is present
shall be the act of the Committee.

 

3.3           The Committee shall determine and designate
from time to time the eligible persons to whom Awards will be granted and shall
set forth in each related Award Agreement the Award Period, the Date of Grant,
and such other terms, provisions, limitations, and performance requirements, as
are approved by the Committee, but not inconsistent with the Plan, including,
but not limited to, any rights of the Committee to cancel or rescind any such
Award.  The Committee shall determine
whether an Award shall include one type of Incentive, two or more Incentives granted
in combination, or two or more Incentives granted in tandem (that is, a joint
grant where exercise of one Incentive results in cancellation of all or a
portion of the other Incentive).

 

3.4           The Committee, in its discretion, shall (i) interpret
the Plan, (ii) prescribe, amend, and rescind any rules and
regulations necessary or appropriate for the administration of the Plan, and (iii) make
such other determinations and take such other action as it deems necessary or
advisable in the administration of the Plan. 
Any interpretation, determination, or other action made or taken by the
Committee shall be final, binding, and conclusive on all interested parties.

 

3.5           With respect to restrictions in the Plan that
are based on the requirements of Rule 16b-3 promulgated under the 1934
Act, Section 422 of the Code, Section 162(m) of the Code, the rules of
any exchange or inter-dealer quotation system upon which the Company’s
securities are listed or quoted, or any other applicable law, rule or
restriction (collectively, “applicable law”), to the extent that any such
restrictions are no longer required by applicable law, the Committee shall have
the sole discretion and authority to grant Awards that are not subject to such
mandated restrictions and/or to waive any such mandated restrictions with
respect to outstanding Awards.

 

ARTICLE 4.          ELIGIBILITY

 

Any
Employee (including an Employee who is also a director or an officer) or
Non-Employee Director is eligible to participate in the Plan.  The Committee, upon its own action, may
grant, but shall not be required to grant, an Award to any Employee or
Non-Employee Director.  Awards may be
granted by the Committee at any time and from time to time to new Participants,
or to then Participants, or to a greater or lesser number of Participants, and
may include or exclude previous Participants, as the Committee shall
determine.  Except as required by this
Plan, different Awards need not contain similar provisions.  The Committee’s determinations under the Plan
(including without limitation determinations of which Employees, if any, are to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among Employees or Non-Employee
Directors who receive, or are eligible to receive, Awards under the Plan.

 

ARTICLE 5.          SHARES SUBJECT TO PLAN

 

5.1           Total Shares Available. 
Subject to adjustment as provided in Articles 14 and 15, the maximum
number of shares of Common Stock that may be delivered pursuant to Awards
granted under the Plan is (a) 10,000,000 shares of Common Stock, plus (b) shares
of Common Stock previously subject to Awards that are forfeited, terminated,
cancelled or rescinded, settled in cash in lieu of Common Stock, or exchanged
for Awards that do not involve Common Stock, or expired unexercised.

 

5

 

5.2           Source of Shares. 
Shares to be issued may be made available from authorized but unissued
Common Stock, Common Stock held by the Company in its treasury, or Common Stock
purchased by the Company on the open market or otherwise.  During the term of this Plan, the Company
will at all times reserve and keep available a number of shares of Common Stock
that shall be sufficient to satisfy the requirements of this Plan.

 

5.3           Restoration and Retention of Shares.  If
any shares of Common Stock subject to an Award shall not be issued or
transferred to a Participant and shall cease to be issuable or transferable to
a Participant because of the forfeiture, termination, expiration or
cancellation, in whole or in part, of such Award or for any other reason, or if
any such shares shall, after issuance or transfer, be reacquired by the Company
because of the Participant’s failure to comply with the terms and conditions of
an Award or for any other reason, the shares not so issued or transferred, or
the shares so reacquired by the Company, as the case may be, shall no longer be
charged against the limitation provided for in Section 5.1 and may be used
thereafter for additional Awards under the Plan.  To the extent an Award under the Plan is
settled or paid in cash, shares subject to such Award will not be considered to
have been issued and will not be applied against the maximum number of shares
of Common Stock provided for in Section 5.1.  If an Award may be settled in shares of
Common Stock or cash, such shares shall be deemed issued only when and to the
extent that settlement or payment is actually made in shares of Common Stock.  To the extent an Award is settled or paid in
cash, and not shares of Common Stock, any shares previously reserved for
issuance or transfer pursuant to such Award will again be deemed available for
issuance or transfer under the Plan, and the maximum number of shares of Common
Stock that may be issued or transferred under the Plan shall be reduced only by
the number of shares actually issued and transferred to the Participant.  If a Participant pays the purchase price of
shares subject to a Stock Option or applicable taxes by surrendering shares of
Common Stock in accordance with the provisions of Article 10, the number
of shares surrendered shall be added back to the number of shares available for
issuance or transfer under the Plan so that the maximum number of shares that
may be issued or transferred under the Plan pursuant to Section 5.1 shall
have been charged only for the net number of shares issued or transferred
pursuant to the Stock Option exercise.  The
Committee may from time to time adopt and observe such procedures concerning
the counting of shares against the Plan maximum as it may deem appropriate.

