Document:

Exhibit 10.17

	

FIRST
AMENDMENT TO EMPLOYMENT AGREEMENT

William R. Klesse
(“Executive”) and Ultramar Diamond Shamrock Corporation, a Delaware
corporation (the “Company”), hereby enter into this First Amendment to
the Employment Agreement between Executive and the Company, dated as of October
23, 1996, and effective as of December 3, 1996 (the “Agreement”). 

WHEREAS, the Executive serves as
Executive Vice President, Operations, of the Company; and 

WHEREAS, the Executive and the
Company entered into the Agreement as of the date stated above; and 

WHEREAS, Section 12.8 of
the Agreement provides that it may be amended only by an instrument in writing
approved by the Company and signed by the Executive and the Company; and 

WHEREAS, the Company
considers it in the best interests of its stockholders to foster the continued
employment of certain key management personnel; and 

WHEREAS, the Company wishes
to amend the Agreement to add certain provisions approved by the Compensation
Committee of the Board of Directors of the Company at a meeting held on May 1,
2000. 

NOW, THEREFORE, in
consideration of the promises and mutual covenants contained herein and in the
Agreement, it is agreed that, effective as of May 1, 2000, the Agreement shall
be amended as follows: 

I. 

A new final sentence is
added to Section 4.2 of the Agreement as follows: 

	 	
Notwithstanding
any other provision of the Agreement, or the terms of the Ultramar Diamond Shamrock
Corporation Retirement Restoration Plan (the “RRP”), to the contrary, Executive (and
Executive’s beneficiaries) shall be entitled to no benefits under, or with respect to,
the RRP, in acknowledgment of the fact that such benefits will be provided under the
supplemental executive retirement plan of the Company in which Executive participates.

	

II. 

Section 5.2(i) of the
Agreement is hereby deleted and substituted with the following: 

	

Klesse First Amendment to Employment Agreement

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      (i)
If the Company determines in good faith that the Executive has incurred a Disability (as
defined below) during the Term, the Company may give the Executive written notice of its
intention to terminate its obligations under this Agreement, which notice may, but need
not, include a statement of the Company’s intent to terminate the Executive’s
employment. In such event, the Company’s obligations under this Agreement, and the
Executive’s employment (if applicable), will terminate effective on the 30th day
after receipt of such notice by the Executive (the “Disability Termination Date”),
provided that within the 30 days after such receipt, the Executive will not have returned
to full-time performance of his duties. The Executive will continue to receive his annual
base salary until the Disability Termination Date. The Executive will continue to receive
benefits until the Disability Termination Date, provided that if the Company has not
elected to terminate the Executive’s employment under this provision (but rather to
terminate only its obligations under this Agreement), the Executive’s right to
continue to receive benefits following the Disability Termination Date will be governed
by the policies and procedures of the Company generally applicable to disabled employees.
In that event, the Executive will be considered an “employee at will” following
the Disability Termination Date, and either the Executive or the Company may thereafter
terminate the Executive’s employment for any reason or for no reason, and the rights
and obligations of the Executive and the Company upon such termination will be governed
by the policies and procedures of the Company applicable to employees at will, and by
applicable law.

	 	
In
the event of the Executive’s disability, the Company will pay the Executive, promptly
after the Disability Termination Date, (a) the unpaid annual base salary to which he is
entitled, pursuant to Section 4.1, through the Disability Termination Date, (b) for any
accrued but unused vacation days, to the extent and in the amounts, if any, provided
under the Company’s usual policies and arrangements, and (c) a lump sum in cash in an
amount equal to 50% of his annual base salary at the Disability Termination Date. This
Section 5.2 will not limit the entitlement of the Executive, the Executive’s estate or
beneficiaries to any disability or other benefits then available to the Executive under
any disability insurance or other benefit plan or policy that is maintained by the
Company for the Executive’s benefit; provided that (i) any amounts paid as base salary
shall offset, on a dollar-for-dollar basis (but not below zero), the Company’s obligation
to pay the Executive short-term disability benefits under any short-term disability plan,
program or arrangement of the Company, in respect of the same period for which such base
salary is paid, and (ii) any benefits paid pursuant to the Company’s long-term disability
plan shall reduce, on a dollar-for-dollar basis (but not below zero), the Company’s
obligation to pay the Executive base salary in respect of the same period for which such
benefits are paid; provided, however, that any such offset or reduction shall not affect,
or be affected by, the payments provided to be made in accordance with clauses (a), (b),
or (c) of this Section 5.2(i).

	

Klesse First Amendment to Employment Agreement

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III. 

Section 5.5(i)(a) of the
Agreement shall be revised to read as follows: 

	 	
      (i)
Form and Amount. Upon Executive’s involuntary termination, other than for Cause, the
Company shall:

	 	
        (a)
subject to Section 5.5(iii), pay or provide Executive

	 	
          (1)
his annual salary and benefits until the date of termination,

	 	
          (2)
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, a lump sum cash payment equal to three multiplied by the sum of (x)
and (y), where (x) is Executive’s highest annual base salary in effect during the three
years prior to his date of termination, and (y) is the highest annual incentive
compensation earned by Executive during the three years prior to his termination; provided,
however, that all amounts received by Executive pursuant to the Ultramar Diamond
Shamrock Corporation Intermediate Incentive and Performance-Based Restricted Stock Plan
shall not be considered “annual incentive compensation” for purposes of this Section
5.5(i)(a)(2),

	

