Document:

exv10w01

 

Exhibit 10.01

VALERO ENERGY CORPORATION

RESTRICTED STOCK PLAN

for

NON-EMPLOYEE DIRECTORS

Adopted April 23, 1997,

as amended and restated through March 10, 2005

 

 

RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1.
	 	Purpose and Effective Date of Plan.	 	 	2	 
	2.
	 	Certain Definitions.	 	 	2	 
	3.
	 	Shares Subject to the Plan.	 	 	3	 
	4.
	 	Eligibility.	 	 	3	 
	5.
	 	Automatic Grants to Non-Employee Directors.	 	 	3	 
	6.
	 	Administration of the Plan.	 	 	4	 
	7.
	 	Restrictions Applicable to Restricted Shares.	 	 	5	 
	8.
	 	Forfeiture, Completion of Restriction Period.	 	 	7	 
	9.
	 	Adjustment in Event of Changes in Common Stock.	 	 	7	 
	10.
	 	Non-Alienation of Benefits.	 	 	7	 
	11.
	 	Appointment of Attorney-in-Fact.	 	 	7	 
	12.
	 	Withholding Taxes.	 	 	8	 
	13.
	 	Amendment and Termination of Plan.	 	 	9	 
	14.
	 	[reserved]	 	 	9	 
	15.
	 	Government and Other Regulations.	 	 	9	 
	16.
	 	No Right to Nomination.	 	 	9	 
	17.
	 	Non-Exclusivity of Plan.	 	 	9	 
	18.
	 	Governing Law.	 	 	9	 
	19.
	 	Miscellaneous Provisions.	 	 	9	 

 

 

VALERO ENERGY CORPORATION

Restricted Stock Plan for Non-Employee Directors

	1.  	Purpose and Effective Date of Plan. The purpose of this Plan is to supplement the
compensation paid to Non-Employee Directors, to increase their proprietary interest in the
Company, to attract and retain persons of outstanding caliber to serve as directors of the
Company and to enhance their identification with the interests of the Company’s stockholders
through ownership of Common Stock. The Effective Date of this Plan is July 31, 1997. Shares
awarded under the Plan shall be in addition to, and shall not replace, any cash or other
compensation arrangement available to Non-Employee Directors.
	 
	2.  	Certain Definitions.

	 	(a)  	“Annual Meeting” shall mean the annual meeting of stockholders for election of
directors of the Company. In the event of any adjournment of any such meeting, the
date on which the inspectors appointed for such meeting declare directors to have been
elected shall be deemed the meeting date for purposes of the Plan.

	 	(b)  	“Board” shall mean the board of directors of the Company.
	 
	 	(c)  	“Common Stock” shall mean the common stock, $0.01 par value, of the Company.
	 
	 	(d)  	“Company” shall mean Valero Energy Corporation, a Delaware corporation.
	 
	 	(e)  	“Compensation Committee” shall mean the Compensation Committee of the Board.
	 
	 	(e-1)	“Effective Date” shall mean July 31, 1997.
	 
	 	(f)  	“Employee Director” shall mean a member of the Board who is an employee of the
Company or any subsidiary of the Company.
	 
	 	(g)  	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
	 
	 	(h)  	“Fair Market Value” shall mean the average of the high and low sales prices of
the Common Stock on a Grant Date (or if Common Stock was not traded on such day, the
first day following the Grant Date on which Common Stock was traded) as reported on the
New York Stock Exchange.
	 
	 	(i)  	“Grant Date” shall mean the date on which Restricted Shares are awarded to a
Non-Employee Director pursuant to Paragraph 5.
	 
	 	(j)  	“Mandatory Retirement Policy” shall mean the retirement policy set forth in
Article I, Section 6, of the Corporate Governance Guidelines of the Company, or any
successor policy.
	 
	 	(k)  	“Non-Employee Director” shall mean a member of the Board who is not an employee
of the Company or any subsidiary of the Company.
	 
	 	(l) 	“Participant” shall have the meaning given in Paragraph 5(c).
	 
	 	(m)  	“Plan” shall mean this Restricted Stock Plan for Non-Employee Directors.
	 
	 	(n)  	“Restriction Period” shall mean the period of time, as specified in Paragraph
7(c), applicable to Restricted Shares granted under the Plan.
	 
	 	(o) 	“Restricted Shares” shall mean shares of Common Stock granted to a Non-Employee
Director pursuant to Paragraph 5.
	 
	 	(p)  	“Restricted Shares Agreement” shall mean the agreement described in Paragraph
5(c).

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	 	(q)  	“Retained Distributions” shall mean distributions that are retained by the
Company pursuant to Paragraph 7(e)(ii).
	 
	 	(r)  	“Share” means a share of Common Stock.
	 
	 	(s)  	“Subsidiary of the Company” shall mean any corporation, partnership or other
entity in which the Company owns, directly or indirectly, a controlling interest.

	3.  	Shares Subject to the Plan.

	 	(a)  	Subject to the provisions of Paragraph 9 below, the maximum aggregate number of
shares of Common Stock that may be granted under the Plan shall be 100,000 Shares
(pre-split), provided, however, that any Restricted Shares granted under the Plan that
are forfeited pursuant to the terms of the Plan or otherwise surrendered shall again
become available for grant under the Plan. Shares withheld by the Company, or
delivered to the Company, to pay taxes pursuant to Paragraph 12 shall not be available
for additional grants under the Plan.
	 
	 	(b)  	The Restricted Shares may be, in whole or in part, authorized but unissued
shares of Common Stock or shares of Common Stock previously issued and outstanding and
reacquired by the Company.
	 