 

5.4           Uncertificated Shares.  The
Company’s transfer agent will deliver the shares of Common Stock each holder of
Common Stock under the Plan is entitled to as a result of having received an
Award under the Plan.  Shares issued
under the Plan will be registered in uncertificated book-entry form (unless a
holder of Common Stock requests a certificate representing such holder’s shares
of Common Stock).  As a result, instead
of receiving Common Stock certificates, holders of Common Stock will receive
account statements reflecting their ownership interest in shares of Common
Stock.  The book-entry shares will be
held with the Company’s transfer agent, which will serve as the record keeper
for all shares of Common Stock being issued in connection with the Plan.  Any stockholder who wants to receive a
physical certificate evidencing shares of Common Stock issued under the Plan
will be able to obtain a certificate at no charge by contacting the Company’s
transfer agent.  Computershare Investor
Services, Chicago, Illinois, currently serves as transfer agent, registrar and
dividend paying agent for Valero’s Common Stock.  Correspondence relating to any stock
accounts, dividends or transfers of stock certificates should be addressed to:
Computershare Investor Services Shareholder Communications P.O. Box A3504
Chicago, IL 60690-3504 (888) 470-2938, (312) 588-4700.

 

ARTICLE 6.          GRANT OF AWARDS

 

6.1           In General.

 

(a)                                  The grant of an Award shall be authorized by
the Committee and may be evidenced by an Award Agreement setting forth the
Incentive or Incentives being granted, the total number of shares of Common
Stock subject to the Incentive(s) or the value of the Performance Award (if
applicable), the Option Price (if applicable), the Award Period, the Date of
Grant, and such other terms, provisions, limitations, and performance
objectives, as are approved by the Committee, but not inconsistent with the
Plan. The Company may execute an Award Agreement with a Participant after the
Committee approves the issuance of an Award. 
Any Award granted pursuant to this Plan must be granted within 10 years
of the date of adoption of this Plan. 
The 

 

6

 

grant of an Award to a Participant shall not be
deemed either to entitle the Participant to, or to disqualify the Participant
from, receipt of any other Award under the Plan.

 

(b)                                 If the Committee establishes a purchase price
for an Award, the Participant must accept such Award within a period of 30 days
(or such shorter period as the Committee may specify) after the Date of Grant
by executing the applicable Award Agreement and paying such purchase price.

 

6.2           Limitations on Awards.

 

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

 

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

 

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

 

(iii)                               Repricing of Stock Options and SARs or other
downward adjustments in the Option Price or SAR Price of previously granted
Stock Options or SARs, respectively, are prohibited, except in connection with
certain capital adjustments as described in Article 14 or 15.

 

(iv)                              No more than 40% (4,000,000), of the
available shares pursuant to Awards under the Plan may be in the form of
time-lapse Restricted Stock.

 

(v)                                 No Participant may receive during any
calendar year Awards that are to be settled in Shares of Common Stock covering
an aggregate of more than 1,000,000 Shares.

 

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

 

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

 

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

 

6.3           Rights as Stockholder. 
Except as provided in Section 6.4 of this Plan, until the issuance
of the Shares of Common Stock (as evidenced by the appropriate entry on the
books of the Company or 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 Incentive or Award.  No adjustment
will be made for a dividend or other rights for which the record date is prior
to the date Shares are issued, except as otherwise provided in this Plan.

 

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

 

7

 

(a)                                  Legend on Shares.  Each
Participant who is awarded Restricted Stock shall be issued the number of
shares of Common Stock specified in the Award Agreement for such Restricted
Stock, and such shares shall be recorded in the share transfer records of the
Company and ownership of such shares shall be evidenced by a certificate or
book entry notation in the share transfer records of the Company.  Such shares shall be registered in the name
of the Participant, and shall bear or be subject to an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, substantially as provided in Section 19.18 of the
Plan.  The Committee may require that the
stock certificates or other evidence of ownership of the shares of Restricted
Stock be held in custody by the Company until the restrictions thereon shall
have lapsed, and that the Participant deliver to the Committee a stock power or
stock powers, endorsed in blank, relating to the shares of Restricted Stock.

 

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

 

(i)                                     Subject to the other provisions of this Plan
and the terms of the particular Award Agreements, during such period as may be
determined by the Committee commencing on the Date of Grant (the “Restriction
Period”), the Participant shall not be permitted to sell, transfer, pledge or
assign shares of Restricted Stock and/or Restricted Stock Units.  Any Restricted Stock or Restricted Stock
Units not granted pursuant to a Performance Award, shall have a minimum
Restriction Period of three years from the Date of Grant, provided that the
Committee may provide for earlier vesting following a Change in Control or upon
an Employee’s termination of employment by reason of death, disability or Retirement.  Except for these limitations, the Committee
may in its sole discretion, remove any or all of the restrictions on such
Restricted Stock and/or Restricted Stock Units whenever it may determine that,
by reason of changes in applicable laws or other changes in circumstances
arising after the date of the Award, such action is appropriate.