Klesse First Amendment to Employment Agreement

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          (3)
three additional years of age and service credit under all Company-sponsored employee
benefit plans, including all retirement income plans and welfare benefit plans, policies
or programs or arrangements in which Executive participates, including any savings,
pension, supplemental executive retirement or other retirement income or welfare benefit,
short or long-term disability, and any other deferred compensation, group and/or
executive life, health, retiree health, medical/hospital, or other insurance (whether
funded by actual insurance or self-insured by the Company), expense reimbursement or
other employee benefit plans, policies, programs or arrangements or any equivalent
successor plans, policies, programs or arrangements that may not now exist or may be
adopted hereafter by the Company (but only to the extent that eligibility, vesting, or
the timing or amount of the benefit are dependent upon age and service); provided,
however, that in the case of a qualified defined benefit pension plan (hereafter,
the “Qualified Plan”), (i) if such aforementioned involuntary termination occurs prior
to, or contemporaneous with, the occurrence of an event entitling Executive to a lump sum
payment under the provisions of either the Ultramar Corporation Supplemental Executive
Retirement Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “Ultramar SERP”) or the Diamond Shamrock, Inc. Supplemental Executive
Retirement Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “DS SERP”) pertaining to “Change in Control” (as defined in either the
Ultramar SERP or the DS SERP, as the case may be), disregarding for this purpose, any
“Change in Control” occurring prior to December 4, 1996 (collectively, a “SERP Lump Sum
Payment”), in lieu of granting any such actual additional years of age and service credit
under the Qualified Plan, an amount equal to the present value of the additional benefit
Executive would have accrued if he had been credited for all purposes with the three
additional years of age and service under the Qualified Plan as of his date of
termination with the Company will be paid in a lump sum in cash within five business days
after any revocation period in the release described in Section 5.5(iii) has expired and
(ii) if such aforementioned involuntary termination occurs following the occurrence of an
event entitling Executive to a SERP Lump Sum Payment, in lieu of granting any such
additional years of age and service credit under the Qualified Plan, an amount equal to
the excess of (A) the present value of the additional benefit Executive would have
accrued if he had been credited for all purposes with the three additional years of age
and service under the Qualified Plan as of his date of termination with the Company over
(B) the amount by which the SERP Lump Sum Payment would, under the terms of the Ultramar
SERP or DS SERP (as the case may be), have been reduced had the aforementioned
involuntary termination instead occurred contemporaneous with the occurrence of the event
entitling Executive to the SERP Lump Sum Payment, will be paid in a lump sum in cash
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, with (i) in the event that Executive’s aforementioned involuntary
termination occurs on or after a “Change in Control” of the Company, as defined in
Section 6.2 (or prior to, but in anticipation of, such a “Change in Control”), such
present value being determined, in both cases, using the interest rate and mortality
table set forth in Section 4.1(m) (i) and 4.1(n)(i), respectively, of the Ultramar SERP
and (ii) in the event that Employee’s aforementioned involuntary termination occurs prior
to such a “Change in Control” of the Company (other than such a termination in
anticipation of such a “Change in Control”), such present value being determined, in each
such case, using in the interest rate and mortality table set forth in Section 4.1(m)(ii)
and 4.1(n)(ii), respectively, of the Ultramar SERP; further, provided, however,
that, in determining the amount of the benefit which Executive is entitled to receive,
determined with respect to the DS SERP, the three additional years of age and service
credit which the Company would otherwise pay, or provide, Executive under the DS SERP
shall not, pursuant to this clause (3), be taken into account under the DS SERP, to the
extent that Executive was otherwise previously so credited with three additional years of
age and service credit under the terms of the DS SERP pertaining to “Change in Control;”
and further, provided, in crediting the three additional years of age and
service for purposes of calculating current and unused vacation such additional years
shall be applied in determining the amount of annual vacation to which Executive is
entitled, but shall not be deemed to cause Executive to have earned three additional
years worth of unused vacation,

	

Klesse First Amendment to Employment Agreement

Page 5 of 8

	 	
          (4)
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, a lump sum cash payment equal to three times the maximum amount the
Company could have contributed on behalf of Executive to all of the Company-sponsored
qualified and nonqualified defined contribution retirement plans in which Executive
participated for any of the three years ending on the date of Executive’s termination of
employment, assuming that Executive made the maximum voluntary contributions thereto,

	 	
          (5)
for a period of three years after the date of Executive’s termination of employment, the
continuation of the employee welfare benefits set forth in Section 4.2 (other than
short-term or long-term disability benefits), except as offset by benefits paid by other
sources as set forth in Section 8.2, or as provided in Section 5.5(ii) (provided,
however, that in the event that any such continued coverage is not permitted under
the terms of any applicable welfare plan or policy, the Company shall provide Executive
with the after-tax economic equivalent to be deemed to be no less than the total cost to
Executive of obtaining such coverage on an individual basis and to be paid quarterly in
advance without discount);

	

IV. 

Section 5.5(i) of the
Agreement shall be amended by striking the period at the end of Subsection
5.5(i)(b) and inserting the following in lieu thereof: 

	 	
;
and (c) the Company shall provide Executive with outplacement services for a period of
one year commencing on the date his employment is terminated in accordance with the
Company’s executive outplacement policy in effect at the time his employment is
terminated or immediately prior to a Change in Control (if prior to his termination of
employment), whichever is more generous.

	

Klesse First Amendment to Employment Agreement

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V.  

Section 5.5(ii) of the
Agreement shall be amended by striking the reference to “Section
5.5(i)(a)(4)” and inserting “Section 5.5(i)(a)(5)” in lieu
thereof and adding a new sentence to the end thereof which shall read as
follows: 

	 	
Notwithstanding
the above, if Executive’s continued participation in any of the benefits referenced in
Section 5.5(i)(a)(5) would violate any applicable law or cause any benefits plan, policy,
or arrangement of the Company to fail to qualify for tax-favored status, the Company
shall not be required to provide such benefits to Executive through the Company’s plans,
policies, or arrangements, but instead shall either (A) arrange to make a substantially
similar benefit available to Executive at no cost to the Executive or (B) pay Executive a
sufficient amount of cash to allow Executive to purchase, on an after-tax basis, a
substantially similar benefit on the open market at no incremental cost to Executive.

	

VI. 

Section 5.5 of the
Agreement shall be amended by adding a new subsection (iv) to the end thereof
which shall read as follows: 

	 	
      (iv)
Other Severance Benefits. Notwithstanding any provision of this Agreement to the
contrary, Executive shall be entitled to receive the greater of (a) the termination
payments and benefits provided under Section 5.5 of this Agreement, or (b) the
termination payments and benefits provided by any other Company-sponsored plan, program
or policy which has as its primary purpose the provision of severance benefits, but in no
event shall Executive be eligible to receive termination payments and benefits provided
under both this Agreement and any such plan, program or policy.

	

VII. 

Section 8 of the Agreement
shall be revised to read as follows: 

	

Klesse First Amendment to Employment Agreement

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			8. 		Mitigation
and Offset.

	 	
            
8.1      
Executive’s
right to receive when due the payments and other benefits provided for under and in
accordance with the terms of this Agreement is absolute, unconditional and subject to no
set-off, counterclaim or legal equitable defense. Any claim which the Company may have
against Executive, whether for breach of this Agreement or otherwise, shall be brought in
a separate action or proceeding and not part of any action or proceeding brought by
Executive to enforce the rights against the Company under this Agreement.

