exv10w01



 






Exhibit 10.01




RESTRICTED UNIT AGREEMENT



This Restricted Unit Agreement (the “Agreement”) dated October 20, 2005 is by and between Valero
Energy Corporation, a Delaware corporation (“Valero”), and William E. Greehey, Chief Executive
Officer of Valero (“Greehey”).





	 1.	 	Grant of Restricted Units. Valero hereby grants to Greehey 60,110 “Restricted Units”
representing the right to receive certain cash payments from Valero on the Vesting Dates set
forth below. The amount of cash payable to Greehey on each Vesting Date will be equal to the
product of: (a) the number of Restricted Units vesting on that date, multiplied by (b) the
fair market value on that date of one share of Valero common stock, $.01 par value (“Common
Stock”). For purposes of this Agreement, “fair market value” means the average of the “high”
and “low” reported sales price per share of Common Stock as reported on the New York Stock
Exchange as of the relevant measuring date, or if there are no sales on the NYSE on that
measuring date, then as of the next following day on which there were sales. Such cash
payments shall be made on or as soon as reasonably practical following the applicable Vesting
Date, but in any event by no later than the 15th day of the third month following the end of
the year in which the applicable Vesting Date occurs.
	 
	 2.	 	Dividend Rights. In addition to the right to receive cash on each Vesting Date as
described in Section 1 above, Greehey will be entitled to receive periodic cash payments in
relation to dividends that are paid on Valero’s common stock (the “Dividend Rights”). For
purposes of the settlement of Greehey’s Dividend Rights under this Agreement, Greehey will be
deemed to be a holder of one share of Valero Common Stock for each unvested Restricted Unit
held by Greehey. As and when dividends are declared on Valero’s Common Stock, in settlement
of the Dividend Rights granted hereunder Greehey will be entitled to receive a cash payment
equal to the product of: (a) the declared dividend per share on Valero’s Common Stock,
multiplied by (b) the number of unvested Restricted Units held by Greehey on the dividend
record date. Cash payments in settlement of any Dividend Right shall be made by the last day
of the fiscal quarter during which dividends on Valero’s Common Stock are paid, but in any
event by no later than the 15th day of the third month following the end of the year in which
the applicable dividends on Valero’s Common Stock are paid.
	 
	 3.	 	Vesting. The Restricted Units will vest in the following increments on the following dates:




12,022 on October 20, 2006;

12,022 on October 20, 2007;

12,022 on October 20, 2008;

12,022 on October 20, 2009;

12,022 on October 20, 2010; (each a “Vesting Date”).




	4.	 	Termination of Employment. If Greehey’s employment with Valero is terminated by
Greehey (whether through retirement, death, disability or otherwise), or is terminated by
Valero without “cause” (as defined per the Employment Agreement then in effect between Valero
and Greehey, or if none, then the Employment Agreement presently in effect on the date hereof,
as amended) (hereafter, as applicable, the “Employment Agreement”), then any Restricted Units
that have not vested as of the date of termination of Greehey’s employment shall not be
forfeited and shall continue to vest in accordance with the vesting schedule set forth in
Section 3 above. If, however, Greehey’s employment is terminated by Valero for “cause” (as
defined per the
Employment Agreement), then those Restricted Units that have not yet vested on the date of
termination of Greehey’s employment





Page 1




 









 









	 	 	shall be forfeited as of that date and Greehey shall not
be entitled to Dividend Rights or any other payments with respect thereto.
	 
	5.	 	Withholding. Valero is hereby authorized to withhold from any settlement of the
Restricted Units or Dividend Rights the amount of any applicable withholding taxes with
respect to such settlement, and to take any other action necessary to satisfy all obligations
for the payment of the taxes.
	 
	6.	 	Reorganization Event. In the event of any stock dividend, rights distribution,
split-up, recapitalization, share exchange, merger, consolidation, stock acquisition,
spin-off, separation, reorganization, liquidation or other similar event (any one of which
being hereafter referred to as a “Reorganization Event”), as a result of which (i) shares or
other securities of any class or rights shall be issued in respect of outstanding shares of
Common Stock, or (ii) shares of Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes or other securities, then the
Restricted Units granted under this Agreement shall be affected as follows. Upon the closing
of the Reorganization Event, each unvested Restricted Unit shall be treated as one share of
Common Stock for purposes of determining the number of unvested Restricted Units owned by
Greehey immediately following the Reorganization Event.
	 