 

(ii)                                  Except as provided in subparagraph (i) above
and subject to the terms of a Participant’s Award Agreement, the Participant
shall have, with respect to his or her Restricted Stock, all of the rights of a
stockholder of the Company, including the right to vote the shares, and the
right to receive any dividends thereon. 
Certificates or evidence of ownership of shares of Common Stock free of
restriction under this Plan shall be delivered to the Participant promptly
after, and only after, the Restriction Period shall expire without forfeiture
in respect of such shares of Common Stock. 
Certificates for the shares of Common Stock forfeited under the
provisions of the Plan shall be promptly returned to the Company by the
forfeiting Participant.  Each
Participant, by his or her acceptance of Restricted Stock, shall irrevocably
grant to the Company a power of attorney to transfer any shares so forfeited to
the Company and agrees to execute any documents requested by the Company in
connection with such forfeiture and transfer.

 

(iii)                               The Restriction Period of Restricted Stock
and/or Restricted Stock Units shall commence on the Date of Grant and, subject
to Article 15 of the Plan, unless otherwise established by the Committee
in the Award Agreement setting forth the terms of the Restricted Stock and/or
Restricted Stock Units, shall expire upon satisfaction of the conditions set
forth in the Award Agreement; such conditions may provide for vesting based on (i) length
of continuous service, (ii) achievement of specific business objectives, (iii) increases
in specified indices, (iv) attainment of specified growth rates, or (v) other
comparable Performance Measurements, as may be determined by the Committee in
its sole discretion.

 

(c)                                  Forfeiture.  Except as otherwise determined
by the Committee or the Chief Executive Officer, the provisions of Article 9
shall apply with respect to Restricted Stock granted hereunder.

 

8

 

6.5           SARs and Limited SARs.

 

(a)                                  An SAR shall entitle the Participant at his
election to surrender to the Company the SAR, or portion thereof, as the
Participant shall choose, and to receive from the Company in exchange therefore
cash in an amount equal to the excess (if any) of the Fair Market Value (as of
the date of the exercise of the SAR) per share over the SAR Price per share
specified in such SAR, multiplied by the total number of shares of the SAR
being surrendered.  In the discretion of
the Committee, the Company may satisfy its obligation upon exercise of an SAR
by the distribution of that number of shares of Common Stock having an
aggregate Fair Market Value (as of the date of the exercise of the SAR) equal
to the amount of cash otherwise payable to the Participant, with a cash
settlement to be made for any fractional share interests, or the Company may
settle such obligation in part with shares of Common Stock and in part with
cash.

 

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

 

6.6           Tandem Awards.  The
Committee may grant two or more Incentives in one Award in the form of a “tandem
award,” so that the right of the Participant to exercise one Incentive shall be
canceled if, and to the extent, the other Incentive is exercised.  For example, if a Stock Option and an SAR are
issued in a tandem Award, and the Participant exercises the SAR with respect to
100 shares of Common Stock, the right of the Participant to exercise the
related Stock Option shall be canceled to the extent of 100 shares of Common
Stock.

 

6.7           Performance Based Awards.

 

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

 

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

 

(c)                                  Form of Payment. 
Payment of the amount to which a Participant shall be entitled upon the
settlement of a Performance Award shall be made in a lump sum or installments
in cash, shares of Common Stock, or a combination thereof as determined by the
Committee.

 

9

 

6.8           Other Stock Based Awards.

 

(a)                                  Grant of Other Stock Based Awards.  The
Committee may issue to Participants, either alone or in addition to other
Awards made under the Plan, Stock Unit Awards which may be in the form of
Common Stock or other securities.  The
value of each such Award shall be based, in whole or in part, on the value of
the underlying Common Stock or other securities.  The Committee, in its sole and complete
discretion, may determine that an Award, either in the form of a Stock Unit
Award under this Section or as an Award granted pursuant to the other
provisions of this Article, may provide to the Participant (i) dividends
or Dividend Equivalents (payable on a current or deferred basis) and (ii) cash
payments in lieu of or in addition to an Award. 
The Committee shall determine the terms, restrictions, conditions,
vesting requirements, and payment rules (all of which are sometimes
hereinafter collectively referred to as “rules”) of the Award and shall set
forth those rules in the related Award Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 7.          OPTION PRICE; SAR/LIMITED SAR
PRICE

 

7.1           Option/SAR Price.  The Plan
limitations stated in Section 6.2(a)(i) & -(ii) shall apply.

 

7.2           Repricing.  The Plan limitations stated in
Section 6.2(a)(iii) shall apply.

 

ARTICLE 8.          AWARD PERIOD; VESTING

 

8.1           Award Period. 
Subject to the other provisions of this Plan, the Committee may, in its
discretion, provide that an Incentive may not be exercised in whole or in part
for any period or periods of time or beyond any date specified in the Award
Agreement.  Except as provided in the
Award Agreement, an Incentive may be exercised in whole or in part at any time
during its term.

