Document:

Exhibit 10.20

	

FIRST
AMENDMENT TO EMPLOYMENT AGREEMENT

Christopher Havens
(“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 November
27, 1996, and effective as of December 3, 1996 (the “Agreement”). 

WHEREAS, the Executive serves as
Executive Vice President, Marketing and Retail 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 continuous
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: 

	

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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).

	

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 each such case, 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 Executive’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 the interest rate and mortality table set forth in
Section 4.1(m)(ii) and 4.1(n)(ii), respectively, of the Ultramar SERP, 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 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: 

			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.

	

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      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/ Christopher Havens
——————————————

Christopher Havens

	ULTRAMAR DIAMOND SHAMROCK CORPORATION

By: /s/ Jean Gaulin 
——————————————

TITLE  Chairman, President and CEOExhibit 10.21

	

EMPLOYMENT
AGREEMENT

This EMPLOYMENT AGREEMENT
(the “Agreement”), dated as of August 1, 2000 (the “Effective
Date”), but effective as provided herein, is made and entered into by and
between Ultramar Diamond Shamrock Corporation, a Delaware corporation (the
“Company”), and Robert S. Shapard (the “Executive”). 

WHEREAS, the Executive is serving as
Executive Vice President and Chief Financial Officer of 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
recognizes that, as is the case for most publicly held companies, the
possibility of a Change in Control (as defined herein) exists; and 

WHEREAS, the Company wishes
to assure itself of both present and future continuation of management in the
event of a Change in Control; and 

WHEREAS, the Company wishes
to continue to employ the Executive and the Executive is willing to continue to
render services, both on the terms and subject to the conditions set forth in
this Agreement. 

NOW, THEREFORE, in
consideration of the promises and of the mutual covenants herein contained, it
is agreed as follows: 

	1. 		Employment. 

	

            1.1 
The Company hereby agrees to continue to employ the Executive and the Executive hereby
agrees to undertake employment with the Company upon the terms and conditions herein set
forth.  

            1.2 
Employment will be for a term commencing on the Effective Date and, subject to earlier
expiration upon the Executive’s termination under Section 5, expiring three years
from the Effective Date (the “Term”). Notwithstanding the previous sentence,
this Agreement and the employment of the Executive will be automatically renewed and the
Term extended, subject to Section 5, for successive one-year periods upon the terms and
conditions set forth herein, commencing on the third anniversary of the Effective Date,
and on each anniversary date thereafter, unless either party to this Agreement gives the
other party, written notice (in accordance with Section 12.5) of such party’s
intention to terminate this Agreement at least three months prior to the end of such
initial or extended term. For purposes of this Agreement, any reference to the “Term”of
this Agreement will include the original term and any extension thereof.  

	

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	2. 		Position and Duties.

	

            2.1 
Position and Duties. During the Term, the Executive will serve as Executive Vice
President and Chief Financial Officer of the Company, and will have such duties,
functions, responsibilities and authority as are (i) consistent with the Executive’s
position as Executive Vice President and Chief Financial Officer 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”). 

            2.2 
Commitment. During the Term, the Executive will be the Company’s full-time employee
and, except as may otherwise be approved in advance in writing by the Board, and except
during vacation periods and reasonable periods of absence due to sickness, personal
injury or other disability, the Executive will devote substantially all of his business
time and attention to the performance of his duties to the Company. 

3.      Place of Performance. In
connection with his employment during the Term, unless otherwise agreed by the Executive,
the Executive will be based at such location as may be determined by the Board. The
Executive will undertake normal business travel on behalf of the Company.  

	4. 		Compensation and Related Matters.

			4.1 		Compensation and Benefits.

	

            
          
(i)
Annual Base Salary. During the Term of this Agreement, the Company will pay to the
Executive an annual base salary of not less than $350,000, 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 compensation of executive
employees. The Board may from time to time authorize such additional compensation to the
Executive, in cash or in property, as the Board may determine in 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 to executive and management employees. Except as set forth in the proviso to
the preceding sentence, 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.