	 	
            
8.2      Executive
shall not have any duty to mitigate the amounts payable by the Company under this
Agreement upon any termination of employment by seeking new employment following
termination. All amounts payable pursuant to this Agreement shall be paid without
reduction regardless of any amount of salary, compensation or other amounts which may be
paid or payable to Executive as the result of Executive’s employment by another
employer; provided, however, that Executive’s coverage under the
Company’s welfare benefit plans will be reduced to the extent that Executive becomes
covered under any comparable employee benefit plan made available by another employer and
covering the same type of benefits. Executive shall report to the Company any such
benefits actually received by him.

	

VIII. 

Section 12.5(i) of the
Agreement shall be amended to read as follows: 

	 	
          (i)
To The Company. If to the Company, addressed to the attention of the Chief
Executive Officer at P.O. Box 696000, San Antonio, Texas, 78269-6000, with a copy sent to
the attention of the General Counsel at such address.

	

IX. 

Section 12 of the Agreement
shall be amended to add a new Subsection 12.11 which shall read as follows: 

	 	
          12.11
Dialogue. Unless Executive otherwise consents by the execution of an instrument in
writing that specifically refers to Section 12.11 of this Agreement, no claim or dispute
arising out of or related to this Agreement or any other agreement, policy, plan, program
or arrangement, including without limitation, any qualified or nonqualified retirement
plan, stock option plan or agreement, or any other equity incentive plan in which
Executive participated prior to his termination, shall be subject to the Company’s
Dialogue Dispute Resolution Program.

	

Klesse First Amendment to Employment Agreement

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X. 

The model release attached to this
First Amendment as “Exhibit A“ shall be substituted for the exhibit referred to
in Section 5.5(iii) of the Agreement.  

	

XI. 

Except as otherwise
provided herein, the Agreement shall remain in full force and effect. 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the first day of May, 2000. 

	

/s/ William R. Klesse
——————————————

William R. Klesse

	ULTRAMAR DIAMOND SHAMROCK CORPORATION

By: /s/ Jean Gaulin
——————————————

Title  Chairman, President and CEO

	

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT

Timothy J. Fretthold
(“Executive”) and Ultramar Diamond Shamrock Corporation, a Delaware
corporation (the “Company”), hereby enter into this First Amendment to
the Employment Agreement between Executive and the Company, dated as of October
23, 1996, and effective as of December 3, 1996 (the “Agreement”). 

WHEREAS, the Executive serves as
Executive Vice President, Chief Administrative and Legal Officer, of the Company; and 

WHEREAS, the Executive and the
Company entered into the Agreement as of the date stated above; and 

WHEREAS, Section 12.8 of
the Agreement provides that it may be amended only by an instrument in writing
approved by the Company and signed by the Executive and the Company; and 

WHEREAS, the Company
considers it in the best interests of its stockholders to foster the continued
employment of certain key management personnel; and 

WHEREAS, the Company wishes
to amend the Agreement to add certain provisions approved by the Compensation
Committee of the Board of Directors of the Company at a meeting held on May 1,
2000. 

NOW, THEREFORE, in
consideration of the promises and mutual covenants contained herein and in the
Agreement, it is agreed that, effective as of May 1, 2000, the Agreement shall
be amended as follows: 

I. 

A new final sentence is
added to Section 4.2 of the Agreement as follows: 

	 	
Notwithstanding
any other provision of the Agreement, or the terms of the Ultramar Diamond Shamrock
Corporation Retirement Restoration Plan (the “RRP”), to the contrary, Executive (and
Executive’s beneficiaries) shall be entitled to no benefits under, or with respect to,
the RRP, in acknowledgment of the fact that such benefits will be provided under the
supplemental executive retirement plan of the Company in which Executive participates.

	

II. 

Section 5.2(i) of the
Agreement is hereby deleted and substituted with the following: 

	

Fretthold First Amendment to Employment Agreement

Page 2 of 8

	 	
      (i)
If the Company determines in good faith that the Executive has incurred a
Disability (as defined below) during the Term, the Company may give the
Executive written notice of its intention to terminate its obligations under
this Agreement, which notice may, but need not, include a statement of the
Company’s intent to terminate the Executive’s employment. In such
event, the Company’s obligations under this Agreement, and the
Executive’s employment (if applicable), will terminate effective on the
30th day after receipt of such notice by the Executive (the “Disability
Termination Date”), provided that within the 30 days after such receipt,
the Executive will not have returned to full-time performance of his duties. The
Executive will continue to receive his annual base salary until the Disability
Termination Date. The Executive will continue to receive benefits until the
Disability Termination Date, provided that if the Company has not elected to
terminate the Executive’s employment under this provision (but rather to
terminate only its obligations under this Agreement), the Executive’s right
to continue to receive benefits following the Disability Termination Date will
be governed by the policies and procedures of the Company generally applicable
to disabled employees. In that event, the Executive will be considered an
“employee at will” following the Disability Termination Date, and
either the Executive or the Company may thereafter terminate the
Executive’s employment for any reason or for no reason, and the rights and
obligations of the Executive and the Company upon such termination will be
governed by the policies and procedures of the Company applicable to employees
at will, and by applicable law.

	 	
In
the event of the Executive’s disability, the Company will pay the Executive, promptly
after the Disability Termination Date, (a) the unpaid annual base salary to which he is
entitled, pursuant to Section 4.1, through the Disability Termination Date, (b) for any
accrued but unused vacation days, to the extent and in the amounts, if any, provided
under the Company’s usual policies and arrangements, and (c) a lump sum in cash in an
amount equal to 50% of his annual base salary at the Disability Termination Date. This
Section 5.2 will not limit the entitlement of the Executive, the Executive’s estate or
beneficiaries to any disability or other benefits then available to the Executive under
any disability insurance or other benefit plan or policy that is maintained by the
Company for the Executive’s benefit; provided that (i) any amounts paid as base salary
shall offset, on a dollar-for-dollar basis (but not below zero), the Company’s obligation
to pay the Executive short-term disability benefits under any short-term disability plan,
program or arrangement of the Company, in respect of the same period for which such base
salary is paid, and (ii) any benefits paid pursuant to the Company’s long-term disability
plan shall reduce, on a dollar-for-dollar basis (but not below zero), the Company’s
obligation to pay the Executive base salary in respect of the same period for which such
benefits are paid; provided, however, that any such offset or reduction shall not affect,
or be affected by, the payments provided to made in accordance with clauses (a), (b), or
(c) of this Section 5.2(i).

	

Fretthold First Amendment to Employment Agreement

Page 3 of 8

III. 