 

No
Incentive granted under the Plan may be exercised at any time after the end of
its Award Period.  The Plan limitations
stated in Section 6.2(a)(vii) shall apply.

 

10

 

8.2           Vesting.  The Committee, in its sole
discretion, may determine that an Incentive will be immediately exercisable, in
whole or in part, or that all or any portion may not be exercised until a date,
or dates, subsequent to its Date of Grant, or until the occurrence of one or
more specified events, subject in any case to the terms of the Plan.  If the Committee imposes conditions upon
exercise, then subsequent to the Date of Grant, the Committee may, in its sole
discretion, accelerate the date on which all or any portion of the Incentive
may be exercised.

 

ARTICLE 9.          TERMINATION OF SERVICE

 

9.1           Termination of Employment.

 

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

 

(b)                                 Voluntary Termination by
Participant (Exercisable Awards).  If a Participant’s employment
or service as a Non-Employee Director with the Company is voluntarily
terminated by the Participant (other than through retirement, death or
disability; see Section 9.3 below), then: (i) that portion of any
Exercisable Award that has not vested on or prior to such date of termination
shall automatically lapse and be forfeited, and (ii) all vested but
unexercised Exercisable Awards previously granted to that Participant under the
Plan shall automatically lapse and be forfeited at the close of business on the
30th day following that date of such Participant’s termination, unless an
Exercisable Award expires earlier according to its original terms.

 

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

 

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

 

9.2           Awards Other Than Exercisable Awards.  Except
as otherwise provided in the Plan, or otherwise determined by the Committee and
included in the applicable Award Agreement, if a Participant’s employment or
service as a Non-Employee Director with the Company is voluntarily terminated
by the Participant (other than through retirement, death or disability; see Section 9.3
below), or is terminated by the Company with or without Cause, then any Award other than an Exercisable Award previously granted to that
Participant under the Plan which remains unvested shall automatically lapse and
be forfeited at the close of business on the date of such Participant’s
termination of employment or service.

 

11

 

9.3           Retirement, Death, Disability.  Except
as otherwise provided in the Plan, or otherwise determined by the Committee and
included in the applicable Award Agreement, if a Participant’s employment or
service as a Non-Employee Director is terminated because of retirement, death
or disability (with the determination of disability to be made within the sole
discretion of the Committee), any Award 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 or Restricted Stock Units
held by the Participant that remain unvested as of the date of retirement,
death or disability shall immediately vest and become non-forfeitable as of
such date.

 

9.4           Amendment.  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.

 

ARTICLE 10.       EXERCISE OF INCENTIVE

 

10.1         In General.  (a)  A vested Incentive
may be exercised during its Award Period, subject to limitations and
restrictions set forth therein and in Article 9.  A vested Incentive may be exercised at such
times and in such amounts as provided in this Plan and the applicable Award
Agreement, subject to the terms, conditions, and restrictions of the Plan.

 

(b)           In no event may an Incentive be exercised or
shares of Common Stock be issued pursuant to an Award if a necessary listing or
quotation of the shares of Common Stock on a stock exchange or inter-dealer
quotation system or any registration under state or federal securities laws
required under the circumstances has not been accomplished.  No Incentive may be exercised for a
fractional share of Common Stock.

 

10.2         Stock Options.  (a) 
Subject to such administrative regulations as the Committee may from time to
time adopt, a Stock Option may be exercised by the delivery of written notice
to the Company setting forth the number of shares of Common Stock with respect
to which the Stock Option is to be exercised (the “Exercise Notice”) and the
date of exercise thereof (the “Exercise Date”) in accordance with procedures
established by the Company.  On the
Exercise Date, the Participant shall deliver to the Company consideration with
a value equal to the total Option Price of the shares to be purchased, payable
as follows: (a) cash, check, bank draft, or money order payable to the
order of the Company, (b) Common Stock (including Restricted Stock) owned
by the Participant on the Exercise Date, valued at its Fair Market Value on the
Exercise Date, (c) by delivery (including by fax) to the Company or its
designated agent of an executed irrevocable option exercise form together with
irrevocable instructions from the Participant to a broker or dealer, reasonably
acceptable to the Company, to sell certain of the shares of Common Stock
purchased upon exercise of the Stock Option and promptly deliver to the Company
the amount of sale proceeds necessary to pay such purchase price, and/or (d) in
any other form of valid consideration that is acceptable to the Company in its
sole discretion.  In the event that
shares of Restricted Stock are tendered as consideration for the exercise of a
Stock Option, a number of shares of Common Stock issued upon the exercise of
the Stock Option equal to the number of shares of Restricted Stock used as
consideration therefor shall be subject to the same restrictions and provisions
as the Restricted Stock so submitted, as well as any additional restrictions
that may be imposed by the Committee.