	 	(c)  	The Company shall not be required to issue fractional Shares, and in lieu
thereof any fractional Shares shall be rounded to the next higher number of whole
Shares.

	4.  	Eligibility. The only persons eligible to participate in the Plan shall be Non-Employee
Directors. An Employee Director who retires from employment with the Company or any
Subsidiary of the Company shall be (without further action by the Committee) eligible to
participate in the Plan and shall be entitled to receive a grant of Restricted Shares
immediately upon the commencement of his or her service as a Non-Employee Director.
	 
	5.  	Automatic Grants to Non-Employee Directors.

	 	(a)  	On the date of each Annual Meeting, each Non-Employee Director who is elected
as a Non-Employee Director at the Annual Meeting or whose term
of office otherwise continues following the date of the Annual Meeting shall thereupon
receive an automatic grant of Restricted Shares valued at $60,000 in the aggregate
based upon the Fair Market Value of a Share on such Grant Date.
	 
	 	(b)  	Each person who is first elected or appointed as a Non-Employee Director on a
date other than the date of an Annual Meeting shall automatically receive, on the date
so elected or appointed, a pro-rata grant of Restricted Shares (as compared to the
annual grant of Restricted Shares described in Paragraph 5(a) above)
valued (based upon the Fair Market Value of a Share on the Grant
Date) at an amount equal to $60,000 multiplied by a number equal to
the quotient of the whole number of months (rounding upward for fractional months) until the
next Annual Meeting divided by 12.
	 
	 	(c)  	The officers of the Company shall promptly cause the Company to enter into an
agreement with each Non-Employee Director who is granted Restricted Shares pursuant to
this Paragraph 5 (“Restricted Share Agreement”), and shall cause the Company to issue
such Restricted Shares, all without further action by the Company, the Board, the
Compensation Committee or the Special Committee. Each Non-Employee Director receiving
an automatic grant of Restricted Shares pursuant to this Paragraph 5 is referred to
herein as a “Participant.” The execution and delivery of a Restricted Shares Agreement
shall be a condition precedent to the issuance of Restricted Shares to a Participant.

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	6.  	Administration of the Plan.

	 	(a)  	Except as otherwise set forth herein, the Plan shall be administered by the
Compensation Committee, as appointed and constituted from time to time by the Board so
long as the Compensation Committee is composed solely of two or more “Non-Employee
Directors” (as defined in Rule 16b-3 under the Exchange Act). In the event the
Compensation Committee shall fail to meet the foregoing criteria, then additional or
different persons shall be appointed by the Board for purposes of administering this
Plan so that the committee administering this Plan shall be composed solely of two or
more Non-Employee Directors (as defined in Rule 16b-3).
	 
	 	(b)  	In connection with its administration of this Plan, the Compensation Committee
is empowered to:

	 	(i)  	Make rules and regulations for the administration of the Plan
that are not inconsistent with the terms and provisions of this Plan;
	 
	 	(ii)  	Construe all terms, provisions, conditions and limitations of
the Plan in good faith, and adopt amendments to the Plan;
	 
	 	(iii)  	Make equitable adjustments for any mistakes or errors in the
administration of this Plan or deemed to be necessary as the result of any
unusual situation or any ambiguity in the Plan;
	 
	 	(iv)  	Select, employ and compensate, from time to time, consultants,
accountants, attorneys and other agents and employees as the Compensation
Committee may deem necessary or advisable for the proper and efficient
administration of this Plan.

	 	(c)  	The foregoing list of express powers granted to the Compensation Committee upon
the adoption of this Plan is not necessarily intended to be either complete or
exclusive, and the Compensation Committee shall, in addition to the specific powers
granted by this Plan, have such powers not inconsistent with the Plan or Rule 16b-3,
whether or not expressly authorized herein, which it may deem necessary, desirable,
advisable, proper, convenient or appropriate for the supervision and administration of
this Plan. Except as otherwise specifically provided herein, the decisions and
judgment of the Compensation Committee on any question or claim arising hereunder shall
be final, binding and conclusive upon the Participants and all persons claiming by,
through or under a Participant.
	 
	 	(d)  	Notwithstanding the foregoing, the Compensation Committee shall have no
authority to exercise discretion with respect to the selection of any Non-Employee
Director as a Participant in the Plan, the determination of the number of Restricted
Shares that are allocated to any such Non-Employee Director or the terms or conditions
of any such allocation, and shall have no authority to amend any provision of the Plan
relating to eligibility for participation in the Plan, the amount or timing of grants
under the Plan or the imposition or removal of restrictions on the vesting of
Restricted Shares.
	 
	 	(e)  	Distributions of Shares may, as the Compensation Committee shall in its sole
discretion determine, be made from authorized but unissued Shares or from treasury or
reacquired Shares.

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	7.  	Restrictions Applicable to Restricted Shares.

	 	(a)  	All Restricted Shares granted pursuant to Paragraph 5 of the Plan shall be
subject to the risk of forfeiture during the applicable Restriction Period. The
Restriction Period for each grant of Restricted Shares shall commence on the Grant
Date.
	 