Section 5.5(i)(a) of the
Agreement shall be revised to read as follows: 

	 	
      (i)
Form and Amount. Upon Executive’s involuntary termination, other than for Cause, the
Company shall:

	 	
        (a)
subject to Section 5.5(iii), pay or provide Executive

	 	
          
(1)
his annual salary and benefits until the date of termination,

	 	
          
(2)
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, a lump sum cash payment equal to three multiplied by the sum of (x)
and (y), where (x) is Executive’s highest annual base salary in effect during the three
years prior to his date of termination, and (y) is the highest annual incentive
compensation earned by Executive during the three years prior to his termination;
provided, however, that all amounts received by Executive pursuant to the Ultramar
Diamond Shamrock Corporation Intermediate Incentive and Performance-Based Restricted
Stock Plan shall not be considered “annual incentive compensation” for purposes of this
Section 5.5(i)(a)(2),

	

Fretthold First Amendment to Employment Agreement

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(3)
three additional years of age and service credit under all Company-sponsored employee
benefit plans, including all retirement income plans and welfare benefit plans, policies
or programs or arrangements in which Executive participates, including any savings,
pension, supplemental executive retirement or other retirement income or welfare benefit,
short or long-term disability, and any other deferred compensation, group and/or
executive life, health, retiree health, medical/hospital, or other insurance (whether
funded by actual insurance or self-insured by the Company), expense reimbursement or
other employee benefit plans, policies, programs or arrangements or any equivalent
successor plans, policies, programs or arrangements that may not now exist or may be
adopted hereafter by the Company (but only to the extent that eligibility, vesting, or
the timing or amount of the benefit are dependent upon age and service); provided,
however, that in the case of a qualified defined benefit pension plan (hereafter, the
“Qualified Plan”), (i) if such aforementioned involuntary termination occurs prior to, or
contemporaneous with, the occurrence of an event entitling Executive to a lump sum
payment under the provisions of either the Ultramar Corporation Supplemental Executive
Retirement Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “Ultramar SERP”) or the Diamond Shamrock, Inc. Supplemental Executive
Retirement Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “DS SERP”) pertaining to “Change in Control” (as defined in either the
Ultramar SERP or the DS SERP, as the case may be), disregarding for this purpose, any
“Change in Control” occurring prior to December 4, 1996 (collectively, a “SERP Lump Sum
Payment”), in lieu of granting any such actual additional years of age and service credit
under the Qualified Plan, an amount equal to the present value of the additional benefit
Executive would have accrued if he had been credited for all purposes with the three
additional years of age and service under the Qualified Plan as of his date of
termination with the Company will be paid in a lump sum in cash within five business days
after any revocation period in the release described in Section 5.5(iii) has expired and
(ii) if such aforementioned involuntary termination occurs following the occurrence of an
event entitling Executive to a SERP Lump Sum Payment, in lieu of granting any such
additional years of age and service credit under the Qualified Plan, an amount equal to
the excess of (A) the present value of the additional benefit Executive would have
accrued if he had been credited for all purposes with the three additional years of age
and service under the Qualified Plan as of his date of termination with the Company over
(B) the amount by which the SERP Lump Sum Payment would, under the terms of the Ultramar
SERP or DS SERP (as the case may be), have been reduced had the aforementioned
involuntary termination instead occurred contemporaneous with the occurrence of the event
entitling Executive to the SERP Lump Sum Payment, will be paid in a lump sum in cash
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, with (i) in the event that Executive’s aforementioned involuntary
termination occurs on or after a “Change in Control” of the Company, as defined in
Section 6.2 (or prior to, but in anticipation of, such a “Change in Control”), such
present value being determined, in both cases, using the interest rate and mortality
table set forth in Section 4.1(m) (i) and 4.1(n)(i), respectively, of the Ultramar SERP
and (ii) in the event that Employee’s aforementioned involuntary termination occurs prior
to such a “Change in Control” of the Company (other than such a termination in
anticipation of such a “Change in Control”), such present value being determined, in each
such case, using in the interest rate and mortality table set forth in Section 4.1(m)(ii)
and 4.1(n)(ii), respectively, of the Ultramar SERP; further, provided, however, that, in
determining the amount of the benefit which Executive is entitled to receive, determined
with respect to the DS SERP, the three additional years of age and service credit which
the Company would otherwise pay, or provide, Executive under the DS SERP shall not,
pursuant to this clause (3), be taken into account under the DS SERP, to the extent that
Executive was otherwise previously so credited with three additional years of age and
service credit under the terms of the DS SERP pertaining to “Change in Control;” and
further, provided, in crediting the three additional years of age and service for
purposes of calculating current and unused vacation such additional years shall be
applied in determining the amount of annual vacation to which Executive is entitled, but
shall not be deemed to cause Executive to have earned three additional years worth of
unused vacation,

	

Fretthold First Amendment to Employment Agreement

Page 5 of 8

	 	
          
(4)
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, a lump sum cash payment equal to three times the maximum amount the
Company could have contributed on behalf of Executive to all of the Company-sponsored
qualified and nonqualified defined contribution retirement plans in which Executive
participated for any of the three years ending on the date of Executive’s termination of
employment, assuming that Executive made the maximum voluntary contributions thereto,

	 	
          
(5)
for a period of three years after the date of Executive’s termination of employment, the
continuation of the employee welfare benefits set forth in Section 4.2 (other than
short-term or long-term disability benefits), except as offset by benefits paid by other
sources as set forth in Section 8.2, or as provided in Section 5.5(ii) (provided,
however, that in the event that any such continued coverage is not permitted under the
terms of any applicable welfare plan or policy, the Company shall provide Executive with
the after-tax economic equivalent any coverage foregone, such economic equivalent to be
deemed to be no less than the total cost to Executive of obtaining such coverage on an
individual basis and to be paid quarterly in advance without discount);

	

IV. 

Section 5.5(i) of the
Agreement shall be amended by striking the period at the end of Subsection
5.5(i)(b) and inserting the following in lieu thereof: 

	 	
;
and (c) the Company shall provide Executive with outplacement services for a period of
one year commencing on the date his employment is terminated in accordance with the
Company’s executive outplacement policy in effect at the time his employment is
terminated or immediately prior to a Change in Control (if prior to his termination of
employment), whichever is more generous.

	

Fretthold First Amendment to Employment Agreement

Page 6 of 8

	

V. 

