exv10w04



 






Exhibit 10.04




	 	 	 	 	 	 	 
	Notice of Grant of Stock Option
and Option Agreement	 	Valero Energy Corporation
		 	ID: 74-1828067
	 	 	P. O. Box 696000
	 	 	San Antonio, TX 78269-6000
	 
	 	 	 	 	 	 
	[name of non-employee director]

	 	Option Number:
	 	 	00000000	 
	

	 	Plan:
	 	RMSO

	 
	 	 	 	 	 	 
	

	 	ID:
	 	 	11111111	 












Effective ______________, 2005 you have been granted a Non-Qualified Stock Option to buy _______
shares of the common stock of Valero Energy Corporation (the “Company”) at $_____ per share.




The total Option price of the shares granted is $__________.




Your Options will vest on the dates shown below.




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Shares	 	Grant Date	 	Vest Type	 	Full Vest	 	Expiration	 	 
	 	 	 	 	 





By your signature and the Company’s signature below, you and the Company agree that the Option
referenced above is granted under and governed by the terms and conditions of the Company’s
Non-Employee Director Stock Option Plan, as amended, and the Option Agreement attached hereto, all
of which are made a part of this agreement.










VALERO ENERGY CORPORATION




	 	 	 	 	 
	By:
	 	 	 	 
	

	 	

	 	

	Mike Crownover	 	Date
	Director — Human Resources	 	 
	 
	 	 	 	 
	
	 	

	Non-Employee Director	 	Date






 









 






OPTION AGREEMENT

Valero Energy Corporation Non-Employee Director Stock Option Plan




This Option Agreement (“Agreement”) is entered into between Valero Energy Corporation, a Delaware
corporation (“Valero”), and a Non-Employee Director of the Board of Directors of Valero pursuant to
the terms of the Valero Energy Corporation Non-Employee Director Stock Option Plan (as may be
amended, the “Director Plan”). As used herein, Director shall mean ____________. Capitalized
terms used in this Agreement but not otherwise defined in this Agreement have the meanings set
forth in the Director Plan.




     1. Grant of Option. Valero grants to Director the option (“Option”) to purchase up to
___ shares of Common Stock of Valero, $.01 par value per share (“Shares”), in accordance with
the terms of this Agreement and the Director Plan. The Shares, when issued to Director upon the
exercise of the Option, shall be fully paid and non-assessable.



     2. Purchase Price. The purchase price of the Shares shall be $_________per Share.



     3. Exercise of Option. The period during which the Option is in effect (“Option Period”)
shall commence on _________, 2005. The Option Period shall terminate on _________, 2012. No
portion of the Option may be exercised prior to _________, 2006. Subject to the provisions of the
Director Plan relating to suspension or termination from the Director Plan, the Option will be
available for exercise in the following increments: _________.



     If the Director desires to exercise the Option, Director must deliver written notice to Stock
Plan Administration of Valero substantially in the form of the attached Form A (“Exercise
Notice”). The Option must be exercised in accordance with one of the methods for exercise set
forth in the attached form of Exercise Notice. The date on which the Exercise Notice is received
by Valero will be the “Exercise Date.” The completed Exercise Notice must include the number of
Shares with respect to which the Option is being exercised. Payment for the Shares will be made at
Valero’s San Antonio offices.



     If any law or regulation requires Valero to take any action with respect to the Shares
specified in the Exercise Notice, then the date of delivery of the Shares against payment shall be
extended for the period necessary to take such action. In the event of any failure by Director to
pay for the number of Shares specified in the Exercise Notice on the Settlement Date, as the same
may be extended as provided above, the exercise of the Option with respect to such number of Shares
shall be treated as if it had never been made.



     4. Director Plan Incorporated by Reference. The Director Plan is incorporated herein, and by
this reference, is made a part hereof for all purposes. The Director Plan contains detailed
provisions relating to, among other things, forfeiture of this Option under certain circumstances,
adjustment of Shares in the event of certain changes in capitalization, and other matters of
importance to Director. Director warrants and agrees that he or she has received and read a copy
of the Director Plan or a Director Plan Summary relating thereto, and that all rights granted
hereunder are subject to the more detailed provisions of the Director Plan.



     5. Limitation of Rights of Director. Director shall have no rights with respect to any Shares
not expressly conferred by the Director Plan or this Agreement.



     6. No Assignment. This Agreement and the Option granted hereunder are of a personal nature
and, without prior written approval from the Compensation Committee of the Board of Directors, the
option shall not be transferable by Director except by will or under the laws of descent and
distribution, and shall be exercisable, during the Director’s lifetime, only by Director.