	 	(b)  	The Restriction Period for Restricted Shares granted to a Non-Employee Director
shall end and the Restricted Shares and any related Retained Distributions shall become
nonforfeitable on the earlier of any of the following events:

	 	(i)  	The date a Non-Employee Director ceases to be a Director of the
Company by reason of the Mandatory Retirement Policy;
	 
	 	(ii)  	The date a Non-Employee Director completes his or her tenure as a
Director of the Company as provided in the bylaws of the Company and declines
to stand for reelection;
	 
	 	(iii)  	The date a Non-Employee Director, having been nominated for
and having agreed to stand for reelection, is not reelected by the stockholders of the
Company to serve as a member of the Board;
	 
	 	(iv)  	The date of the death of a Non-Employee Director;
	 
	 	(v)  	The date a Non-Employee Director certifies in writing to the
Company that he or she is resigning as a member of the Board due to medical or health
reasons which render such Non-Employee Director unable to continue to serve as
a member of the Board;
	 
	 	(vi)  	Subject to the provisions of and definitions contained in
Paragraph 7(f), the occurrence of a Change of Control of the Company; or
	 
	 	(vii)  	The date specified in Paragraph 7(c).

	 	(c)  	Except as otherwise provided herein, the Restriction Period shall terminate as
follows, and the Restricted Shares (and any Retained Distributions) shall vest and
accrue (i.e., become non-forfeitable) to the Non-Employee Director in the following
increments: with respect to any grant of Restricted Shares under Paragraph 5, the
Restriction Period for one-third of such Restricted Shares shall terminate on the date
of the first Annual Meeting following the Grant Date, the Restriction Period for
another one-third of such Restricted Shares shall terminate on the date of the second
Annual Meeting following the Grant Date, and the Restriction Period for the final
one-third of such Restricted Shares shall terminate on the date of the third Annual
Meeting following the Grant Date.
	 
	 	(d)  	Restricted Shares and the shares of Common Stock issuable in connection with
the vesting of the Restricted Shares will be issued in uncertificated
form, pursuant to
the Direct Registration System (“DRS”) or similar system
for recording the issuance and transfer of uncertificated shares of
Common Stock that is administered by the Company’s stock transfer agent.
	 
	 	(e)  	Restricted Shares shall constitute issued and outstanding shares of Common
Stock for all corporate purposes. The Non-Employee Director will have the right to
vote such Restricted Shares, to receive and retain all regular cash dividends paid on
such Restricted Shares and to exercise all other rights, powers and privileges of a
holder of Common Stock with respect to such Restricted Shares, with the exception that:

	 	(i)  	the Non-Employee Director will not be entitled to delivery of a
stock certificate or a designation of “unrestricted” status
in the DRS until the
Restriction Period applicable to such Restricted Shares shall have expired and
all other vesting requirements with respect thereto shall have been fulfilled;

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	 	(ii)  	other than cash dividends and rights to purchase stock which
might be distributed to shareholders of the Company, the Company will retain
custody of all distributions (“Retained Distributions”) made or declared with
respect to Restricted Shares (and such Retained Distributions will be subject
to the same restrictions, terms and conditions as are applicable to the
Restricted Shares with respect to which they were made, paid or declared) until
such time, if ever, as the Restriction Period applicable to the Restricted
Shares with respect to which such Retained Distributions shall have been made,
paid or declared shall have expired, and such Retained Distributions shall not
bear interest or be segregated in separate accounts;
	 
	 	(iii)  	upon the breach of any restrictions, terms or conditions
provided in the Plan with respect to any Restricted Shares or Retained
Distributions, such Restricted Shares and any related Retained Distributions
shall thereupon be automatically forfeited.

	 	(f)  	A “Change of Control” as used herein, shall be deemed to occur when:

	 	(i)  	the stockholders of the Company approve any agreement or
transaction pursuant to which:

	 	(A)  	the Company will merge or consolidate with any
other person (other than a wholly owned subsidiary of the Company) and
will not be the surviving entity (or in which the Company survives only
as the subsidiary of another entity);
	 
	 	(B)  	the Company will sell all or substantially all
of its assets to any other person (other than a wholly owned subsidiary
of the Company); or
	 
	 	(C)  	the Company will be liquidated or dissolved; or

	 	(ii)  	any “person” or “group” (as these terms are used in Section
13(d) and 14(d) of the Exchange Act) other than the Company, any subsidiary of
the Company, any employee benefit plan of the Company or its subsidiaries, or
any entity holding 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 (“Rights Agreement”) between the Company and
Computershare Investor Services, L.L.C., as Rights Agent (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); or
	 
	 	(iii)  	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 which, if the tender or exchange offer
were to be fully subscribed and all shares 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; or
	 
	 	(iv)  	individuals who, as of any date, constitute the Board (the
“Incumbent Board”) thereafter cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director whose election, or nomination for election by the Company’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
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

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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; or

	 	(v)  	the occurrence of the Distribution Date (as defined in the
Rights Agreement); or
	 
	 	(vi)  	any other event determined by the Board or the Committee to
constitute a “Change of Control” hereunder.

	8.  	Forfeiture, Completion of Restriction Period.

	 	(a)  	If a Non-Employee Director ceases to be a member of the Board for any reason
other than as set forth in Paragraph 7(b), then all Restricted Shares and all Retained
Distributions with respect thereto issued to such Non-Employee Director and to which
the Restriction Period still applies shall be forfeited to the Company and the
Non-Employee Director shall not have any rights (including dividend and voting rights)
with respect to such forfeited Restricted Shares and Retained Distributions.
	 
	 	(b)  	Upon expiration of the Restriction Period with respect to a Non-Employee
Director’s Restricted Shares, and the satisfaction of any other applicable
restrictions, terms and conditions, such Restricted Shares and any Retained
Distributions with respect to such Restricted Shares shall become nonforfeitable. The
Company shall promptly thereafter direct the Company’s stock transfer agent to
redesignate such shares in the Non-Employee Director’s DRS account as “issued and
unrestricted” Shares.
	 