	

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            4.2
    Executive Benefits. In addition to the compensation described in Section 4.1, the
Company will make available to the Executive and his eligible dependents, subject to the
terms and conditions of the applicable plans, including without limitation the
eligibility rules, including designation by the Compensation Committee, participation in
all Company-sponsored employee benefit plans including all employee retirement income and
welfare benefit policies, plans, programs or arrangements in which senior executives of
the Company participate, including any stock option, stock purchase, stock appreciation,
savings, pension, supplemental executive retirement or other retirement income or welfare
benefit, short or long-term disability, and any other deferred compensation, incentive
compensation, group and/or executive life, health, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company), expense
reimbursement or other employee benefit policies, plans, programs or arrangements or any
equivalent successor policies, plans, programs or arrangements that may now exist or be
adopted hereafter by the Company.  

            4.3
Expenses. The Company will promptly reimburse the Executive for all travel and
other business expenses the Executive incurs in order to perform his duties to the
Company under this Agreement in a manner commensurate with the Executive’s position
and level of responsibility with the Company, and in accordance with the Company’s
policy regarding substantiation of expenses.  

5.           
Termination. Notwithstanding the Term specified in Section 1.2, the termination of the Executive’s employment
hereunder will be governed by the following provisions: 

            
5.1     
Death. In the event of the Executive’s death during the Term, the Company
will pay to the Executive’s beneficiaries or estate, as appropriate, promptly after
the Executive’s death, (i) the unpaid annual base salary to which the Executive is
entitled, pursuant to Section 4.1, through the date of the Executive’s death, and
(ii) for any earned but unused vacation days, to the extent and in the amounts, if any,
provided under the Company’s usual policies and arrangements. This Section 5.1 will
not limit the entitlement of the Executive’s estate or beneficiaries to any death or
other benefits then available to the Executive under any life insurance, stock ownership,
stock options, or other benefit plan or policy that is maintained by the Company for the
Executive’s benefit.  

            
5.2     
Disability. 

                      (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. 

	

	

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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 earned 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 payment provided to be made in accordance with
clauses (a), (b), or (c) of this Section 5.2(i); provided, however, that
any such offset or reduction shall not affect, or be affected by, the payment provided to
be made in accordance with clauses (a), (b), or (c) of this Section 5.2(i).  

                      (ii)
For purposes of this Agreement, “Disability” will mean the Executive’s incapacity due to
physical or mental illness to substantially perform his duties on a full-time basis for
six consecutive months and within 30 days after a notice of termination is thereafter
given by the Company the Executive will not have returned to the full-time performance of
the Executive’s duties; provided, however, if the Executive disagrees with a
determination to terminate him because of Disability, the question of the Executive’s
disability will be subject to the certification of a qualified medical doctor agreed to
by the Company and the Executive or, in the event of the Executive’s incapacity to
designate a doctor, the Executive’s legal representative. In the absence of agreement
between the Company and the Executive, each party will nominate a qualified medical
doctor and the two doctors will select a third doctor, who will make the determination as
to Disability. In order to facilitate such determination, the Executive will, as
reasonably requested by the Company, (a) make himself available for medical examinations
by a doctor in accordance with this Section 5.2(ii), and (b) grant the Company and any
such doctor access to all relevant medical information concerning him, arrange to furnish
copies of medical records to such doctor and use his best efforts to cause his own doctor
to be available to discuss his health with such doctor. 

	

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            5.3
Cause. 

                      (i)
The Company may terminate the Executive’s employment hereunder for Cause (as defined
below). In the event of the Executive’s termination for Cause, the Company will promptly
pay to the Executive (or his representative) the unpaid annual base salary to which he is
entitled, pursuant to Section 4.1, through the date the Executive is terminated and the
Executive will be entitled to no other compensation, except for earned but unused
vacation and other compensation as otherwise due to him under applicable law. 

