Exhibit 10.08

VALERO GP, LLC

EXCESS THRIFT PLAN

Effective July 1, 2006

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VALERO GP, LLC

EXCESS THRIFT PLAN

Table of Contents

 

SECTION

        PAGE SECTION 1.    DEFINITIONS.    2 SECTION 2.    PARTICIPATION -
§415(c) BENEFIT PLAN.    5 SECTION 3.    PARTICIPATION - §401(A)(17) BENEFIT
PLAN.    5 SECTION 4.    BENEFITS - §415(c) BENEFIT PLAN COMPONENT.    6 SECTION
5.    BENEFITS - §401(a)(17) BENEFIT PLAN COMPONENT    7 SECTION 6.    COMMON
PROVISIONS.    7 SECTION 7.    EMPLOYER CONTRIBUTIONS.    10 SECTION 8.   
ADMINISTRATION.    10 SECTION 9.    MISCELLANEOUS.    10

 

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VALERO GP, LLC

EXCESS THRIFT PLAN

Introduction

The Valero GP, LLC Excess Thrift Plan (“Excess Thrift Plan” or “Plan”) is
established effective July 1, 2006 for the purpose of providing benefits to
those employees of Valero GP, LLC (the “Company”) and its participating
subsidiaries whose Annual Additions under the Valero GP, LLC Thrift Plan (“the
Thrift Plan”) are subject to the limitations on such Annual Additions as
provided under §415 of the Internal Revenue Code of 1986, as amended (“the
Code”), and/or are constrained from making maximum contributions under the
Thrift Plan by §401(a)(17) of the Code, which limits the amount of an employee’s
annual compensation which may be taken into account under that Plan (“the
Compensation Limit”).

The Excess Thrift Plan is comprised of two separate components, consisting of
(1) an “excess benefit plan” as defined under §3(36) of the Employee Retirement
Income Security Act of 1974, as amended, and (2) a plan which is unfunded and
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees. Each component of
the Excess Thrift Plan shall consist of a separate plan for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

The Excess Thrift Plan is not intended to constitute either a qualified plan
under the provisions of §401 of the Code or a funded plan subject to ERISA.

 

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VALERO GP, LLC

EXCESS THRIFT PLAN

All defined terms used in the Thrift Plan shall have the same meanings for
purposes of the Excess Thrift Plan except as otherwise provided below.

SECTION 1. DEFINITIONS.

 

1.1 “Annual Addition” shall mean the total amount that would have constituted
“Annual Additions” as defined in paragraph (2) of Code §415(c), if such
additions had not been limited pursuant to Code §415(c)(1), and as described in
Section 6.6(a) of the Thrift Plan.

 

1.2 “Annual Addition Limitation” shall mean the limitation on Annual Additions
to a Participant’s Thrift Plan Account, as provided in Code §415(c)(1), and as
described in Section 6.4(a) of the Thrift Plan.

 

1.3 “Annual Benefit Salary” shall mean a Participant’s current base rate of pay
expressed in annual terms, exclusive of all other forms of pay, such as bonuses,
commissions, overtime pay, shift differential, or any type of fluctuating
emolument. However, Annual Benefit Salary shall be determined without regard to
any reduction to the Participant’s taxable pay as a result of participating in
any plan subject to Section 125 of the Code or the §401(k) feature of the Thrift
Plan. During a period of absence from work, with or without pay, such as a sick
leave, disability leave or personal leave of absence, the Participant’s base
rate of pay most recently in effect while working shall be used in computing his
Annual Benefit Salary.

 

1.4 “Beneficiary” shall mean the Participant’s beneficiary as designated under
the Thrift Plan.