	 	(c)  	Notwithstanding any other provision of this Plan, if the Committee finds by a majority vote,
that the Participant, before or after termination of his capacity as a Non-Employee Director
of the Company, committed fraud, embezzlement, theft, commission of felony, or proven
dishonesty in the course of his relationship to the Company and/or a Subsidiary of the Company
which conduct damaged the Company and/or a Subsidiary of the Company, or disclosed trade
secrets of the Company or a Subsidiary of the Company, then all Restricted Shares and all
Retained Distributions with respect thereto issued to such Participant to which the
Restriction Period still applies shall be forfeited to the Company and the Participant will
have no further rights with respect thereto. The decision of the Committee will be final.

	9.  	Adjustment in Event of Changes in Common Stock. In the event of a recapitalization, stock
split, stock dividend, combination or exchange of shares, merger, consolidation, liquidation
or other similar event, the aggregate number and class of Restricted Shares and other
securities or property available for grant under the Plan shall be automatically adjusted so
that the total number of Restricted Shares or other securities or property issuable under the
Plan immediately following such event shall be the number of shares of Common Stock and other
securities or property which, had all remaining shares of Common Stock available under the
Plan been granted to a single holder immediately prior to such event, would be held or
received by such holder immediately following such event.
	 
	10.  	Non-Alienation of Benefits. No Shares, Retained Distributions, or other rights or benefits
under the Plan or any Restricted Shares Agreement shall be subject, prior to the end of any
applicable Restriction Period or other restrictive period, to anticipation, alienation, sale,
assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge (other than by
will or the laws of descent and distribution), and any such attempt to anticipate, alienate,
sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be
void. No Shares, Retained Distributions, or other rights or benefits under the Plan shall in
any manner be liable for or subject to the debts, contracts, liabilities or torts of the
person entitled to such right or benefit. If any Non-Employee Director or other person
claiming by, through or under a Non-Employee Director hereunder should attempt to anticipate,
alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge any
Shares, Retained Distributions, or any right or benefit hereunder, prior to the end of any
applicable Restriction Period or other restrictive period, then such Restricted Shares and
related Retained Distributions shall be automatically forfeited and such rights or benefits
shall cease and terminate.
	 
	11.  	Appointment of Attorney-in-Fact. Upon the grant of any Restricted Shares the Non-Employee
Director shall be deemed to have appointed the Company, acting through its Corporate Secretary, the attorney-in-fact of the Non-Employee
Director, with full power of substitution, for the purpose of carrying out the provisions of
this Plan and taking any action and executing any instruments which

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such attorney-in-fact
may deem necessary or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact shall be irrevocable and coupled with an interest. The Company as
attorney-in-fact for the Non-Employee Director may, in the name and stead of the
Non-Employee Director, make and execute all conveyances, assignments and transfers of the
Restricted Shares and Retained Distributions deposited with the Company or its stock
transfer agent pursuant to the Plan. The Non-Employee Director shall, if so requested by the
Company, execute and deliver to the Company all such instruments as may, in the judgement of
the Company, be advisable for such purpose.

	12.  	Withholding Taxes.

	 	(a)  	At the time any Restricted Shares become nonforfeitable under the Plan (or, if
at the time of receipt the Participant shall not be subject to taxation with respect to
such Shares, at such later date as such Participant becomes subject to taxation with
respect to such Shares; whichever such date is applicable being referred to herein as
the “tax date”), the Participant shall make a cash payment to the Company equal to the
amount required by applicable provisions of law to be withheld by the Company in
connection with federal income tax, FICA and all other federal, state and local taxes
in respect of such Shares (or such greater amount as the Participant shall elect to
have withheld in respect of such taxes; whichever such amount is applicable being
referred to herein as the “tax amount”), provided that subject to the prior approval of
the Committee, the Participant may elect that all or any portion of the tax amount be
collected by withholding from the number of Shares otherwise to be delivered to the
Participant that number of Shares having a Fair Market Value on the tax date equal to
all or any portion of the amount otherwise to be collected subject to any limitations
prescribed by applicable law, in all cases, only that number of whole Shares the Fair
Market Value of which does not exceed the tax amount shall be withheld or delivered and
the Participant shall make a cash payment to the Company equal to any excess amount to
be withheld or collected. In lieu of the foregoing withholding procedure, a
Participant, subject to the prior approval of the Committee, may satisfy the tax
withholding or collection requirement by delivering to the Company on the tax date
certificates for other Shares already owned by the Participant, endorsed in blank with
appropriate signature guarantee, having a Fair Market Value on the tax date equal to
the tax amount. All taxes payable with respect to income of a Participant resulting
from the grant or issuance of any Shares hereunder shall be the sole responsibility of
the Participant, not of the Company, whether or not the Company shall have withheld or
collected from the Participant any sums required to be so withheld or collected in
respect of such income, and whether or not any sums so withheld or collected shall be
sufficient to provide for any such taxes. The determination of any tax resulting from
the award or vesting of Shares or from cash or other distributions with respect to
Shares or Retained Distributions shall be the sole responsibility of the Participant.
	 
	 	(b)  	To the extent permitted under the Internal Revenue Code of 1986, as amended, a
Non-Employee Director granted Restricted Shares may elect (which, apart from any other
notice required by law, shall require that the Non-Employee Director notify the Company
of such election at the time it is made) within 30 days after the Grant Date to include
in gross income for federal income tax purposes an amount equal to the Fair Market
Value of such Shares at the Grant Date.