                      (ii)
For purposes of this Agreement, the Company will have “Cause” to terminate the
Executive’s employment hereunder upon a finding by the Board that (a) the Executive
committed an illegal act or acts that were intended to and did defraud the Company, (b)
the Executive engaged in gross negligence or gross misconduct against the Company or
another employee, or in carrying out his duties and responsibilities, or (c) the
Executive materially breached any of the express covenants set forth in Section 9.1, 9.2
or 9.3. The Company will not have Cause unless and until the Company provides the
Executive with written notice that the Company intends to terminate his employment for
Cause. Such written notice will specify the particular act or acts, or failure to act,
that is or are the basis for the decision to so terminate the Executive’s employment for
Cause. The Employee will be given the opportunity within 30 calendar days of the receipt
of such notice to meet with the Board to defend such act or acts, or failure to act. The
Executive’s employment by the Company automatically will be terminated under this Section
5.3 for Cause as of the receipt of the written notice from the Company or, if later, the
date specified in such notice. A notice given under this Section 5.3 must set forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment for Cause, and if the termination date is other than the
date of receipt of such notice, specify the date on which the Executive’s employment is
to be terminated (which date will not be earlier than the date on which such notice is
given in accordance with Section 12.5). Such notice must be given no later than 180
business days after a director of the Company (excluding the Executive, if applicable)
first has actual knowledge of the events justifying the purported termination. 

	

	

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            5.4 
Termination.

                      (i)
Involuntary Termination. The Executive’s employment hereunder may be terminated by the
Company for any reason by written notice as provided in Section
12.5. The Executive will be treated for purposes of this Agreement as having been
involuntarily terminated by the Company other than for Cause if the Executive terminates
his employment with the Company for any of the following reasons (each, a “Good Reason”)
without the Executive’s written consent: (a) the Company has breached any material
provision of this Agreement and within 30 days after notice thereof from the Executive,
the Company fails to cure such breach; (b) a successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company fails to assume liability under the Agreement;
(c) at any time after the Company has notified the Executive pursuant to Section 1.2 that
the Company does not intend to renew the Agreement and the Executive’s employment at the
end of the Term (including any previous renewals) (rather than to allow the Agreement
automatically to renew); (d) a material reduction in the aggregate benefits described by
Section 4.2 (other than stock based compensation) provided to the Executive, unless such
decrease is required by law or is applicable to all employees of the Company eligible to
participate in any employee benefit arrangement affected by such reduction; (e) a
significant reduction in the Executive’s duties or the addition of duties, which in
either case are materially inconsistent with the Executive’s title or position; or (f) a
reduction in the Executive’s annual base salary. 

                      (ii)
Voluntary Termination. The Executive may voluntarily terminate the Agreement at any time
by notice to the Company as provided in Section 12.5. The
Executive’s death or Disability (as defined in Section 5.2(ii)) during the term of the
Agreement will constitute a voluntary termination of employment for purposes of
eligibility for termination payments and benefits as provided in Section 5.5, but for no
other purpose. 

            5.5 
Termination Payments and Benefits. 

                      (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/or service); provided,
however, that in the case of a qualified defined benefit pension plan, 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 such plan as of his
date of termination with the Company will be paid in a lump sum in cash within five
business 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 using the interest rate and mortality table set forth
in Section 4.1(m)(i) and 4.1(n)(i), respectively, of the Ultramar Corporation
Supplemental Executive Retirement Plan (or any equivalent successor plan, policy, program
or arrangement) (collectively, the “Ultramar SERP”) and (ii) in the event that
Executive’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 using the interest
rate and mortality table set forth in Section 4.1(m)(ii) and 4.1(n)(ii), respectively, of
the Ultramar SERP, 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, 

                              (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 the Executive’s
termination of employment assuming that the executive made the maximum voluntary
contributions thereto,  

	

	

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                              (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); and  

                          (b)
provide the 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.  