 

1.5 “Change in Control” shall mean the occurrence of one or more of the
following events:

 

  (a) Any one person or more than one person acting as a group (a “Group”) shall
acquire (whether in one or more transactions) ownership of interests in the
Company that, together with interests held by such person or Group, constitutes
more than 50% of the total fair market value or total voting power of all
interests, of the Company; or

 

  (b) any one person or Group acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
Group) ownership interests in the Company representing 35% or more of the total
voting power of all such interests in the Company; or

 

  (c) a majority of the members of the governing body of the Company (or, for
purposes of this subparagraph (c), the relevant entity under the provisions of
Prop. Treas. Reg. §1.409A-3(g)(5)(vi)(A)) is replaced during any 12-month period
by members whose appointment or election is not endorsed by a majority of the
members of the governing body of the Company prior to the date of appointment or
election; or

 

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  (d) any one person or Group acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
Group) assets from the Company that have a total gross fair market value equal
to or more than 40% of the total gross fair market value of all of the assets of
the Company immediately prior to such acquisition or acquisitions.

 

  (e) A Change in Control shall also be deemed to occur if a Change in Control,
as defined in (a), (b), (c) or (d) above, shall occur with respect to:

 

  (1) the entity for which a Participant is providing services at the time of
such Change in Control, or

 

  (2) the entity liable for paying the benefits under this Plan (or all such
entities if more than one entity shall be so liable); or

 

  (3) an entity that is the majority holder of interests in any entity
identified in (1) or (2), or any entity in a chain of entities in which such
entity is a majority holder of interests in another entity in the chain, ending
in an entity identified in (1) or (2) above.

 

  (f) Special Rules.

 

  (1) For purposes of calculating ownership in determining whether a Change in
Control has occurred, the attribution rules of Code section 318(a) shall apply
with respect to stock of a corporation, and shall be applied by analogy with
respect to other types of business entities.

 

  (2) If, at the time of a transaction, any one person or Group is considered to
own more than 50 percent of the total fair market value or total voting power of
interests in the Company (or other entity), or is considered to own 35 percent
or more of the total voting power of interests in the Company (or other entity),
then the acquisition of additional interests in the Company or other entity
shall not be treated as a Change in Control under section (a) or (b) above, as
applicable.

 

  (3) For purposes of applying the provisions of section (d) above, a transfer
of assets is not treated as a change in the ownership of such assets if the
assets are transferred to:

 

  (A) any person or Group who holds an interest in the Company, in exchange for
such interest;

 

  (B) an entity, 50% or more of the total value or voting power of which is
owned, directly or indirectly, by the Company;

 

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  (C) a person or Group that owns, directly or indirectly, 50% or more of the
total value or voting power of the Company; or

 

  (D) an entity, at least 50% of the total value or voting powers of which is
owned, directly or indirectly, by a person or Group described in (C) above.

In applying the provisions of this section (f)(3), a person’s status is
determined immediately after the transfer of assets.

 

1.6 “Code” shall mean the Internal Revenue Code of 1986 and the regulations
issued thereunder, as amended from time to time.

 

1.7 “Committee” shall mean the Benefit Plans Administrative Committee, which
administers this Plan.

 

1.8 “Company” shall mean Valero GP, LLC, and any successor Company through
merger, acquisition or otherwise.

 

1.9 “Company Equity” shall mean units of Valero L.P., a master limited
partnership.

 

1.10 “Compensation Limit” shall mean the maximum annual compensation allowed to
be taken into account by the Thrift Plan for any Plan Year, pursuant to the
provisions of §401(a)(17) of the Code, or any successor provision thereto.

 

1.11 “Disabled” or “Disability” shall mean the existence one or more of the
following conditions:

 

  (a) The Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months; or

 

  (b) The Participant is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Company; or

 

  (c) The Participant is determined to be totally disabled by the Social
Security Administration.

 

1.12 “Employee Contribution Percentage” shall mean the whole percentage of the
Participant’s Annual Benefit Salary which such Participant has elected to
contribute to the Thrift Plan as his Employee Contribution under the provisions
of such Plan.

 

1.13 “Employee” shall mean any person who is currently employed by an Employer.

 

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1.14 “Employer” shall mean the Company or any subsidiary of the Company
designated by the Board of Directors or other governing body of the Company as
being eligible to participate in the Excess Thrift Plan provided such subsidiary
shall adopt the Excess Thrift Plan by action of its Board of Directors or other
governing body.

 

1.15 “Excess Thrift Plan” shall mean the Valero GP, LLC Excess Thrift Plan, as
described herein and as hereafter amended.