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	13.  	Amendment and Termination of Plan. Subject to the provisions of Paragraph 6(d), the
Compensation Committee may at any time terminate, modify or amend the Plan as it shall deem
advisable. Notwithstanding the foregoing, shareholder approval shall be obtained for any
action with respect to the Plan to the extent required by applicable state or federal rules,
regulations or laws. No termination or amendment of the Plan shall adversely affect the
rights of any Non-Employee Director under any grant previously made.
	 
	14.  	[reserved]
	 
	15.  	Government and Other Regulations. Notwithstanding any other provisions of the Plan, the
obligations of the Company with respect to Restricted Shares or Retained Distributions shall
be subject to all applicable laws, rules and regulations, and such approvals by any
governmental agencies as may be required or deemed appropriate by the Company. The Company
reserves the right to delay or restrict, in whole or in part, the issuance or delivery of
Common Stock pursuant to any grants of Restricted Shares or Retained Distributions under the
Plan until such time as any legal requirements or regulations shall have been met relating to
the issuance of such Restricted Shares or Retained Distributions.
	 
	16.  	No Right to Nomination. Nothing in the Plan or in any grant shall confer upon any Director
the right be nominated for reelection to the Board.
	 
	17.  	Non-Exclusivity of Plan. Neither the adoption of the Plan by the Compensation Committee nor
any submission of the Plan to the stockholders of the Company for approval shall be construed
as creating any limitations on the power of the Compensation Committee or the Board to adopt
such other incentive arrangements as it may deem desirable, including, without limitation, the
awarding of Common Stock otherwise than under the Plan, and such arrangements as may be either
generally acceptable or applicable in specific cases.
	 
	18.  	Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of
the State of Texas.
	 
	19.  	Miscellaneous Provisions.

	 	(a)  	Except as to automatic grants to Non-Employee Directors pursuant to Paragraph 5
hereof, no employee or other person shall have any claim or right to be granted Shares
under this Plan.
	 
	 	(b)  	The expenses of the Plan shall be born by the Company.
	 
	 	(c)  	By accepting any grant under the Plan, each Non-Employee Director and each
personal representative or beneficiary and each other person claiming by, through or
under such Non-Employee Director shall be conclusively deemed to have indicated his or
her acceptance and ratification of, and consent to, any action taken under the Plan by
the Company, the Board or the Compensation Committee.
	 
	 	(d)  	[reserved].
	 
	 	(e)  	Each grant of Restricted Shares to any person serving at the Grant Date as a
Non-Employee Director shall be in consideration of past services of the Participant.
Each grant of Restricted Shares to a person who was not serving as a Non-Employee
Director prior to the Grant Date shall be in consideration of such person’s agreement
to stand for election as or be considered for appointment as a Non-Employee Director
and to serve as such if so elected or appointed. Each such grant shall be deemed to
constitute a conclusive finding by the Board that such services or agreement, as
applicable, have a value equal to or in excess of the value of such Restricted Shares,
and constitute payment in full therefor. All authorized and unissued shares

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issued as Restricted Shares in accordance with the Plan shall be fully paid and
nonassessable shares and free from preemptive rights. No Restricted Shares shall be
issued for consideration having a value less than the par value of the Common Stock.

-10-exv10w02

 

Exhibit 10.02

VALERO ENERGY CORPORATION

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

Adopted April 23, 1997,

as amended and restated through

March 10, 2005

 

 

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

TABLE OF CONTENTS

	 	 	 	 	 
	Purpose and Effective Date
	 	 	1	 
	Administration
	 	 	1	 
	Option Shares
	 	 	2	 
	Grant of Options
	 	 	2	 
	Eligibility
	 	 	2	 
	Option Price
	 	 	3	 
	Duration of Options
	 	 	3	 
	Amount Exercisable
	 	 	3	 
	Exercise of Options.
	 	 	4	 
	Transferability of Options
	 	 	5	 
	Forfeitures
	 	 	5	 
	Requirements of Laws and Regulations
	 	 	5	 
	No Rights as Stockholder
	 	 	5	 
	No Obligation to Retain Optionee
	 	 	6	 
	Changes in the Company’s Capital Structure
	 	 	6	 
	Amendment or Termination of Plan
	 	 	7	 
	Written Agreement
	 	 	8	 

 

 

VALERO ENERGY CORPORATION

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

	1.  	Purpose and Effective Date. The Non-Employee Director Stock
Option Plan (the “Plan”) of Valero Energy Corporation, a Delaware corporation (the “Company”),
is for the benefit of members of the board of directors of the Company (“Board” or “Board of
Directors”) who, at the time of their service, are not employees of the Company or any of its
subsidiaries (“Non-Employee Directors”), but are persons who have made or are expected to make
a significant contribution to the continued growth of the Company. The purpose of the Plan is
to provide such persons with an additional incentive to continue to serve on the Board through
grants of options to purchase the Company’s common stock (“Options”). The Effective Date of
the Plan (“Effective Date”) is July 31, 1997. No Options shall be granted pursuant to the
Plan after April 23, 2007.
	 
	2.  	Administration. (a) Except as otherwise set forth herein, the Plan shall be
administered by the Compensation Committee (“Committee”) of the Board. If the Committee is
not composed solely of two or more “Non-Employee Directors” (as defined in Rule 16b-3 under
the Exchange Act) of the Company, then such additional or different persons shall be appointed
by the Board to act for purposes of administering this Plan so that the committee
administering this Plan shall be composed solely of two or more Non-Employee Directors.