     7. Successors. This Agreement shall be binding upon any successors of Valero and the heirs,
successors and legal representatives of Director.



     8. Direct Registration. Employee agrees that in lieu of stock certificates, any Shares
issuable in connection with the exercise of the Options may be issued in uncertificated form
pursuant to the Direct Registration Service of Valero’s stock transfer agent.



 









 











FORM A — STOCK OPTION EXERCISE FORM




On the day you exercise your options, this exercise form must be faxed to Valero’s
Stock Option Administration department at (210) 345-2717 or (210) 444-8528 and the original(s)
mailed to P.O. Box 696000, San Antonio, TX 78269-6000, mailstation VHC/E1N. The Stock Option
Administration department must receive your original form(s) within three days after exercise date.




ATTN: Stock Option Administration (VHC-E1N), telephone (210) 345-2072 or (210) 345-2447

fax (210) 345-2717 or (210) 444-8528.




The undersigned elects to exercise an Option to purchase shares as follows:




	 	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	

	

	 	 	 	(Use Complete Legal Name)
	

	 	Address:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	 	 	







	 	 	 	 	 	 	 	 	 
	Employee Number: Telephone Number:

	 	

	 	(Where you can be reached at time of exercise)
	       Date of Grant to Which Exercise Applies:

	 	

	 	

	 	

	 	

	       Option Number to Which Exercise Applies:

	 	

	 	

	 	

	 	

	       Option Price to Which Exercise Applies:

	 	

	 	

	 	

	 	

	       Number of Shares to Which Exercise Applies:

	 	

	 	

	 	

	 	







The Settlement Date on which the shares will be tendered may not be less than three nor more
than ten business days following this Exercise Date.




Federal income tax will be withheld at 25%; if a higher amount is requested, please specify
__________ (max 35%).




On or before the Settlement Date, I will pay the Option price, applicable taxes, and any
transaction fees as follows: [Choose One]




	 	 	 	 	 
	o

	 	a)
	 	CASH PURCHASE METHOD. I will furnish a check made payable to Valero Energy Corporation
on the date of exercise. In addition to the Option price, federal income tax, social
security tax, Medicare tax and state tax, as applicable, will be payable to Valero on the
Exercise Date. I will be informed not later than the close of business on the Exercise
Date of the total settlement funds required. All option shares will be issued to me via
the Computershare Direct Registration System; or
	 
	 	 	 	 
	o

	 	b)
	 	STOCK PURCHASE METHOD. I will submit a signed Representation of Ownership statement
attesting as to shares of Valero Common Stock that I own. The number of shares of Valero
Common Stock attested to on this signed statement must have a market value equal to or
exceeding the sum of the Option price plus the amount of applicable tax withholding for
the number of Option shares being exercised. The stock will be valued at the average of
the high and low sales price per share of Valero Common Stock quoted on the New York Stock
Exchange on the exercise date. In addition to the Option price, federal income tax,
social security tax, Medicare tax and state tax, as applicable, will be deducted from the
Option shares exercised, and a net number of shares will be issued to me via the
Computershare Direct Registration System. Fractional shares will be settled in cash
within one week of the exercise date; or
	 
	 	 	 	 
	o

	 	c)
	 	RELOAD METHOD — former UDS Options only. I will submit documentation indicating that
I currently hold, which I have held for a minimum of at least six
months,                                    shares of Valero
Energy Corporation common stock. I recognize that in addition to
the option price, federal income tax (25%), social security tax, Medicare tax and state
tax, as applicable will be deducted from the Option shares exercised (fractional shares
will be settled in cash within one week of the exercise date). I will receive a new
option for the number of shares tendered for the option price. This new option vests 100%
at the end of two years and the expiration date is the same as the underlying option
(available for eligible options granted under the former 1990 Diamond Shamrock, 1992
Ultramar and 1996 Ultramar Diamond Shamrock plans); or
	 
	 	 	 	 
	o

	 	d)
	 	SAME-DAY-SALE FOR
CASH  METHOD. I am making an irrevocable election
for same day sale with this option program’s broker, electing to receive cash from the sale. Cash proceeds from the
sale of Option shares (less Option price, applicable taxes, and transaction fees) will be
remitted to me by the broker; or
	 
	 	 	 	 
	o

	 	e)
	 	BROKER SALE FOR STOCK METHOD - for active employees only. I am
making an irrevocable election to sell with this option program’s broker, electing
to receive shares of Valero Common Stock from the exercise. The broker will sell from the
Option shares a number of shares approximating the sum of the Option price and applicable
taxes. This will result in a cash balance, which will be issued to me by the broker after
processing is completed. Remaining Option shares will be issued to me via the
Computershare Direct Registration System.






	 	 	 
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