                      (ii)
Maintenance of Benefits. During the period set forth in Section 5.5(i)(a)(5), the Company
will use its best efforts to maintain in full force and effect
for the continued benefit of the Executive all referenced benefits or will arrange to
make available to the Executive benefits substantially similar to those that the
Executive would otherwise have been entitled to receive if his employment had not been
terminated. Such benefits will be provided to the Executive on the same terms and
conditions (including employee contributions toward the premium payments) under which the
Executive was entitled to participate immediately prior to his termination.
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 benefit
plan, policy or arrangement of the Company to fail to qualify for tax-favored status, the
Company shall not be required to provide such benefit 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.

                      (iii)
Release. No benefit will be paid or made available under Section 5.5(i)(a) unless the
Executive first executes a release in the form attached as an exhibit to this
Agreement, and (b) to the extent any portion of such release is subject to the seven-day
revocation period prescribed by the Age Discrimination in Employment Act of 1967, as
amended, or to any similar revocation period in effect on the date of termination of
Executive’s employment, such revocation period has expired.

                      (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.

	

	

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6.     
Change in Control Provisions.

            6.1
Impact of Change in Control. In the event of a “Change in Control“of the
Company, as defined in Section 6.2, (i) the company will cause all cash benefits due
under this Agreement to be secured by an irrevocable trust for the benefit of the
Executive, the assets of which will be subject to the claims of the Company’s
creditors, and will transfer to such trust cash and other property adequate to satisfy
all of the expenses of the trust for at least five years after the Change in Control and
any of the Company’s actual and potential cash obligations under this Agreement,
(ii) if the Executive’s employment is involuntarily terminated without Cause after
the Change in Control, (A) the covenants of Sections 9.1 and 10 will be inapplicable to
the Executive, and (B) the covenant of Section 9.2 will expire on the third anniversary
of the date of termination of the Executive’s employment, and (iii) the definition
of Good Reason, as set forth in Section 5.4(i) above, will be expanded to include the
following:  

                          (a)
A good faith determination by the Executive that, as a result of the Change in Control
and a change in circumstances thereafter significantly affecting his positions, including
a change in the scope of business or other activities for which he was responsible, he
has been rendered substantially unable to carry out, has been substantially hindered in
the performance of, or has suffered a substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached to any of the Executive’s
positions; the Executive’s determination will be presumed to have been made in good faith
unless otherwise shown by the Company by clear and convincing evidence; 

                          (b)
The relocation of the Company’s principal executive offices (but only if, immediately
prior to the Change in Control, the Executive’s principal place of employment was at the
Company’s principal executive offices), or requirement that the Executive have as his
principal location of work any location that is, in excess of 50 miles from the location
thereof immediately preceding the Change in Control or to travel away from his home or
office significantly more often than that required immediately prior to the Change in
Control; or 

                          (c)
For any reason, or without reason, during the 30-day period immediately following the
first anniversary of the first occurrence of a Change in Control. 

	

	

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            6.2 
Definition of Change in Control. For purposes of this Agreement, a “Change in
Control“ will be deemed to occur if at any time during the term of the Agreement any
of the following events will occur:  

                      (i)
The Company is merged, consolidated or reorganized into or with another corporation or
other legal person, and as a result of such merger, consolidation or reorganization, less
than 50% of the combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the aggregate by the
holders of Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction; 

                      (ii)
The Company sells or otherwise transfers all or substantially all of its assets to any
other corporation or other legal person, and as a result of such sale or transfer, less
than 50% of the combined voting power of the then outstanding voting securities of such
corporation or person are held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such sale; 

                      (iii)
There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report), each as promulgated pursuant to the Securities Exchange Act of 1934 (the
“Exchange Act”), disclosing that any person (as the term “person” is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the
term “beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 20% or more of the
combined voting power of the then-outstanding securities of the Company entitled to vote
generally in the election of Directors of the Company (“Voting Stock”); 

                      (iv)
The Company files a report or proxy statement with the Securities and Exchange Commission
pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a change in control of the
Company has or may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; or 

                      (v)
If during the period of two consecutive years individuals who at the beginning of any
such period constitute the Directors of the Company cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by the
Company’s shareholders, of each Director of the Company first elected during such period
was approved by a vote of at least two-thirds of the Directors of the Company then still
in office who were Directors of the Company at the beginning of any such period
(excluding for this purpose the election of any new Director in connection with an actual
or threatened election or proxy contest). 