	7.	 	Change of Control. Defined. A “Change of Control” shall be deemed to occur when:






	 	(a)	 	the stockholders of Valero approve any agreement or transaction pursuant to
which: (i) Valero will merge or consolidate with any other entity (other than a wholly
owned subsidiary of Valero) and will not be the surviving entity (or in which Valero
survives only as the subsidiary of another entity); (ii) Valero will sell all or
substantially all of its assets to any other person or entity (other than a wholly
owned subsidiary of Valero); or (iii) Valero will be liquidated or dissolved;
	 
	 	(b)	 	any “person” or “group” (as these terms are used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934) other than Valero, any subsidiary of Valero, any
employee benefit plan of Valero or its subsidiaries, or any entity holding shares of
Common Stock for or pursuant to the terms of such employee benefit plans, is or becomes
an “Acquiring Person” as defined in the Rights Agreement dated June 18, 1997 between
Valero and Computershare Investor Services, L.L.C., as successor Rights Agent to Harris
Trust and Savings Bank, as amended (or any successor Rights Agreement), or, if no
Rights Agreement is then in effect, such person or group acquires or holds such number
of shares as, under the terms and conditions of the most recent such Rights Agreement
to be in force and effect, would have caused such person or group to be an “Acquiring
Person” thereunder;
	 
	 	(c)	 	any “person” or “group” shall commence a tender offer or exchange offer for 15%
or more of the shares of Common Stock then outstanding, or for any number or amount of
shares of Common Stock which, if the tender or exchange offer were to be fully
subscribed and all shares of Common Stock for which the tender or exchange offer is
made were to be purchased or exchanged pursuant to the offer, would result in the
acquiring person or group directly or indirectly beneficially owning 50% or more of the
shares of Common Stock then outstanding;
	 
	 	(d)	 	individuals who, as of any date, constitute Valero’s Board of Directors (the
“Incumbent Board”) thereafter cease for any reason to constitute at least a majority of
the Board of
Directors; provided, however, that any individual becoming a director whose
election, or nomination for election by Valero’s stockholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such






Page 2




 









 









	 	 	 	individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person or group other than the Board of
Directors;
	 
	 	(e)	 	the occurrence of the Distribution Date (as defined in the Rights Agreement
dated June 18, 1997 between Valero and Computershare Investor Services, L.L.C., as
successor Rights Agent to Harris Trust and Savings Bank, as amended); or
	 
	 	(f)	 	any other event determined by Valero’s Board of Directors or the Compensation
Committee thereof to constitute a “Change of Control” hereunder.






	8.	 	Actions of Compensation Committee. The Compensation Committee, as constituted before
a Change of Control, is hereby authorized, and has sole discretion to take any one or more of
the following actions, whether in connection with a Change of Control or otherwise:






	 	(a)	 	adjust any unvested Restricted Units as the Compensation Committee deems
appropriate to reflect a Change of Control; or
	 
	 	(b)	 	cause any unvested Restricted Units to be assumed, or new rights substituted
therefor, by the acquiring or surviving corporation after a Change of Control. The
Compensation Committee may in its discretion include other provisions and limitations
in any amended Restricted Unit Agreement as it may deem equitable and in the best
interests of Valero.






	9.	 	Rights as Stockholder. Except for the Dividend Rights described above, neither
Greehey nor any person claiming by, through or under Greehey with respect to the Restricted
Units shall have any rights as a stockholder of Valero (including, without limitation, voting
rights).
	 
	10.	 	Assignment.






	 	(a)	 	This Agreement and Greehey’s interest in the Restricted Units and Dividend
Rights granted by this Agreement are of a personal nature, and, except as expressly
provided below, Greehey’s rights with respect thereto may not be sold, mortgaged,
pledged, assigned, transferred, conveyed or disposed of in any manner by Greehey. Any
such attempted sale, mortgage, pledge, assignment, transfer, conveyance or disposition
shall be void, and Valero shall not be bound thereby.
	 
	 	(b)	 	Cash payments upon settlement of the Restricted Units and Dividend Rights may
be made only to Greehey, during his lifetime, or to his beneficiary(ies) after his
death. After Greehey’s death, any cash settlements with respect to Restricted Units or
Dividend Rights will be made to Greehey’s beneficiary(ies) as designated under
Greehey’s Valero Energy Corporation Beneficiary Designation Form, or if there is no
such designation, to the beneficiary(ies) designated in Greehey’s last will and
testament.






	11.	 	Successors. This Agreement shall be binding upon any successors of Valero and upon
the beneficiaries, legatees, heirs, administrators, executors and legal representatives of
Greehey.





Page 3





 









 









	12.	 	No Trust Fund. This Agreement shall not create or be construed to create a trust or
separate fund of any kind or any fiduciary relationship between Valero and Greehey or any
other person with respect to the Restricted Units and Dividend Rights. To the extent that any
person acquires a right to receive payments from Valero under this Agreement, such right shall
be no greater than the right of any unsecured general creditor of Valero.
	 
	13.	 	Governing Law. The validity, construction, and effect of this Agreement shall be
determined in accordance with the laws of the State of Texas.
	 
	14.	 	Compliance with Section 409A. This Agreement and the award evidenced hereby are
intended to comply, and shall be administered consistently, in all respects with Section 409A
of the Internal Revenue Code and the regulations promulgated thereunder. If necessary in
order to ensure such compliance, this Agreement may be reformed consistent with guidance
issued by the Internal Revenue Service.





	 	 	 	 	 
	 	VALERO ENERGY CORPORATION

 	 
	 	By:  	/s/ Keith D. Booke
 	 
	 	 	Keith D. Booke 	 
	 	 	Executive Vice President and

Chief Administrative Officer 	 



	 	 	 	 	 
	 	     /s/ William E. Greehey
 	 
	 	WILLIAM E. GREEHEY 	 
	 	 	 
	 



Page 4