Section 5.5(ii) of the
Agreement shall be amended by striking the reference to “Section
5.5(i)(a)(4)” and inserting “Section 5.5(i)(a)(5)” in lieu
thereof and adding a new sentence to the end thereof, which shall read as
follows: 

	 	
Notwithstanding
the above, if Executive’s continued participation in any of the benefits referenced in
Section 5.5(i)(a)(5) would violate any applicable law or cause any benefits plan, policy,
or arrangement of the Company to fail to qualify for tax-favored status, the Company
shall not be required to provide such benefits to Executive through the Company’s plans,
policies, or arrangements, but instead shall either (A) arrange to make a substantially
similar benefit available to Executive at not cost to the Executive or (B) pay Executive
a sufficient amount of cash to allow Executive to purchase, on an after-tax basis, a
substantially similar benefit on the open market at no incremental cost to Executive.

	

VI. 

Section 5.5 of the
Agreement shall be amended by adding a new subsection (iv) to the end thereof
which shall read as follows: 

	 	
      (iv)
Other Severance Benefits. Notwithstanding any provision of this Agreement to the
contrary, Executive shall be entitled to receive the greater of (a) the termination
payments and benefits provided under Section 5.5 of this Agreement, or (b) the
termination payments and benefits provided by any other Company-sponsored plan, program
or policy which has as its primary purpose the provision of severance benefits, but in no
event shall Executive be eligible to receive termination payments and benefits provided
under both this Agreement and any such plan, program or policy.

	

VII. 

Section 8 of the Agreement
shall be revised to read as follows: 

	

Fretthold First Amendment to Employment Agreement

Page 7 of 8

			8. 		Mitigation and Offset.

	 	
      8.1
      
Executive’s right to receive when due the payments and other benefits
provided for under and in accordance with the terms of this Agreement is
absolute, unconditional and subject to no set-off, counterclaim or legal
equitable defense. Any claim which the Company may have against Executive,
whether for breach of this Agreement or otherwise, shall be brought in a
separate action or proceeding and not part of any action or proceeding brought
by Executive to enforce the rights against the Company under this Agreement.

	 	
      8.2      
Executive shall not have any duty to mitigate the amounts payable by the Company
under this Agreement upon any termination of employment by seeking new
employment following termination. All amounts payable pursuant to this Agreement
shall be paid without reduction regardless of any amount of salary, compensation
or other amounts which may be paid or payable to Executive as the result of
Executive’s employment by another employer; provided, however, that
Executive’s coverage under the Company’s welfare benefit plans will be
reduced to the extent that Executive becomes covered under any comparable
employee benefit plan made available by another employer and covering the same
type of benefits. Executive shall report to the Company any such benefits
actually received by him.

	

VIII. 

Section 12.5(i) of the
Agreement shall be amended to read as follows: 

	 	
      (i)
To The Company. If to the Company, addressed to the attention of the Chief Executive
Officer at P.O. Box 696000, San Antonio, Texas, 78269-6000, with a copy sent to the
attention of the General Counsel at such address.

	

IX. 

Section 12 of the Agreement
shall be amended to add a new Subsection 12.11 which shall read as follows: 

	 	
      12.11
Dialogue. Unless Executive otherwise consents by the execution of an instrument in
writing that specifically refers to Section 12.11 of this Agreement, no claim or dispute
arising out of or related to this Agreement or any other agreement, policy, plan, program
or arrangement, including without limitation, any qualified or nonqualified retirement
plan, stock option plan or agreement, or any other equity incentive plan in which
Executive participated prior to his termination, shall be subject to the Company’s
Dialogue Dispute Resolution Program.

	

Fretthold First Amendment to Employment Agreement

Page 8 of 8

	

X. 

The model release attached
to this First Amendment as “Exhibit A” shall be substituted for the
exhibit referred to in Section 5.5(iii) of the Agreement. 

XI. 

Except as otherwise
provided herein, the Agreement shall remain in full force and effect. 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the first day of May, 2000. 

	

/s/ Timothy J. Fretthold
——————————————

Timothy J. Fretthold

	ULTRAMAR DIAMOND SHAMROCK CORPORATION

By: /s/ Jean Gaulin
——————————————

TITLE  Chairman, President and CEO

	

FIRST
AMENDMENT TO EMPLOYMENT AGREEMENT

W. Paul Eisman
(“Executive”) and Ultramar Diamond Shamrock Corporation, a Delaware
corporation (the “Company”), hereby enter into this First Amendment to
the Employment Agreement between Executive and the Company, dated as of October
23, 1996, and effective as of December 3, 1996 (the “Agreement”). 

WHEREAS, the Executive serves as
Senior Vice President, Supply and Development, of the Company; and 

WHEREAS, the Executive and the
Company entered into the Agreement as of the date stated above; and 

WHEREAS, Section 12.8 of
the Agreement provides that it may be amended only by an instrument in writing
approved by the Company and signed by the Executive and the Company; and 

WHEREAS, the Company
considers it in the best interests of its stockholders to foster the continued
employment of certain key management personnel; and 

WHEREAS, the Company wishes
to amend the Agreement to add certain provisions approved by the Compensation
Committee of the Board of Directors of the Company at a meeting held on May 1,
2000. 

NOW, THEREFORE, in
consideration of the promises and mutual covenants contained herein and in the
Agreement, it is agreed that, effective as of May 1, 2000, the Agreement shall
be amended as follows: 

I. 

A new final sentence is
added to Section 4.2 of the Agreement as follows: 

	 	
Notwithstanding
any other provision of the Agreement, or the terms of the Ultramar Diamond Shamrock
Corporation Retirement Restoration Plan (the “RRP”), to the contrary, Executive (and
Executive’s beneficiaries) shall be entitled to no benefits under, or with respect to,
the RRP, in acknowledgment of the fact that such benefits will be provided under the
supplemental executive retirement plan of the Company in which Executive participates.

	

II. 

Section 5.2(i) of the
Agreement is hereby deleted and substituted with the following: 

	

Eisman First Amendment to Employment Agreement

Page 2 of 8

	 	
      (i)
If the Company determines in good faith that the Executive has incurred a
Disability (as defined below) during the Term, the Company may give the
Executive written notice of its intention to terminate its obligations under
this Agreement, which notice may, but need not, include a statement of the
Company’s intent to terminate the Executive’s employment. In such
event, the Company’s obligations under this Agreement, and the
Executive’s employment (if applicable), will terminate effective on the
30th day after receipt of such notice by the Executive (the “Disability
Termination Date”), provided that within the 30 days after such receipt,
the Executive will not have returned to full-time performance of his duties. The
Executive will continue to receive his annual base salary until the Disability
Termination Date. The Executive will continue to receive benefits until the
Disability Termination Date, provided that if the Company has not elected to
terminate the Executive’s employment under this provision (but rather to
terminate only its obligations under this Agreement), the Executive’s right
to continue to receive benefits following the Disability Termination Date will
be governed by the policies and procedures of the Company generally applicable
to disabled employees. In that event, the Executive will be considered an
“employee at will” following the Disability Termination Date, and
either the Executive or the Company may thereafter terminate the
Executive’s employment for any reason or for no reason, and the rights and
obligations of the Executive and the Company upon such termination will be
governed by the policies and procedures of the Company applicable to employees
at will, and by applicable law.