	

	

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Notwithstanding the foregoing
provisions of Section 6.2(iii) or (iv) hereof, unless otherwise determined in a specific
case by majority vote of the Board (or the Compensation Committee thereof), a “Change
in Control” will not be deemed to have occurred for purposes of this Agreement solely
because the Company, an entity in which the Company directly or beneficially owns 50% or
more of the voting securities of such entity, any Company-sponsored employee stock
ownership plan or any other employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act, disclosing beneficial ownership by it of shares of
voting securities of the Company, whether in excess of 20% or otherwise, or because the
Company reports that a change in control of the Company has or may have occurred or will
or may occur in the future by reason of such beneficial ownership.  

7. Certain Additional Payments by the Company: 

            (i)
Anything in this Agreement to the contrary notwithstanding, if it is determined (as
hereafter provided) that any payment or distribution by the Company to or for the benefit
of the Executive, whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without limitation any stock option,
stock appreciation right or similar right, or the lapse or termination of any restriction
on or the vesting or exercisability of any of the foregoing (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code (or any successor
provision thereto) by reason of being “contingent on a change in ownership or control” of
the Company, within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the “Excise Tax”),
then the Executive will be entitled to receive an additional payment or payments (a “Gross-Up
Payment”) in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. No Gross-Up Payment
will be made with respect to the Excise Tax, if any, attributable to (a) any incentive
stock option, as defined by Section 422 of the Code (“ISO”) granted prior to
the execution of this Agreement (unless a comparable Gross-Up Payment has theretofore
been made available with respect to such option), or (b) any stock appreciation or
similar right, whether or not limited, granted in tandem with any ISO described in clause
(a).  

	

	

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            (ii)
Subject to the provisions of Section 7(vi) hereof, all determinations required to be made
under this Section 7, including whether an Excise Tax is payable by the Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, will be made by a nationally recognized firm of certified public
accountants (the “Accounting Firm”) selected by the Executive in his sole
discretion. The Executive will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within 15 calendar
days after the Termination Date, if applicable, and any other such time or times as may
be requested by the Company or the Executive. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, the Company will pay the required Gross-Up
Payment to the Executive within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it will, at the same time as it makes such determination, furnish the
Executive with an opinion that he has substantial authority not to report any Excise Tax
on his federal, state, local income or other tax return. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment will be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section 4999 of
the Code (or any successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (an “Underpayment”), consistent with
the calculations required to be made hereunder. In the event that the Company exhausts or
fails to pursue its remedies pursuant to Section 7(vi) hereof and the Executive
thereafter is required to make a payment of any Excise Tax, the Executive will direct the
Accounting Firm to determine the amount of the Underpayment that has occurred and to
submit its determination and detailed supporting calculations to both the Company and the
Executive as promptly as possible. Any such Underpayment will be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after receipt
of such determination and calculations.  

            (iii)
The Company and the Executive will each provide the Accounting Firm access to and copies
of any books, records and documents in the possession of the Company or the Executive, as
the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate
with the Accounting Firm in connection with the preparation and issuance of the
determination contemplated by Section 7(ii) hereof.  

            (iv)
The federal, state and local income or other tax returns filed by the Executive will be
prepared and filed on a consistent basis with the determination of the Accounting Firm
with respect to the Excise Tax payable by the Executive. The Executive will make proper
payment of the amount of any Excise Tax, and at the request of the Company, provide to
the Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior to the
filing of the Executive’s federal income tax return, or corresponding state or local
tax return, if relevant, the Accounting Firm determines that the amount of the Gross-Up
Payment should be reduced, the Executive will within five business days pay to the
Company the amount of such reduction.  