 

1.16 “Participant” shall mean an eligible Employee who has become a Participant
in the Excess Thrift Plan as provided in Sections 2.2 or 3.2 herein.

 

1.17 “Plan Year” shall mean the calendar year, except that the first Plan Year
of the Excess Thrift Plan shall commence on the Effective Date of the Excess
Thrift Plan and end on the following December 31.

 

1.18 “Thrift Plan” shall mean the Valero GP, LLC Thrift Plan, as amended.

SECTION 2. PARTICIPATION - §415(c) BENEFIT PLAN.

 

2.1 Conditions of Eligibility.

 

  (a) Every Employee shall become eligible to participate in the §415(c) benefit
plan component of the Excess Thrift Plan on the later of becoming eligible to
participate in the Thrift Plan or the effective date of the Excess Thrift Plan.

 

  (b) Notwithstanding paragraph (a) above or Section 2.2 below, any Employee who
is covered under a collective bargaining agreement and whose benefits are the
subject of good faith bargaining shall not be eligible to participate in the
§415(c) benefit plan component of the Excess Thrift Plan.

 

2.2 Participation.

Each Employee actively participating in the Thrift Plan whose Annual Additions
for the Plan Year exceed the Annual Addition Limitation, shall automatically
become a Participant in the §415(c) benefit plan component of the Excess Thrift
Plan.

SECTION 3. PARTICIPATION - §401(A)(17) BENEFIT PLAN.

 

3.1 Conditions of Eligibility.

 

  (a) Every Employee whose Annual Benefit Salary exceeds the Compensation Limit
shall become eligible to participate in the §401(a)(17) benefit plan component
of the Excess Thrift Plan on the later of becoming eligible to participate in
the Thrift Plan or the effective date of the Excess Thrift Plan.

 

  (b) Notwithstanding Section 3.1(a) above, any Employee who is covered under a
collective bargaining agreement and whose benefits are the subject of good faith
bargaining shall not be eligible to participate in the §401(a)(17) benefit plan
component of the Excess Thrift Plan.

 

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3.2 Participation.

Each Employee actively participating in the Thrift Plan shall automatically
become a Participant in the §401(a)(17) benefit plan component of the Excess
Thrift Plan on the first day of the calendar month coincident with or next
following the date on which such Employee’s Annual Benefit Salary exceeds the
Compensation Limit for the Plan Year.

SECTION 4. BENEFITS - §415(c) BENEFIT PLAN COMPONENT.

Upon becoming a Participant in the §415(c) benefit plan component of the Excess
Thrift Plan pursuant to Section 2.2 above, a separate bookkeeping account shall
be established hereunder for such Participant, which shall be credited as
follows:

 

4.1 Amount of §415(c) Benefit.

In any case where a Participant’s Annual Additions exceed the Annual Addition
Limitation, the Participant’s Excess Thrift Plan §415(c) Account shall be
credited with an amount equal to the Employer Matching Contributions that would
have been made under the Thrift Plan had the Annual Addition Limitation not
applied, reduced by the amount of Employer Matching Contributions made to the
Participant’s Thrift Plan account for such Plan Year.

 

4.2 Section 415(c) Amounts Credited.

 

  (a) The amounts credited to a Participant’s Excess Thrift Plan §415(c) Account
shall reflect both a dollar-value and a number of hypothetical units of Company
Equity. The dollar-value of hypothetical units of Company Equity credited to a
Participant’s Excess Thrift Plan §415(c) Account shall be the average of the
“high” and “low” sales price of Company Equity, as reported in the New York
Stock Exchange Composite Transactions listing in the Wall Street Journal
(corrected to exclude typographical errors), on the last trading day of the
calendar month preceding the date that the amount is credited to the
Participant’s Excess Thrift Plan §415(c) Account.

 

  (b) The number of hypothetical units of Company Equity credited to a
Participant’s Excess Thrift Plan §415(c) Account for any month under Section 4.1
shall be equal to:

 

  (1) in the case of adjustments involving units of Company Equity, the actual
number of whole and fractional shares involved in the particular adjustment(s)
to the Thrift Plan; and

 

  (2) in the case of adjustments involving amounts other than Company Equity, a
number of hypothetical units of Company Equity equivalent to the dollar-value of
the amounts involved in the particular adjustment(s) to the Thrift Plan.