 

(b)           Upon payment of all amounts due from the
Participant, the Company shall cause shares of the Common Stock then being
purchased to be delivered as directed by the Participant (or the person
exercising the Participant’s Stock Option in the event of his death) at its
principal business office promptly after the Exercise Date; provided that if
the Participant has exercised an Incentive Stock Option, the Company may at its
option retain possession of the shares acquired upon exercise until the
expiration of the holding periods described in Section 422(a)(1) of
the Code.  The obligation of the Company
to deliver shares of Common Stock shall, however, be subject to the condition
that if at any time the Committee shall determine in its discretion that the
listing, registration, or qualification of the Stock Option or the Common Stock
upon any securities exchange or inter-dealer quotation system or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
Stock Option or the issuance or purchase of shares of Common Stock thereunder,
the Stock Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.

 

12

 

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

 

10.3         SARs.  Subject to the conditions of
this Section and such administrative regulations as the Committee may from
time to time adopt, an SAR may be exercised by the delivery (including by fax)
of written notice to the Committee setting forth the number of shares of Common
Stock with respect to which the SAR is to be exercised (the “Exercise Notice”) and
the date of exercise thereof (the “Exercise Date”) in accordance with procedures
established by the Company.  On the
Exercise Date, the Participant shall receive from the Company in exchange
therefore cash in an amount equal to the excess (if any) of the Fair Market
Value (as of the date of the exercise of the SAR) per share of Common Stock
over the SAR Price per share specified in such SAR, multiplied by the total
number of shares of Common Stock of the SAR being surrendered.  In the discretion of the Committee, the
Company may satisfy its obligation upon exercise of an SAR by the distribution
of that number of shares of Common Stock having an aggregate Fair Market Value
(as of the date of the exercise of the SAR) equal to the amount of cash
otherwise payable to the Participant, with a cash settlement to be made for any
fractional share interests, or the Company may settle such obligation in part
with shares of Common Stock and in part with cash.

 

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

 

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

 

ARTICLE 11.       SPECIAL PROVISIONS

APPLICABLE TO COVERED
PARTICIPANTS

 

Awards
subject to Performance Criteria paid to Covered Participants under this Plan
shall be governed by the conditions of this Article 11 in addition to the
requirements of Article 6, above. 
Should conditions set forth under this Article 11 conflict with the
requirements of Article 6, the conditions of this Article 11 shall
prevail.

 

11.1         Establishment of Performance Measures, Goals
or Criteria.  All Performance Measures, Goals, or Criteria
relating to Covered Participants for a relevant Performance Period shall be
established by the Committee in writing prior to the beginning of the
Performance Period, or by such other later date for the Performance Period as
may be permitted under Section 162(m) of the Code.  The Performance Goals may be identical for
all Participants or, at the discretion of the Committee, may be different to
reflect more appropriate measures of individual performance.

 

13

 

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

 

(a)                                  Increased revenue;

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

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

(d)                                 Market share;

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

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

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

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

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

(j)                                     Operating measures (including operating
income, funds from operations, cash from operations, after-tax operating
income, sales volumes, production volumes, and production efficiency);

(k)                                  Expense measures (including but not limited
to cost-per-barrel, overhead cost and general and administrative expense);

(l)                                     Margins;

(m)                               Stockholder value;

(n)                                 Total stockholder return;

(o)                                 Proceeds from dispositions;

(p)                                 Production volumes;

(q)                                 Refinery runs or refinery utilization;

(r)                                    Total market value; and

(s)                                  Corporate values measures (including ethics
compliance, environmental, and safety).

 

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

 

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

 

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

 

14

 

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

 

11.7         Other Considerations.  All
Awards to Covered Participants under this Plan shall be further subject to such
other conditions, restrictions, and requirements as the Committee may determine
to be necessary to carry out the purpose of this Article 11.

 

ARTICLE 12.       AMENDMENT OR DISCONTINUANCE

 

12.1         In General.  Subject to the limitations set
forth in this Article 12, the Committee may at any time and from time to
time, without the consent of the Participants, alter, amend, revise, suspend,
or discontinue the Plan in whole or in part; provided, however, that no
amendment which requires stockholder approval under the rules of the
national exchange on which the shares of Common Stock are listed (or in order
for the Plan and Incentives awarded under the Plan to continue to comply with Section 162(m)
of the Code, including any successors to such Section), shall be effective
unless such amendment shall be approved by the requisite vote of the
stockholders of the Company entitled to vote thereon.  Any such amendment shall, to the extent
deemed necessary or advisable by the Committee, be applicable to any outstanding
Incentives theretofore granted under the Plan, notwithstanding any contrary
provisions contained in any Award Agreement. 
In the event of any such amendment to the Plan, the holder of any
Incentive outstanding under the Plan shall, upon request of the Committee and
as a condition to the exercisability thereof, execute a conforming amendment in
the form prescribed by the Committee to any Award Agreement relating thereto.