	

	

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            (v)
The fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by Sections 7(ii) and (iv) hereof will be
borne by the Company. If such fees and expenses are initially advanced by the Executive,
the Company will reimburse the Executive the full amount of such fees and expenses within
five business days after receipt from the Executive of a statement therefor and
reasonable evidence of his payment thereof.  

            (vi)
The Executive will notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of a Gross-Up
Payment. Such notification will be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive will further apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid (in each case, to the extent known by the
Executive). The Executive will not pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which he gives such notice
to the Company and (b) the date that any payment of amount with respect to such claim is
due. If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive will:  

                      (1)
provide the Company with any written records or documents in his possession relating to
such claim reasonably requested by the Company; 

                      (2)
take such action in connection with contesting such claim as the Company will reasonably
request in writing from time to time, including without limitation accepting legal
representation with respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company; 

                      (3)
cooperate with the Company in good faith in order effectively to contest such claim; and 

                      (4)
permit the Company to participate in any proceedings relating to such claim; 

provided, however, that the
Company will bear and pay directly all costs and expenses (including interest
and penalties) incurred in connection with such contest and will indemnify and
hold harmless the Executive, on an after-tax basis, for and against any Excise
Tax or income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and expenses.
Without limiting the foregoing provisions of this Section 7(vi), the Company
will control all proceedings taken in connection with the contest of any claim
contemplated by this Section 7(vi) and, at its sole option, may pursue or forego
any and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim (provided, however, that the
Executive may participate therein at his own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company will determine; provided, however, that if the Company directs the
Executive to pay the tax claimed and sue for a refund, the Company will advance
the amount of such payment to the Executive on an interest-free basis and will
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect thereto,
imposed with respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of any such contested claim will be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive will be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority. 

	

	

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            (vii)
If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(vi) hereof, the Executive receives any refund with respect to such claim, the
Executive will (subject to the Company’s complying with the requirements of Section
7(vi) hereof) promptly pay to the Company the amount of such refund (with any interest
paid or credited thereon after any taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 7(vi) hereof, a
determination is made that the Executive will not be entitled to any refund with respect
to such claim and the Company does not notify the Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance will be forgiven and will not be required to be repaid
and the amount of such advance will offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid pursuant to this Section 7.  

	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.  

	9. 		Competition;
Confidentiality; Nonsolicitation. 

	

            9.1
 (i) Subject to Section 6.1(ii), the Executive hereby covenants and agrees that during the
Term and for one year following the Term he will not, without the prior written consent
of the Company, engage in Competition (as defined below) with the Company. For purposes
of this Agreement, if the Executive takes any of the following actions he will be engaged
in “Competition,“ engaging in or carrying on, directly or indirectly, any
enterprise, whether as an advisor, principal, agent, partner, officer, director,
employee, stockholder, associate or consultant to any person, partnership, corporation or
any other business entity, that is principally engaged in the business of refining and/or
marketing oil or related products in States or Provinces in which the Company (or any
division or segment thereof) has operations; provided, however, that “Competition“ will
not include (a) the mere ownership of securities in any enterprise and exercise of rights
appurtenant thereto or (b) participation in management of any enterprise or business
operation thereof other than in connection with the competitive operation of such
enterprise.  

                      (ii)
Subject to Section 6.1(ii), the Executive hereby covenants and agrees that during the
Term and for three years following the Term he will not assist a third party in preparing
or making an unsolicited bid for the Company, engaging in a proxy contest with the
Company, or engaging in any other similar activity. 