	 	(b)  	In connection with its administration of this Plan, the Committee is empowered
to:

	 	(i)  	Make rules and regulations for the administration of the Plan which
are not inconsistent with the terms and provisions of this Plan;
	 
	 	(ii)  	Construe all terms, provisions, conditions and limitations of the
Plan in good faith, and adopt amendments to the Plan;
	 
	 	(iii)  	Make equitable adjustments for any mistakes or errors in the
administration of this Plan or deemed to be necessary as the result of any
unusual situation or any ambiguity in the Plan;
	 
	 	(iv)  	Select, employ and compensate, from time to time, consultants,
accountants, attorneys and other agents and employees as the Committee may deem
necessary or advisable for the proper and efficient administration of the Plan.

	 	(c)  	The foregoing list of express powers granted to the Committee upon the adoption
of this Plan is not necessarily intended to be either complete or exclusive, and the
Committee shall, in addition to the specific powers granted by this Plan, have such
powers not inconsistent with the Plan or Rule 16b-3, whether or not expressly authorized
herein, which it may deem necessary, desirable, advisable, proper, convenient or
appropriate for the supervision and administration of this Plan. Except as otherwise
specifically provided herein , the decisions and judgment of the Committee on any
question or claim arising hereunder shall be final, binding and conclusive upon the
Participants and all persons claiming by, through or under a Participant.
	 
	 	(d)  	Notwithstanding the foregoing, the Committee shall have no authority to exercise
discretion with respect to the selection of any Non-Employee Director as a Participant
in the Plan, the determination of the number of Options that may be allocated to any
such Non-Employee Director or the terms or conditions of any such allocation, and shall
have no authority to amend any provision of the Plan relating to eligibility for
participation in the Plan, the

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	 	   	amount or timing of grants under the Plan or the
imposition or removal of restrictions on the vesting of Options.

	3.  	Option Shares. The stock subject to the Options and other provisions of the
Plan shall be shares of the Company’s common stock, $0.01 par value (the “Common Stock”). The
total number of shares of Common Stock with respect to which Options may be granted under this
Plan shall not exceed in the aggregate 200,000 shares (pre-split). The class and aggregate
number of shares of Common Stock that may be subject to the Options granted under this Plan
shall be subject to adjustment under Section 16 below. The shares issued upon the exercise of
Options may be treasury shares or authorized but unissued shares. If an outstanding Option
expires or is terminated for any reason, the shares of Common Stock allocable to the
unexercised portion of that Option may again be subject to an Option under the Plan.
	 
	4.  	Grant of Options.

	 	(a)  	[reserved]
	 
	 	(b)  	Options Granted after the Effective Date of this Plan.

	 	(i)  	For so long as this Plan is in effect and shares are available for
the grant of Options hereunder, each person who shall first become a Non-Employee
Director after the Effective Date of this Plan shall be granted, on the date of
his or her election, an Option to purchase 5,000 shares of Common Stock at a per
share Option Price equal to the Fair Market Value (as defined in Section 7 below)
of a share of Common Stock on such date (such number of shares being subject to
adjustment as provided in Section 16 of this Plan).
	 
	 	(ii)  	For so long as this Plan is in effect and shares are available for
the grant of Options hereunder, at the annual meeting of the Company’s
stockholders (the “Annual Meeting”) each year beginning in the year after the
year of his or her first election as a Non-Employee Director, there shall be
granted to each person whose term as a Non-Employee Director will continue
following the date of such Annual Meeting, an Option to purchase 1,000 shares of
Common Stock at a per share Option Price equal to the Fair Market Value (as
defined in Section 7 below) of a share of Common Stock on such date (such number
of shares being subject to the adjustments provided in Section 16 of this Plan).

	5.  	[reserved].
	 
	6.  	Eligibility. The individuals who shall be eligible to participate in the Plan
shall be those individuals who are members of the Board who, at the time of a grant hereunder,
are not employees of the Company or an Affiliate (as defined in Section 12 below). An
employee-director who retires from employment with the Company or an Affiliate shall be
(without further action by the Committee) eligible to participate in the Plan and shall be
entitled to receive the Option grants described in Section 4 immediately upon commencement of
his or her service as a Non-Employee Director.

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	7.  	Option Price. The price at which a share of Common Stock subject to an Option
may be purchased pursuant to an Option granted under this Plan (the “Option Price”) shall be
its Fair Market Value on the date the Option is granted. The “Fair Market Value” of a share
of Common Stock shall be the average of the high and low sales prices of a share of Common
Stock on that date as reported on the New York Stock Exchange. If no closing price or quotes
are reported on that date or if, in the discretion of the Committee, another means of
determining the Fair Market Value of a share of stock on that date is necessary or advisable,
the Committee may provide for another means for determining the Fair Market Value.
	 
	8.  	Duration of Options. No Option shall be exercisable after the expiration
of seven years from the date the Option is granted.
	 
	9.  	Amount Exercisable.

	 	 	 	 	 
	9A.	 	The Options granted pursuant to Section 4(b)(i) shall vest and become exercisable
in one-third increments beginning on the first anniversary of the date the Options were
granted (the “Date of Grant”), and
continuing on each subsequent anniversary until the third anniversary of the Date of
Grant, whereupon the Options will be fully vested.
	 
	 	 	 	 
	9B.	 	The Options granted pursuant to Section 4(b)(ii) shall vest fully and become
exercisable on the first anniversary of their Date of Grant.
	 