 

12.2         Amendments to Awards.  The
Committee may waive any conditions or rights under, amend any terms of, or
alter any Award theretofore granted; provided that, unless required by law, no
action contemplated or permitted by this Article 12 shall adversely affect
any rights of Participants or obligations of the Company to Participants with
respect to any Incentive theretofore granted under the Plan without the consent
of the affected Participant.

 

12.3         Unusual or Nonrecurring Events.  The
Committee is hereby authorized to make adjustments in the terms, conditions,
and criteria of Awards in recognition of unusual or nonrecurring events (including
the events described in Section 14 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.

 

ARTICLE 13.       EFFECTIVE DATE AND TERM

 

The
Plan shall be effective as of May 1, 2005. 
Subject to earlier termination pursuant to Article 12, the Plan
shall have a term of 10 years from its effective date and will terminate on April 30,
2015.  After termination of the Plan, no
future Awards may be made.  However, any
Incentives granted before that date will continue to be effective in accordance
with their terms and conditions.

 

15

 

ARTICLE 14.       CAPITAL ADJUSTMENTS

 

14.1         In General.  If at any time while the Plan
is in effect, or Incentives are outstanding, there shall be any increase or
decrease in the number of issued and outstanding shares of Common Stock
resulting from (1) the declaration or payment of a stock dividend, (2) any
recapitalization resulting in a stock split-up, combination, or exchange of
shares of Common Stock, or (3) other increase or decrease in such shares
of Common Stock effected without receipt of consideration by the Company, then:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 15.       RECAPITALIZATION, MERGER AND
CONSOLIDATION; CHANGE OF CONTROL

 

15.1         Adjustments, Recapitalizations,
Reorganizations, or Other Adjustments.  The existence of this Plan and
Incentives granted hereunder shall not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company’s capital
structure and its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or preference stocks ranking prior to
or otherwise affecting the Common Stock or the rights thereof (or any rights,
options, or warrants to purchase same), or the dissolution or liquidation of
the Company, or 

 

16

 

any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

 

15.2         Acquiring Entity. 
Subject to any required action by the stockholders, if the Company shall
be the surviving or resulting corporation in any merger, consolidation or share
exchange, any Incentive granted hereunder shall pertain to and apply to the
securities or rights (including cash, property, or assets) to which a
Participant would have been entitled.

 

15.3         Acquired Entity.  In
the event of any merger, consolidation or share exchange pursuant to which the
Company is not the surviving or resulting corporation, there shall be
substituted for each share of Common Stock subject to the unexercised portions
of such outstanding Incentives, that number of shares of each class of stock or
other securities or that amount of cash, property, or assets of the surviving,
resulting or consolidated company which were distributed or distributable to
the stockholders of the Company in respect to each share of Common Stock held
by them, such outstanding Incentives to be thereafter exercisable for such
stock, securities, cash, or property in accordance with their terms.
Notwithstanding the foregoing, however, all Stock Options and SARs may be
canceled by the Company immediately prior to the effective date of any such
reorganization, merger, consolidation, share exchange or any dissolution or
liquidation of the Company by giving notice to each holder thereof or his
personal representative of its intention to do so and by permitting the purchase
during the 30 day period next preceding such effective date of all or any
portion of all of the shares of Common Stock subject to such outstanding
Incentives whether or not such Incentives are then vested or exercisable.

 

15.4         Change of Control.

 

(a)                                  In the event of a Change of Control,
notwithstanding any other provision in this Plan to the contrary all unmatured
installments of Incentives outstanding and not otherwise canceled in accordance
with Section 15.3 above, shall thereupon automatically be accelerated and
exercisable in full and all Restriction Periods applicable to Awards of
Restricted Stock and/or Restricted Stock Units shall automatically expire.  The determination of the Committee that any
of the foregoing conditions has been met shall be binding and conclusive on all
parties.

 

(b)                                 In the event of a Change of Control,
notwithstanding any other provision in this Plan and not otherwise canceled in
accordance with Section 15.3 above, previously granted and unpaid
Performance Cash and/or Dividend Equivalents or Performance Cash and/or
Dividend Equivalents granted in the year during which the Change of Control
occurs will be paid no later than 60 days from the date of the occurrence of
such Change of Control.  The amount of
the Performance Cash and/or Dividend Equivalent payable shall be:

 

(i)                                     One-half of the maximum value of Performance
Cash and/or Dividend Equivalent payable pursuant to the terms and provisions of
the Award (reduced by the application of the Committee’s negative discretion,
if applicable) to such person if the Change of Control occurs before 50 percent
of the Performance Period has elapsed; or

 

(ii)                                  The full maximum value of the Performance
Cash and/or Dividend Equivalent payable pursuant to the terms and provisions of
the Award (reduced by the application of the Committee’s negative discretion,
if applicable) to such person if the Change of Control occurs on or after 50
percent of the Performance Period has elapsed.