	 	
In
the event of the Executive’s disability, the Company will pay the Executive, promptly
after the Disability Termination Date, (a) the unpaid annual base salary to which he is
entitled, pursuant to Section 4.1, through the Disability Termination Date, (b) for any
accrued but unused vacation days, to the extent and in the amounts, if any, provided
under the Company’s usual policies and arrangements, and (c) a lump sum in cash in an
amount equal to 50% of his annual base salary at the Disability Termination Date. This
Section 5.2 will not limit the entitlement of the Executive, the Executive’s estate or
beneficiaries to any disability or other benefits then available to the Executive under
any disability insurance or other benefit plan or policy that is maintained by the
Company for the Executive’s benefit; provided that (i) any amounts paid as base salary
shall offset, on a dollar-for-dollar basis (but not below zero), the Company’s obligation
to pay the Executive short-term disability benefits under any short-term disability plan,
program or arrangement of the Company, in respect of the same period for which such base
salary is paid, and (ii) any benefits paid pursuant to the Company’s long-term disability
plan shall reduce, on a dollar-for-dollar basis (but not below zero), the Company’s
obligation to pay the Executive base salary in respect of the same period for which such
benefits are paid; provided, however, that any such offset or reduction shall not affect,
or be affected by, the payments provided to be made in accordance with clauses (a), (b),
or (c) of this Section 5.2(i).

	

	

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III. 

Section 5.5(i)(a) of the
Agreement shall be revised to read as follows: 

	 	
      
(i)
Form and Amount. Upon Executive’s involuntary termination, other than for Cause, the
Company shall:

	 	
        
(a)
subject to Section 5.5(iii), pay or provide Executive

	 	
          
(1)
his annual salary and benefits until the date of termination,

	 	
          
(2)
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, a lump sum cash payment equal to three multiplied by the sum of (x)
and (y), where (x) is Executive’s highest annual base salary in effect during the three
years prior to his date of termination, and (y) is the highest annual incentive
compensation earned by Executive during the three years prior to his termination;
provided, however, that all amounts received by Executive pursuant to the
Ultramar Diamond Shamrock Corporation Intermediate Incentive and
Performance-Based Restricted Stock Plan shall not be considered “annual incentive
compensation” for purposes of this Section 5.5(i)(a)(2),

	

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(3)
three additional years of age and service credit under all Company-sponsored employee
benefit plans, including all retirement income plans and welfare benefit plans, policies
or programs or arrangements in which Executive participates, including any savings,
pension, supplemental executive retirement or other retirement income or welfare benefit,
short or long-term disability, and any other deferred compensation, group and/or
executive life, health, retiree health, medical/hospital, or other insurance (whether
funded by actual insurance or self-insured by the Company), expense reimbursement or
other employee benefit plans, policies, programs or arrangements or any equivalent
successor plans, policies, programs or arrangements that may not now exist or may be
adopted hereafter by the Company (but only to the extent that eligibility, vesting, or
the timing or amount of the benefit are dependent upon age and service); provided,
however, that in the case of a qualified defined benefit pension plan (hereafter, the
“Qualified Plan”), (i) if such aforementioned involuntary termination occurs prior to, or
contemporaneous with, the occurrence of an event entitling Executive to a lump sum
payment under the provisions of either the Ultramar Corporation Supplemental Executive
Retirement Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “Ultramar SERP”) or the Diamond Shamrock, Inc. Supplemental Executive
Retirement Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “DS SERP”) pertaining to “Change in Control” (as defined in either the
Ultramar SERP or the DS SERP, as the case may be), disregarding for this purpose, any
“Change in Control” occurring prior to December 4, 1996 (collectively, a “SERP Lump Sum
Payment”), in lieu of granting any such actual additional years of age and service credit
under the Qualified Plan, an amount equal to the present value of the additional benefit
Executive would have accrued if he had been credited for all purposes with the three
additional years of age and service under the Qualified Plan as of his date of
termination with the Company will be paid in a lump sum in cash within five business days
after any revocation period in the release described in Section 5.5(iii) has expired and
(ii) if such aforementioned involuntary termination occurs following the occurrence of an
event entitling Executive to a SERP Lump Sum Payment, in lieu of granting any such
additional years of age and service credit under the Qualified Plan, an amount equal to
the excess of (A) the present value of the additional benefit Executive would have
accrued if he had been credited for all purposes with the three additional years of age
and service under the Qualified Plan as of his date of termination with the Company over
(B) the amount by which the SERP Lump Sum Payment would, under the terms of the Ultramar
SERP or DS SERP (as the case may be), have been reduced had the aforementioned
involuntary termination instead occurred contemporaneous with the occurrence of the event
entitling Executive to the SERP Lump Sum Payment, will be paid in a lump sum in cash
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, with (i) in the event that Executive’s aforementioned involuntary
termination occurs on or after a “Change in Control” of the Company, as defined in
Section 6.2 (or prior to, but in anticipation of, such a “Change in Control”), such
present value being determined, in both cases, using the interest rate and mortality
table set forth in Section 4.1(m)(i) and 4.1(n)(i), respectively, of the Ultramar SERP
and (ii) in the event that Employee’s aforementioned involuntary termination occurs prior
to such a “Change in Control” of the Company (other than such a termination in
anticipation of such a “Change in Control”), such present value being determined, in each
such case, using in the interest rate and mortality table set forth in Section 4.1(m)(ii)
and 4.1(n)(ii), respectively, of the Ultramar SERP; further, provided, however, that, in
determining the amount of the benefit which Executive is entitled to receive, determined with respect to the DS SERP, the three additional years
of age and service credit which the Company would otherwise pay, or provide, Executive
under the DS SERP shall not, pursuant to this clause (3), be taken into account under the
DS SERP, to the extent that Executive was otherwise previously so credited with three
additional years of age and service credit under the terms of the DS SERP pertaining to
“Change in Control;” and further, provided, in crediting the three additional years of
age and service for purposes of calculating current and unused vacation such
additional years shall be applied in determining the amount of annual vacation to which
Executive is entitled, but shall not be deemed to cause Executive to have earned three
additional years worth of unused vacation,