	 	 	 	 
	9C.	 	Notwithstanding the preceding provisions of this Section 9, all outstanding Options granted
to a Non-Employee Director that that have not already vested shall become fully vested and
immediately exercisable on the earlier of any of the following events:

	(a)  	The date a Non-Employee Director ceases to be a director of the Company by
reason of his or her retirement in good standing from the Board by reason of age or
disability under the then-established retirement policy of the Company;
	 
	(b)  	The date a Non-Employee Director completes his or her tenure as a director of
the Company as provided in the bylaws of the Company and declines to stand for
reelection;
	 
	(c)  	The date a Non-Employee Director, having been nominated for and having agreed
to stand for reelection, is not reelected by the stockholders of the Company to serve
as a member of the Board;
	 
	(d)  	The date of the death of a Non-Employee Director;
	 
	(e)  	The date a Non-Employee Director certifies in writing to the Company that he or
she is resigning as a member of the Board due to medical or health reasons which render
such Non-Employee Director unable to continue to serve as a member of the Board;
	 
	(f)  	Subject to the provisions of and definitions contained in Paragraph 9D(b), the
occurrence of a Change of Control of the Company.

	 	 	 	 	 
	 
	 	 	 	 
	9D.

	 	(a)
	 	In the event of any Change of Control, each Option granted under this Plan
not theretofore forfeited or terminated and held as of the date of a Change of Control
shall upon occurrence of the Change of Control immediately become vested or exercisable
with respect to all of the shares granted thereunder and will remain exercisable for the
remainder of the original term of the Option.
	 
	 	 	 	 
	

	 	(b)
	 	A “Change of Control” shall be deemed to occur when:

	 	(i)  	the stockholders of the Company approve any agreement
or transaction pursuant to which:

	 	(A)  	the Company will merge or consolidate
with any other entity (other than a wholly owned subsidiary of the
Company) and will not be the surviving entity (or in which the
Company survives only as the subsidiary of another entity);
	 
	 	(B)  	the Company will sell all or
substantially all of its assets to any other entity (other than a
wholly owned subsidiary of the Company); or
	 
	 	(C)  	the Company will be liquidated or
dissolved; or

	 	(ii)  	any “person” or “group” (as these terms are used in
Section 13(d) and 14(d) of the Exchange Act) other than the Company, any
subsidiary of the Company, any employee benefit plan of the Company or its
subsidiaries, or

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	 	   	any entity holding 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 (“Rights
Agreement”) between the Company and Computershare Investor
Services, L.L.C., as Rights Agent (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); or
	 
	 	(iii)  	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 which, if the tender or
exchange offer were to be fully subscribed and all shares 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; or
	 
	 	(iv)  	individuals who, as of any date, constitute the Board
(the “Incumbent Board”) thereafter cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director whose election, or nomination for election by the
Company’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 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; or
	 
	 	(v)  	the occurrence of the Distribution Date (as defined
in the Rights Agreement); or
	 
	 	(vi)  	any other event determined by the Board or the
Committee to constitute a “Change of Control” hereunder.

	10.  	Exercise of Options.

	 	(a)  	Unless otherwise prescribed by the Committee, Options may be exercised only by
written notice of exercise (the “Exercise Notice”), in the form prescribed by the
Committee, delivered to the Company to the Stock Option Plan administrator, and signed
by the Participant or other person acting on behalf of the Participant. The date on
which the Exercise Notice is delivered to the Company shall be the “Notice Date.” The
Exercise Notice shall specify a date (the “Settlement Date”), not less than five
business days nor more than ten business days following the Notice Date, upon which the
shares or other rights shall be issued or transferred to the Participant (or other
person entitled to exercise the Option) and the Option’s exercise price shall be paid to
the Company.
	 
	 	(b)  	Unless otherwise prescribed by the Committee, on the Settlement Date, the person
exercising an Option shall tender to the Company full payment for the shares or other
rights with respect to which the Award is exercised, together with an additional amount,
in cash,

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	 	   	certified check, cashier’s check or bank draft approved by the Company, equal
to the amount of any taxes required to be collected or withheld by the Company in
connection with the exercise of the Option (the “Tax Payment”).
	 
	 	(c)  	Subject to any rules and limitations as the Committee may adopt, a person
exercising an Option may make the Tax Payment in whole or in part by electing, at or
before this time of exercise of the Option, either (i) to have the Company withhold from
the number of shares otherwise deliverable a number of shares whose value equals the Tax
Payment, or (ii) to deliver certificates for other shares owned by the person exercising
the Option, endorsed in blank with appropriate signature guarantee, having a value equal
to the amount otherwise to be collected or withheld. If the Committee shall fail to
disapprove the election prior to the Settlement Date, the election will be deemed
approved .
	 
	 	(d)  	Subject to any rules and limitations as the Committee may adopt or as may
be set forth in any written stock option agreement signed by the Company, a person
exercising an Option for the receipt of shares may pay for the shares with other shares
of Company Common Stock legally and beneficially owned by that person at the time of the
exercise of the Options.
	 
	 	(e)  	Any calculation with respect to a Participant’s income, required tax
withholding or other matters required to be made by the Company upon the exercise of an
Option shall be made using the Fair Market Value of the shares of Common Stock on the
Notice Date, whether or not the Exercise Notice is delivered to the Company before or
after the close of trading on that date, unless otherwise specified by the Committee.
Notwithstanding the foregoing, for Option exercises using the Company’s “same-day-sale
for cash method” or “broker sale for stock method,” a Participant’s taxable gain and
related tax withholding on the exercise will be calculated using the actual market price
at which Shares were sold in the transaction .

	11.  	Transferability of Options. Without prior written approval from
the Committee, Options shall not be transferable by the optionee except by will or under the
laws of descent and distribution, and shall be exercisable, during the optionee’s lifetime,
only by the optionee.
	 