 

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SECTION 5. BENEFITS - §401(a)(17) BENEFIT PLAN COMPONENT

Upon becoming a Participant in the §401(a)(17) benefit plan component of the
Excess Thrift Plan pursuant to Section 3.2 above, a separate bookkeeping account
shall be established hereunder for such Participant, which shall be credited as
follows:

 

5.1 Amount of §401(a)(17) Benefit.

To the extent that a Participant’s Annual Benefit Salary exceeds the
Compensation Limit for the Plan Year, the Participant’s Excess Thrift Plan
§401(a)(17) Account shall be credited monthly with an amount equal to the
Employer Matching Contributions which such Participant would have received under
the Thrift Plan had the Compensation Limit not applied (calculated without
regard to the Annual Addition Limitation), reduced by (i) any amount credited to
the Participant’s Excess Thrift Plan §415(c) Account under Section 4.1; and
(ii) further reduced the amount of Employer Matching Contributions made to the
Participant’s Thrift Plan account for such Plan Year.

 

5.2 Section 401(a)(17) Amounts Credited.

 

  (a) The amounts credited to a Participant’s Excess Thrift Plan §401(a)(17)
Account shall reflect both a dollar-value and a number of hypothetical units of
Company Equity. The dollar-value of hypothetical units of Company Equity
credited to a Participant’s Excess Thrift Plan §401(a)(17) Account shall be the
average of the “high” and “low” sales price of Company Equity, as reported in
the New York Stock Exchange Composite Transactions listing in the Wall Street
Journal (corrected to exclude typographical errors), on the last trading day of
the calendar month preceding the date that the amount is credited to the
Participant’s Excess Thrift Plan §401(a)(17) Account.

 

  (b) The number of hypothetical units of Company Equity credited to a
Participant’s Excess Thrift Plan §401(a)(17) Account for any month under
Section 5.1 shall be equal to the number of whole and fractional shares which
would have been allocated to such Participant’s Thrift Plan Account had he been
permitted to make additional Employee Contributions to the Thrift Plan in an
amount equal to the product of the Participant’s Employee Contribution
Percentage for such month times one-twelfth (1/12) of that portion of his Annual
Benefit Salary in excess of the Compensation Limit.

SECTION 6. COMMON PROVISIONS.

In addition to the provisions of Sections 1, 7, 8 and 9 herein, which shall be
equally applicable to the §415(c) benefit plan component and the §401(a)(17)
benefit plan component of the Excess Thrift Plan, the following provisions of
this Section 6 shall apply to both benefit plan components:

 

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6.1 General Principle of Crediting Amounts Under This Plan.

It is intended that amounts shall be credited to Participant’s Accounts under
Sections 4 and 5 of this Plan to ensure that, to the extent that a Participant’s
Employer Matching Contribution under the Thrift Plan is limited in any Plan Year
by application of the Annual Addition Limitation or the Compensation Limitation,
such reduced amount of Employer Matching Contribution shall be credited
hereunder, so that the Participant receives the full Employer Matching
Contribution (by combining the Employer Matching Contributions made under the
Thrift Plan and the amounts credited to this Plan) that he would have received
had neither the Annual Addition Limitation nor the Compensation Limitation
applied for such Plan Year. The Committee may take such actions as necessary to
effect such intent.

 

6.2 Other Amounts Credited.

 

  (a) During each Plan Year, a Participant’s Excess Thrift Plan Accounts shall
be credited at the same time and with the same amount of earnings or losses that
a like investment in Company Equity would have experienced, including, but not
limited to (i) ordinary cash dividends, and (ii) cash (other than ordinary cash
dividends), shares or other securities or rights or other property constituting
or derived from any stock dividend or rights distribution, split-up, stock
split, reverse stock split, recapitalization, combination or exchange of shares,
merger, consolidation, acquisition of property or stock, spin-off or separation,
reorganization, liquidation or other similar event. All cash amounts inuring to
a Participant’s Excess Thrift Plan Account under this Section 6.2 shall be
converted not less than annually into equivalent hypothetical units of Company
Equity. The number of hypothetical units of Company Equity credited to a
Participant’s Excess Thrift Plan Account for any month under this Section 6.2
shall be determined by the average of the “high” and “low” sales price of units
of Company Equity, as reported in the New York Stock Exchange Composite
Transactions listing in the Wall Street Journal, on the last trading day of the
calendar month preceding the date that the amount is credited to the
Participant’s Excess Thrift Plan Account.