	

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(4)
within five business days after any revocation period in the release described in Section
5.5(iii) has expired, a lump sum cash payment equal to three times the maximum amount the
Company could have contributed on behalf of Executive to all of the Company-sponsored
qualified and nonqualified defined contribution retirement plans in which Executive
participated for any of the three years ending on the date of Executive’s termination of
employment, assuming that Executive made the maximum voluntary contributions thereto,

	 	

          (5)
for a period of three years after the date of Executive’s termination of employment, the
continuation of the employee welfare benefits set forth in Section 4.2 (other than
short-term or long-term disability benefits), except as offset by benefits paid by other
sources as set forth in Section 8.2, or as provided in Section 5.5(ii) (provided,
however, that in the event that any such continued coverage is not
permitted under the terms of any applicable welfare plan or policy, the Company shall
provide Executive with the after-tax economic equivalent of any coverage foregone, such
economic equivalent to be deemed to be no less than the total cost to Executive of
obtaining such coverage on an individual basis and to be paid quarterly in advance
without discount);

	

IV. 

Section 5.5(i) of the
Agreement shall be amended by striking the period at the end of Subsection
5.5(i)(b) and inserting the following in lieu thereof: 

	 	
;
and (c) the Company shall provide Executive with outplacement services for a period of
one year commencing on the date his employment is terminated in accordance with the
Company’s executive outplacement policy in effect at the time his employment is
terminated or immediately prior to a Change in Control (if prior to his termination of
employment), whichever is more generous.

	

	

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V. 

Section 5.5(ii) of the
Agreement shall be amended by striking the reference to “Section
5.5(i)(a)(4)” and inserting “Section 5.5(i)(a)(5)” in lieu
thereof and adding a new sentence to the end thereof which shall read as
follows: 

	 	
Notwithstanding
the above, if Executive’s continued participation in any of the benefits referenced in
Section 5.5(i)(a)(5) would violate any applicable law or cause any benefits plan, policy,
or arrangement of the Company to fail to qualify for tax-favored status, the Company
shall not be required to provide such benefits to Executive through the Company’s plans,
policies, or arrangements, but instead shall either (A) arrange to make a substantially
similar benefit available to Executive at no cost to the Executive or (B) pay Executive a
sufficient amount of cash to allow Executive to purchase, on an after-tax basis, a
substantially similar benefit on the open market at no incremental cost to Executive.

	

VI. 

Section 5.5 of the
Agreement shall be amended by adding a new subsection (iv) to the end thereof
which shall read as follows: 

	 	
        (iv)
Other Severance Benefits. Notwithstanding any provision of this Agreement
to the contrary, Executive shall be entitled to receive the greater of (a) the
termination payments and benefits provided under Section 5.5 of this Agreement,
or (b) the termination payments and benefits provided by any other
Company-sponsored plan, program or policy which has as its primary purpose the
provision of severance benefits, but in no event shall Executive be eligible to
receive termination payments and benefits provided under both this Agreement and
any such plan, program or policy.

	

VII. 

Section 8 of the Agreement
shall be revised to read as follows: 

	

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			8. 		Mitigation
and Offset.

	 	
      8.1      
Executive’s right to receive when due the payments and other benefits
provided for under and in accordance with the terms of this Agreement is
absolute, unconditional and subject to no set-off, counterclaim or legal
equitable defense. Any claim which the Company may have against Executive,
whether for breach of this Agreement or otherwise, shall be brought in a
separate action or proceeding and not part of any action or proceeding brought
by Executive to enforce the rights against the Company under this Agreement.

	 	
      8.2      
Executive shall not have any duty to mitigate the amounts payable by the Company
under this Agreement upon any termination of employment by seeking new
employment following termination. All amounts payable pursuant to this Agreement
shall be paid without reduction regardless of any amount of salary, compensation
or other amounts which may be paid or payable to Executive as the result of
Executive’s employment by another employer; provided,
however, that Executive’s coverage under the Company’s welfare
benefit plans will be reduced to the extent that Executive becomes covered under
any comparable employee benefit plan made available by another employer and
covering the same type of benefits. Executive shall report to the Company any
such benefits actually received by him.

	

VIII. 

Section 12.5(i) of the
Agreement shall be amended to read as follows: 

	 	
      (i)
To The Company. If to the Company, addressed to the attention of the Chief
Executive Officer at P.O. Box 696000, San Antonio, Texas, 78269-6000,
with a copy sent to the attention of the General Counsel at such address.

	

IX. 

Section 12 of the Agreement
shall be amended to add a new Subsection 12.11 which shall read as follows: 

	 	
      12.11
Dialogue. Unless Executive otherwise consents by the execution of an
instrument in writing that specifically refers to Section 12.11 of this
Agreement, no claim or dispute arising out of or related to this Agreement or
any other agreement, policy, plan, program or arrangement, including without
limitation, any qualified or nonqualified retirement plan, stock option plan or
agreement, or any other equity incentive plan in which Executive participated
prior to his termination, shall be subject to the Company’s Dialogue
Dispute Resolution Program.

	

	

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X. 

The model release attached
to this First Amendment as “Exhibit A” shall be substituted for the
exhibit referred to in Section 5.5(iii) of the Agreement. 

XI. 

Except as otherwise
provided herein, the Agreement shall remain in full force and effect. 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the first day of May, 2000. 

	

/s/ W. Paul Eisman
——————————————

W. Paul Eisman

	ULTRAMAR DIAMOND SHAMROCK CORPORATION

By: /s/ Jean Gaulin
——————————————

TITLE  Chairman, President and CEOExhibit 10.18

	

SECOND
AMENDMENT TO EMPLOYMENT AGREEMENT

William R. Klesse
(“Executive”) and Ultramar Diamond Shamrock Corporation, a Delaware
corporation (the “Company”), hereby enter into this Second Amendment
to Employment Agreement between Executive and the Company and dated October 23,
1996, and effective as of December 3, 1996 (the “Employment
Agreement”), as amended. 