 

17

 

ARTICLE 16.       LIQUIDATION OR DISSOLUTION

 

In
case the Company shall, at any time while any Incentive under this Plan shall
be in force and remain unexpired, sell all or substantially all of its
property, or dissolve, liquidate, or wind up its affairs (each, a “Dissolution
Event”), then each Participant shall be thereafter entitled to receive, in lieu
of each share of Common Stock of the Company which such Participant would have
been entitled to receive under the Incentive, the same kind and amount of any
securities or assets as may be issuable, distributable, or payable upon any
such sale, dissolution, liquidation, or winding up with respect to each share
of Common Stock of the Company. If the Company shall, at any time prior to the
expiration of any Incentive, make any partial distribution of its assets, in
the nature of a partial liquidation, whether payable in cash or in kind (but
excluding the distribution of a cash dividend payable out of earned surplus and
designated as such) then in such event the Option Prices or SAR Prices then in
effect with respect to each Stock Option or SAR shall be reduced, on the
payment date of such distribution, in proportion to the percentage reduction in
the tangible book value of the shares of the Company’s Common Stock (determined
in accordance with generally accepted accounting principles) resulting by
reason of such distribution.

 

ARTICLE 17.       ADDITIONAL AUTHORITY OF COMMITTEE

 

In
addition to the Committee’s authority set forth elsewhere, in order to maintain
a Participant’s rights in the event of any Change of Control or Dissolution
Event described under Articles 15 and 16, the Committee, as constituted before
the Change of Control or Dissolution Event, is hereby authorized, and has sole
discretion, as to any Incentive, either at the time the Award is made hereunder
or any time thereafter, to take any one or more of the following actions:

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 18.       INCENTIVES IN SUBSTITUTION FOR INCENTIVES
GRANTED BY OTHER CORPORATIONS

 

Incentives
may be granted under the Plan from time to time in substitution for similar
instruments held by employees of a corporation who become or are about to
become Employees of the Company or any Subsidiary as a result of a merger or
consolidation of the employing corporation with the Company or the acquisition
by the Company of stock of the employing corporation.  The terms and conditions of the substitute
Incentives so granted may vary from the terms and conditions set forth in this
Plan to such extent as the Board at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the Incentives in
substitution for which they are granted.

 

18

 

ARTICLE 19.       MISCELLANEOUS PROVISIONS

 

19.1         Code Section 409A. 
Notwithstanding anything in this Plan to the contrary, if any Plan
provision or Award under the Plan would result in the imposition of an
applicable tax under Code Section 409A and related regulations and
Treasury pronouncements (“Section 409A”), that Plan provision or Award may
be reformed to avoid imposition of the applicable tax and no action taken to
comply with Section 409A shall be deemed to adversely affect the
Participant’s rights to an Award.

 

19.2         Investment Intent.  The
Company may require that there be presented to and filed with it by any
Participant under the Plan, such evidence as it may deem necessary to establish
that the Incentives granted or the shares of Common Stock to be purchased or
transferred are being acquired for investment and not with a view to their distribution.

 

19.3         No Right to Continued Employment. 
Neither the Plan nor any Incentive granted under the Plan shall confer
upon any Participant any right with respect to continuance of employment by the
Company or any Subsidiary.

 

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

 

19.5         Indemnification of Board and Committee.  No
member of the Board or the Committee, nor any officer or employee of the Company
acting on behalf of the Board or the Committee, shall be personally liable for
any action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board or the Committee and each and
any officer or employee of the Company acting on their behalf shall, to the
fullest extent permitted by law, be fully indemnified and protected by the
Company in respect of any such action, determination, or interpretation.

 

19.6         Effect of the Plan. 
Neither the adoption of this Plan nor any action of the Board or the
Committee shall be deemed to give any person any right to be granted an Award
or any other rights except as may be evidenced by an Award Agreement, or any
amendment thereto, duly authorized by the Committee and executed on behalf of
the Company, and then only to the extent and upon the terms and conditions
expressly set forth therein.