 

  (b) The crediting of any amounts under this Section 6.2 is separate from, and
in addition to, the crediting of any amounts under any other provision of the
Excess Thrift Plan.

 

6.3 Changes in Thrift Plan Contribution Percentage.

Notwithstanding any other provision of this Plan, amounts to be credited to a
Participant’s Account hereunder shall not be increased as a result of an
increase in the Participant’s Employee Contribution Percentage under the Thrift
Plan effected during a Plan Year. The Participant’s Employee Contribution
Percentage under the Thrift Plan in effect on the first day of a Plan Year shall
remain in effect for the entirety of such Plan Year for purposes of determining
amounts to be credited under the Excess Thrift Plan.

 

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6.4 Vesting.

Except as provided in Sections 6.6, 6.7, and 9.1, a Participant shall vest in
all amounts credited to his Excess Thrift Plan Account in the same manner and on
the same schedule as provided in the relevant provisions of the Thrift Plan. Any
portion of the hypothetical units credited to a Participant’s Excess Thrift Plan
Account which is not vested upon the Participant’s Separation from Service shall
be forfeited.

 

6.5 Benefits Payable Upon Separation from Service.

In the event of a Participant’s Separation from Service (other than by reason of
retirement under the Valero GP, LLC Pension Plan), the Participant shall be
entitled to the value of his vested Excess Thrift Plan Accounts as soon as
reasonably practical thereafter. For purposes of this Plan, “Separation from
Service” shall have the meaning provided under Code §409A and the regulations
and other guidance promulgated thereunder.

 

6.6 Benefits Payable Upon Retirement, Death or Disability.

In the event of a Participant’s death, Disability, or Separation from Service as
a result of his retirement from the service of the Employer under the Valero GP,
LLC Pension Plan, the Participant’s Excess Thrift Plan Account shall immediately
become fully vested and shall be distributed as soon as reasonably practical
thereafter.

 

6.7 Vesting Upon Change in Control.

In the event of a Change in Control, the Excess Thrift Plan Accounts of all
Participants shall immediately become fully vested.

 

6.8 Form of Benefit Payments.

Benefit payments under the Excess Thrift Plan shall be made in the form of a
single lump sum cash payment.

 

6.9 Delay of Certain Benefit Payments.

With respect to any Participant who is a “Specified Employee” within the meaning
of Code Section 409A and the rulings and regulations issued thereunder, any
amount that becomes payable by reason of such Participant’s Separation from
Service (including retirement) shall be delayed until a date that is six
(6) months following the date of such Participant’s Separation from Service. At
such time as payment commences, such Participant shall receive all payments that
would have been made during such six-month period in the absence of such delay.

Such delay shall not apply, however (i) with respect to any benefit that becomes
payable due to the death or Disability of the Participant; or (ii) if, at the
time of the Participant’s Separation from Service, no equity security of the
Company is publicly traded on an established securities market or otherwise.

 

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6.10 Forfeiture of Benefit.

Notwithstanding anything contained in this Excess Thrift Plan to the contrary,
if a Participant who is receiving or may be entitled to receive a benefit
hereunder is discharged for cause, or performs acts of willful malfeasance or
gross negligence in a matter of material importance to the Employer, payments
thereafter payable hereunder to such Participant or such Participant’s
Beneficiary will, at the discretion of, and as determined by the Committee, be
forfeited and the Employer will have no further obligation hereunder to such
Participant or to such Participant’s Beneficiary.

SECTION 7. EMPLOYER CONTRIBUTIONS.

 

7.1 The Excess Thrift Plan is completely separate from and not a part of the
Thrift Plan or any other plan of the Employer. The benefits payable under the
Excess Thrift Plan are unfunded and the Participants (and their Beneficiaries)
shall be general creditors of the Employer with the respect to any payment due
pursuant to the Excess Thrift Plan.