WHEREAS the Executive and the
Company entered into the Employment Agreement as of the date stated above; and 

WHEREAS Section 12.8 of the
Employment Agreement provides that it may be amended only by an instrument in
writing approved by the Company and signed by the Executive and the Company; and 

WHEREAS the Company and
Executive wish to amend the Employment Agreement to add certain provisions
approved by the Compensation Committee of the Board of Directors of the Company
effective as of September 6, 2000. 

NOW, THEREFORE, in
consideration of the promises and mutual covenants contained herein and in the
Employment Agreement, it is agreed that, effective as of September 6, 2000, the
Employment Agreement is amended as follows: 

I. 

The first sentence of
Section 2.1 is deleted and the following is substituted for it: 

	 	
During
the Term, the Executive will serve as the Company’s Executive Vice President Operations
and will have such duties, functions, responsibilities, and authority as are (i)
consistent with the Executive’s position as Executive Vice President Operations of the
Company; or (ii) assigned to his office in the Company’s bylaws; or (iii) reasonably
assigned to him by the Company’s Board of Directors (the “Board”).

	

II. 

The first sentence of Section
3 is deleted and the following is substituted for it: 

	 	
In
connection with his employment during the Term, unless otherwise agreed by the Executive,
the Executive will be based at the Company’s facility currently known as the Avon
Refinery, located in Martinez, California.

	

	

Second Amendment to  Klesse Employment Agreement

Page 2 of 4

III. 

Sections 4.1(i) and (ii)
are deleted and the following substituted for them: 

	 	
      (i)      
Annual
Base Salary and Cost of Living Adjustment. During the Term of this Agreement, the
Company will pay to the Executive an annual base salary of not less than $420,000, which
annual base salary may be modified from time to time by the Board (or the Compensation
Committee thereof) in its sole discretion, payable at the times and in the manner
consistent with the Company’s’general policies regarding executive employees’compensation.
Effective with the first payroll period following the Executive’s relocation to the
Avon Refinery and continuing thereafter for ten years (provided Executive remains
employed by the Company and located at the Avon Refinery), the Company will pay
Executive a cost of living adjustment (“COLA”) determined and payable as
provided herein. For the duration of the first year the COLA shall be $126,000. On the
first through the ninth anniversary of the first COLA payment, the COLA shall reduced
annually by $12,600. For example, on the second anniversary the COLA shall be $113,400;
on the third anniversary the COLA shall be $100,800; subsequent years shall be reduced in
like manner. On the tenth anniversary the COLA shall be $12,600. On the eleventh
anniversary the COLA shall be discontinued it its entirety. The COLA shall be payable at
the times and in the manner consistent with Executive’s annual base salary, provided,
however, that, unless otherwise provided in this Agreement, such COLA shall not be
included for any compensation or benefits plan or policy as annual base salary or
compensation, including (but not limited to) computation of annual incentive eligible
earnings, or as eligible compensation for any qualified or nonqualified retirement plans
of the Company. The Board (or the Compensation Committee) may from time to time authorize
such additional compensation to the Executive, in cash or in property, as the Board may
determine its sole discretion to be appropriate. 

	 	
      (ii)      
Annual
Incentive Compensation. If the Board (or the Compensation Committee thereof)
authorizes any cash incentive compensation or approves any other management incentive
program or arrangement, the Executive will be eligible to participate in such plan,
program, or arrangement under the general terms and conditions applicable executive and
management employees; provided, however, that Executive’s “annual
incentive factor” under any annual incentive compensation program or arrangement
shall not be less than 50% of his annual compensation (excluding the COLA). Nothing in
this section 4.1(ii) will guarantee to the Executive any specific amount of incentive
compensation, or prevent the Board (or the Compensation Committee thereof) from
establishing performance goals and compensation targets applicable only to the Executive. 

	

	

Second Amendment to  Klesse Employment Agreement

Page 3 of 4

IV. 

Section 4.1 is amended by
adding a new subsection (iii) that shall read as follows: 

	 	
      (iii)      
Relocation.
The Company shall relocate Executive to the Avon Refinery in accordance with the
provisions of the Company’s Relocation Guide updated October 11, 2000, as enhanced
for relocations in connection with the Avon Refinery (“Relocation Guide”), a
copy of which is attached hereto as Exhibit “B.” Such Relocation Guide shall
include (but is not limited to) benefits such as Executive’s entitlement to an
incidental moving expense allowance of $105,000, and an interest-free loan for up to
$1,638,000 to purchase a primary residence, each such benefit to be governed by the terms
and conditions of the Relocation Guide and any applicable agreements, including but not
limited to a Promissory Note and Deed of Trust. If Executive’s employment is
involuntarily terminated other than for Cause as provided in Section 5.4(i) hereunder, or
is voluntarily terminated as provided in Section 5.4(ii) as a result of Executive’s
death, Disability, or retirement during the term of this Agreement, in addition to all
other rights and benefits of the Executive, the following shall apply: at the Executive’s
election in writing (or his spouse if Executive has died), made within twelve months of
the event, the Company shall relocate the Executive and his family to their original
location or other location of Executive’s choice within the contiguous 48 United
States in accordance with a relocation program at least as generous as the Relocation
Guide (but excluding entitlement to any COLA and interest-free loan). 

	

V. 

Subsections (1) and (2) of
Section 5.5(i)(a) shall be revised to read as follows: 

	 	
      (i)      
Form and Amount. Upon Executive’s involuntary termination, other than for Cause, the
Company shall:

	 	
        (a)      
subject to Section 5.5(iii), pay or provide Executive

	 	
            (1)
      
his annual salary (including COLA) and benefits until the date of termination,

	

Second Amendment to  Klesse Employment Agreement

Page 4 of 4

	 	
            (2)
      
within
five business days after any revocation period in the release described in Section
5.5(iii) has expired, a lump sum cash payment equal to three multiplied by the sum of (x)
and (y), where (x) is Executive’s highest annual base salary (including any
applicable COLA) in effect during the three years prior to his date of termination, and
(y) is the highest annual incentive compensation earned by Executive during the three
years prior to his termination; provided, however, that all amounts
received by Executive pursuant to the Ultramar Diamond Shamrock Corporation Intermediate
Incentive and Performance-Based Restricted Stock Plans shall not be considered “annual
incentive compensation” for the purposes of this Section 5.5(i)(a)(2). 

	

VI. 

Except as otherwise
provided herein, the Agreement shall remain in full force and effect. 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date of September 6, 2000. 

	

/s/ William R. Klesse
——————————————

William R. Klesse

	ULTRAMAR DIAMOND SHAMROCK CORPORATION

By: /s/ Jean Gaulin 
——————————————

Chairman, President and CEO

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