            9.2 
During the Term, the Company agrees that it will disclose to Executive its confidential
or proprietary information (as defined in this Section 9.2) to the extent necessary for
Executive to carry out his obligations under this Agreement. Subject to Section 6.1(ii),
the Executive hereby covenants and agrees that he will not, without the prior written
consent of the Company, during the Term or thereafter disclose to any person not employed
by the Company, or use in connection with engaging in Competition with the Company, any
confidential or proprietary information of the Company. For purposes of this Agreement,
the term “confidential or proprietary information“ will include all information
of any nature and in any form that is owned by the Company and that is not publicly
available or generally known to persons engaged in businesses similar or related to those
of the Company. Confidential information will include, without limitation, the Company’s
financial matters, customers, employees, industry contracts, and all other secrets and
all other information of a confidential or proprietary nature. The foregoing obligations
imposed by this Section 9.2 will cease if such confidential or proprietary information
will have become, through no fault of the Executive, generally known to the public or the
Executive is required by law to make disclosure (after giving the Company notice and an
opportunity to contest such requirement).  

	

	

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            9.3
The Executive hereby covenants and agrees that during the Term and for one year
thereafter he will not attempt to influence, persuade or induce, or assist any other
person in so persuading or inducing, any employee of the Company to give up, or to not
commence, employment or a business relationship with the Company.  

            9.4
Executive acknowledges and agrees that the remedy at law available to the Company for
breach of any of his post-termination obligations under Sections 9.1, 9.2 and 9.3 would
be inadequate and that damages flowing from such a breach may not readily be susceptible
to being measured in monetary terms. Accordingly, Executive acknowledges, consents and
agrees that, in addition to any other rights or remedies which the Company may have at
law, in equity or under this Agreement, upon adequate proof of his violation of any such
provision of this Agreement, the Company will be entitled to immediate injunctive relief
and may obtain a temporary order restraining any threatened or further breach, without
the necessity of proof of actual damage.  

10. Post-termination
Assistance. Subject to Section 6.1(ii), the Executive agrees that after his
employment with the Company has terminated he will provide, upon reasonable
notice, such information and assistance to the Company as may reasonably be
requested by the Company in connection with any audit, governmental
investigation or litigation in which it or any of its affiliates is or may
become a party; provided, however, that (i) the Company agrees to reimburse the
Executive for any related out-of-pocket expenses, including travel expenses, and
to pay the Executive reasonable compensation for his time based on his rate of
annual salary at the time of termination and (ii) any such assistance may not
unreasonably interfere with the then-current employment of the Executive. 

11. Survival. The
expiration or termination of the Term will not impair the rights or obligations
of any party hereto that accrue hereunder prior to such expiration or
termination, except to the extent specifically stated herein. In addition to the
foregoing, the Executive’s covenants contained in Sections 9.1, 9.2, 9.3,
and 10 and the Company’s obligations under Sections 5, 7, and 12.1 will
survive the expiration or termination of Executive’s employment. 

	12. 		Miscellaneous
Provisions. 

	

            12.1
Legal Fees and Expenses. Without regard to whether the Executive prevails, in
whole or in part, in connection therewith, the Company will pay and be financially
responsible for 100% of any and all attorneys’ and related fees and expenses incurred
by the Executive in connection with any dispute associated with the interpretation,
enforcement or defense of the Executive’s rights under this Agreement by litigation
or otherwise; provided that, in regard to such dispute, the Executive has not acted in
bad faith or with no colorable claim of success. All such fees and expenses will be paid
by the Company as incurred by the Executive on a monthly basis upon an undertaking by the
Executive to repay such advanced amounts if a court determines, in a decision against
which no appeal may be taken or with respect to which the time period to appeal has
expired, that he acted in bad faith or with no colorable claim of success.  

	

	

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            12.2 
Binding on Successors.  This Agreement will be binding upon and inure to the
benefit of the Company, the Executive and each of their respective successors, assigns,
personal and legal representatives, executors, administrators, heirs, distributees,
devisees, and legatees, as applicable.  