 

7.2 No contribution shall be required of any Participant or the Employer.

SECTION 8. ADMINISTRATION.

 

8.1 Committee.

The Committee shall administer the Excess Thrift Plan. The Excess Thrift Plan
shall generally be administered by the Committee pursuant to the same authority,
powers and duties of the committee which administers the Thrift Plan. The
Committee shall interpret the Excess Thrift Plan and shall determine all
questions arising in the administration, interpretation and application of the
Excess Thrift Plan. Any such determination by the Committee shall be conclusive
and binding on all persons. The Committee shall determine the amount and manner
of payment of the benefits due to or on behalf of each Participant under the
Excess Thrift Plan and the commencement and termination dates of such benefit
payment consistent with the terms hereof.

 

8.2 Claims.

A Participant, Beneficiary and any other person who believes he is entitled to
any benefit or right provided under the Excess Thrift Plan shall have the right
to file a written claim with the Committee in the same manner and governed by
the same provisions as provided in the relevant provisions of the Thrift Plan.

SECTION 9. MISCELLANEOUS.

 

9.1 Amendment and Termination.

The Employer reserves the right, in its sole discretion, to terminate, suspend
or amend the Excess Thrift Plan, at any time or from time to time, in whole or
in part for whatever reasons it may deem appropriate. However, no such
termination, suspension or amendment of the Excess Thrift Plan shall alter,
impair or void any Participant’s (or

 

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Beneficiary’s) right with respect to a benefit accrued under the Excess Thrift
Plan as of the date of such termination, suspension or amendment except such
benefits as are voluntarily forfeited by a Participant. In the event of
termination of the Excess Thrift Plan, all unvested amounts, together with the
earnings thereon, credited to a Participant’s Excess Thrift Plan Accounts shall
fully vest in him. Such Excess Thrift Plan Accounts shall continue to be
maintained pursuant to the provisions of Section 6, and any distributions to a
Participant shall continue to be subject to the provisions of Section 6 herein.
In the event of a partial termination of the Excess Thrift Plan, the provisions
of this Section 9.1 shall be applicable to the Participants affected by such
partial termination.

 

9.2 No Employment Rights.

Nothing contained in the Excess Thrift Plan shall be construed as a contract of
employment between the Employer and an Employee, or as a right of any Employee
to be continued in the employment of the Employer or as a limitation of the
right of the Employer to discharge any Employee, with or without cause.

 

9.3 Assignment.

To the maximum extent permitted by law, no benefit under the Excess Thrift Plan
shall be assignable or in any manner subject to alienation, sale, transfer,
hypothecation, claims of creditors, pledge, attachment or encumbrances of any
kind. Provided, however, that this provision shall not affect the right of the
Committee, upon the determination that a judgment, decree or order relating to
child support, alimony payments or marital property rights of the spouse, former
spouse, child or other dependent of the Participant is a “Qualified Domestic
Relations Order” within the meaning of Code §414(p), to distribute or establish
a separate subaccount of all or any portion of a Participant’s benefits under
the Excess Thrift Plan to or for the benefit of the beneficiary of the Qualified
Domestic Relations Order in a manner permitted under the Excess Thrift Plan.

 

9.4 Withholding Taxes.

The Employer shall have the right to deduct from all payments made under the
Excess Thrift Plan any federal, state or local taxes required by law to be
withheld with respect to such payments.

 

9.5 Rules and Regulations.

The Committee may adopt rules and regulations to assist in the administration of
the Excess Thrift Plan.

 

9.6 Law Applicable.

The Excess Thrift Plan is established under and will be construed in accordance
with and governed by the laws of the State of Texas.

 

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IN WITNESS WHEREOF, the Sponsor has executed this Plan on this 1st day of
August, 2006, to be effective as of the 1st day of July 2006.

 

VALERO GP, LLC By  

/s/ Steven A. Blank

  Steven A. Blank, Chairman   Benefit Plans Administrative Committee

 

Valero GP, LLC Excess Thrift Plan