 

19.7         Compliance with Laws and Regulations. 
Notwithstanding anything contained herein to the contrary, the Company
shall not be required to sell or issue shares of Common Stock under any
Incentive if the issuance thereof would constitute a violation by the
Participant or the Company of any provisions of any law or regulation of any
governmental authority or any national securities exchange or inter-dealer
quotation system or other forum in which shares of Common Stock are quoted or
traded (including without limitation Section 16 of the Securities Exchange
Act of 1934 and 162(m) of the Code), and, as a condition of any sale or issuance
of shares of Common Stock under an Incentive, the Committee may require such
agreements or undertakings, if any, as the Committee may deem necessary or
advisable to assure compliance with any such law or regulation.  The Plan, the grant and exercise of Incentives
hereunder, and the obligation of the Company to sell and deliver shares of
Common Stock, shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required; and the grant or making of any Award shall be conditional and
shall be granted or awarded subject to acceptance of the Shares deliverable
pursuant to the Award for listing on the NYSE.

 

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

 

19

 

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

 

19.10       Assignability.  (a) 
Incentive Stock Options may not be transferred or assigned other than by will
or the laws of descent and distribution and may be exercised during the
lifetime of the Participant only by the Participant or the Participant’s
legally authorized representative, and each Award Agreement in respect of an
Incentive Stock Option shall so provide. 
The designation by a Participant of a beneficiary will not constitute a
transfer of the Stock Option.  The
Committee may waive or modify any limitation contained in the preceding
sentences of this Section 19.10 that is not required for compliance with Section 422
of the Code.

 

(b)           The Committee may, in its discretion, authorize all or a portion of a
Non-qualified Stock Option or SAR to be granted to a Participant to be on terms
which permit transfer by such Participant to (i) the spouse, children or
grandchildren of the Participant (“Immediate Family Members”), (ii) a
trust or trusts for the exclusive benefit of such Immediate Family Members, or (iii) a
partnership in which such Immediate Family Members are the only partners, (iv) an
entity exempt from federal income tax pursuant to Section 501(c)(3) of
the Code or any successor provision, or (v) a split interest trust or
pooled income fund described in Section 2522(c)(2) of the Code or any
successor provision, provided that (a) there shall be no consideration for
any such transfer, (b) the Award Agreement pursuant to which such
Non-qualified Stock Option or SAR is granted must be approved by the Committee
and must expressly provide for transferability in a manner consistent with this
Section, and (c) subsequent transfers of transferred Non-qualified Stock
Options or SARs shall be prohibited except those by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
in the Code or Title I of the Employee Retirement Income Security Act of 1974,
as amended. Following transfer, any such Non-qualified Stock Option and SAR
shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for purposes of
Articles 10, 12, 14, 16 and 18 hereof the term “Participant” shall be deemed to
include the transferee.  The events of
Termination of Service shall continue to be applied with respect to the
original Participant, following which the Non-qualified Stock Options and SARs
shall be exercisable by the transferee only to the extent and for the periods
specified in the Award Agreement.  The
Committee and the Company shall have no obligation to inform any transferee of a
Non-qualified Stock Option or SAR of any expiration, termination, lapse or
acceleration of such Option.  The Company
shall have no obligation to register with any federal or state securities
commission or agency any Common Stock issuable or issued under a Non-qualified
Stock Option or SAR that has been transferred by a Participant under this Section 19.10.

 

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

 

19.12       Use of Proceeds. 
Proceeds from the sale of shares of Common Stock pursuant to Incentives
granted under this Plan shall constitute general funds of the Company.

 

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

 

20

 

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

 

19.15       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.

 

19.16       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.

 

19.17       Construction.  Use
of the term “including” in this Plan shall be construed to mean “including but
not limited to.”

 

19.18       Legend.  Each certificate or evidence
of ownership representing shares of Restricted Stock issued to a Participant
shall bear or be subject to the following legend, or a similar legend deemed by
the Company to constitute an appropriate notice of the provisions hereof (any
such certificate not having such legend shall be surrendered upon demand by the
Company and so endorsed):

 

On the face of the certificate:

 

“Transfer of this stock is restricted in accordance
with conditions printed on the reverse of this certificate.”

 

On the reverse:

 

“The shares of stock evidenced hereby are subject to
and transferable only in accordance with the 2005 Valero Energy Corporation
Omnibus Stock Incentive Plan, a copy of which is on file at the principal
office of the Company in San Antonio, Texas. 
No transfer or pledge of the shares evidenced hereby may be made except
in accordance with and subject to the provisions of said Plan.  By acceptance of shares represented hereby,  any holder, transferee or pledge beneficiary hereof
agrees to be bound by all of the provisions of said Plan.”

 

The
following legend shall be inserted on a certificate or evidence of ownership of
Common Stock issued under the Plan if the shares were not issued in a
transaction registered under the applicable federal and state securities laws:

 

“Shares of stock represented hereby have been
acquired by the holder for investment and not for resale, transfer or
distribution, have been issued pursuant to exemptions from the registration
requirements of applicable state and federal securities laws, and may not be
offered for sale, sold or transferred other than pursuant to effective
registration under such laws, or in transactions otherwise in compliance with
such laws, and upon evidence satisfactory to the Company of compliance with
such laws, as to which the Company may rely upon an opinion of counsel
satisfactory to the Company.”

 

21

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