            12.3 
Governing Law.  This Agreement will be governed, construed, interpreted and enforced in
accordance with the substantive laws of the State of Delaware, without
regard to conflicts of law principles. 

            12.4 
Severability.  Any provision of this Agreement that is deemed invalid, illegal or
unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because
its scope is considered excessive, such covenant will be modified so that the scope of
the covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.  

            12.5 
Notices.  For all purposes of this Agreement, all communications, including without
limitation notices, consents, requests or approvals, required or permitted to be given
hereunder will be in writing and will be deemed to have been duly given when hand
delivered or dispatched by electronic facsimile transmission (with receipt thereof
confirmed), or five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business days after
having been sent by a nationally recognized overnight courier service such as Federal
Express, UPS, or Purolator, addressed to the Company, and to the Executive at his
principal residence, or to such other address as any party may have furnished to the
other in writing and in accordance herewith, except that notices of changes of address
will be effective only upon receipt.  

                      (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. 

                      (ii)
To the Executive.  If to the Executive, to him in care of the Company at the above address. 

	

	

Shapard Employment Agreement

Page 17 of 18

            12.6 
Counterparts.  This Agreement may be executed in several counterparts, each of
which will be deemed to be an original, but all of which together will constitute one and
the same Agreement.  

            12.7 
Entire Agreement.  The terms of this Agreement are intended by the parties to be
the final expression of their agreement with respect to the Executive’s employment
by the Company and may not be contradicted by evidence of any prior or contemporaneous
agreement. The parties further intend that this Agreement will constitute the complete
and exclusive statement of its terms and that no extrinsic evidence whatsoever may be
introduced in any judicial, administrative or other legal proceeding to vary the terms of
this Agreement.  

            12.8 
Amendments; Waivers.  This Agreement may not be modified, amended, or terminated
except by an instrument in writing, approved by the Company and signed by the Executive
and the Company. Failure on the part of either party to complain of any action or
omission, breach or default on the part of the other party, no matter how long the same
may continue, will never be deemed to be a waiver of any rights or remedies hereunder, at
law or in equity. The Executive or the Company may waive compliance by the other party
with any provision of this Agreement that such other party was or is obligated to comply
with or perform only through an executed writing; provided, however, that such waiver
will not operate as a waiver of, or estoppel with respect to, any other or subsequent
failure.  

            12.9 
No Inconsistent Actions.  The parties will not voluntarily undertake or fail to
undertake any action or course of action that is inconsistent with the provisions or
essential intent of this Agreement. Furthermore, it is the intent of the parties hereto
to act in a fair and reasonable manner with respect to the interpretation and application
of the provisions of this Agreement.  

            12.10 
Headings and Section References.  The headings used in this Agreement are intended
for convenience or reference only and will not in any manner amplify, limit, modify or
otherwise be used in the construction or interpretation of any provision of this
Agreement. All section references are to sections of this Agreement, unless otherwise
noted.  

            12.11 
Indemnification.  The Company will indemnify, defend and hold the Executive
harmless, to the maximum extent permitted by law, from any and all claims, litigations,
or suits arising out of the activities of the Executive reasonably taken in the
performance of his duties hereunder, including all reasonable expenses and professional
fees that may relate thereto. The Company agrees to use its best efforts to obtain a
directors and officers liability insurance policy covering the Executive in a sufficient
amount to provide such indemnification, and to maintain such policy during the Term (and
for so long thereafter as is practicable in the circumstances taking into account the
availability of such insurance).  

            12.12 
Dialogue.  Unless Executive otherwise consents by the execution of an instrument in
writing that specifically refers to Section 12.12 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
DialogueDispute Resolution Program.  

	

	

Shapard Employment Agreement

Page 18 of 18

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

	

/s/ Robert S. Shapard
——————————————

Robert S. Shapard

	ULTRAMAR DIAMOND SHAMROCK CORPORATION

By: /s/ Jean Gaulin 
——————————————

TITLE  Chairman, President and CEO

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