	12.  	Forfeitures. Notwithstanding any other provision of this Plan, if the Committee
finds by a majority vote, that the optionee, before or after termination of his capacity as a
Non-Employee Director of the Company or any subsidiary corporation, limited partnership or
other entity controlling, or controlled by, or under common control with the Company (an
“Affiliate”), committed fraud, embezzlement, theft, commission of felony, or proven dishonesty
in the course of his relationship to the Company and/or its Affiliates which conduct damaged
the Company or its Affiliates, or disclosed trade secrets of the Company or its Affiliates,
then any outstanding Options which have not been exercised by optionee shall be forfeited.
The decision of the Committee will be final.
	 
	13.  	Requirements of Laws and Regulations. The Company shall
not be required to sell or issue any shares under any Option if issuing the shares shall
constitute a violation by the optionee or the Company of any provisions of any law or
regulation of any governmental authority..
	 
	14.  	No Rights as Stockholder. No optionee shall have rights as a
stockholder with respect to shares covered by his or her Option until the date shares of
Common Stock are issued as a result of the Option’s exercise. Except as provided in Section
16, no adjustment for dividends, or other matters shall be made if the record date is prior to
the date the shares of Common Stock are issued.

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	15.  	No Obligation to Retain Optionee. The granting of any Option
shall not impose upon the Company or any of its subsidiaries any obligation to retain or
continue to retain any optionee in his or her capacity as a Non-Employee Director. The right
of the Company, the directors or the stockholders of the Company or of any subsidiary of the
Company to terminate any optionee shall not be diminished or affected by reason of the fact
that one or more Options have been or will be granted to such Non-Employee Director.
	 
	16.  	Changes in the Company’s Capital Structure.

	 	(a)  	The existence of outstanding Options shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all adjustments,
recapitalization, reorganization or other changes in the Company’s capital structure or
its business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common Stock
or the rights of the Common Stock, or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
	 
	 	(b)  	If all or any portion of an Option is exercised subsequent to any stock dividend,
stock split, rights distribution, split-up, recapitalization, exchange of shares,
merger, spin-off, reorganization or liquidation (“Reorganization Event”), as a result of
which (a) securities of any class or rights shall be issued in respect of outstanding
shares of Common Stock or (b) shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class of other securities, then the
person so exercising such Option shall receive, for the aggregate price payable upon the
exercise of such Option,

	 	(i)  	the aggregate number and class of shares, rights or
other securities for which a recognized market exists, and
	 
	 	(ii)  	a cash amount equal to the fair market value on such
date, as reasonably determined by the Committee, of any other property
(other than regular cash dividend payments) and of any shares, rights or
other securities for which no recognized market exists,

which, if shares of Common Stock (as authorized at the date of the granting of such
Option) had been purchased at the date of granting of the Option for the same
aggregate price (on the basis of the price per share provided in the Option) and had
not been disposed of, such person or persons would be holding at the time of such
exercise as a result of such purchase and any such Reorganization Event;

provided, however, that no fractional share of Common Stock, fractional right or other
fractional security shall be issued upon any such exercise, and the aggregate price
paid shall be appropriately reduced to reflect any fractional share of Common Stock,
fractional right or other fractional security not issued; and provided further,
however, that if the exercise of any Option subsequent to any Reorganization Event
would, pursuant to this Section 16, require the delivery of shares, rights or other
securities which the Company is not then authorized to issue or which in the sole
judgment of the Committee cannot be issued without undue effort or expense, the person
exercising such Option shall receive, in lieu of such shares, rights or other
securities, a cash payment equal to the fair market value on the Exercise Date, as
reasonably determined by the Committee, of such shares, rights or other securities.

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For purposes of applying the provisions of this Plan, the Preference Share Purchase
Rights distributed to stockholders of record of the Company pursuant to the Rights
Agreement, or any successor rights, shall be deemed not to have been distributed until
the Distribution Date (as defined in the Rights Agreement or any successor agreement).

	 	(c)  	In the event of any change in the number of shares of Common Stock outstanding
resulting from a Reorganization Event, the aggregate number and class of shares of
Common Stock remaining available to be optioned under this Plan shall be that number and
class which a person, to whom an Option had been granted for all of the available shares
of Common Stock under this Plan on the date preceding such change as provided in Section
3 would be entitled to receive upon exercise of such Option following such change. Upon
the occurrence of any Reorganization Event, the Committee shall be entitled (but shall
not be required) to determine that new Option Agreements (or amendments to the existing
Option Agreements) shall be entered into with Participants reflecting such stock
dividend or other event.
	 
	 	(d)  	Except as expressly provided before in this Plan, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of any
class, for cash or property, or for labor or services either upon direct sale or upon
the exercise of rights or warrants to subscribe for shares, or upon conversion of shares
or obligations of the Company convertible into shares or other securities, shall not
affect, and no adjustment by reason of it shall be made with respect to, the number or
price of shares of Common Stock then subject to outstanding Options.

	17.  	Amendment or Termination of Plan. The Board of Directors may
modify, revise or terminate this Plan at any time. However, without the further approval of
the holders of at least a majority of the outstanding shares of voting stock, or if the
provisions of the corporate charter, bylaws or applicable state law prescribe a greater degree
of stockholder approval for this action, without the degree of stockholder approval thus
required, the Board of Directors may not

	 	(a)  	change the aggregate number of shares which may be issued under
Options pursuant to the provisions of this Plan;
	 
	 	(b)  	reduce the Option Price permitted for options;
	 
	 	(c)  	change the class of persons eligible to receive options;
	 
	 	(d)  	extend the term during which an Option may be exercised or the
termination date of the Plan; or
	 
	 	(e)  	materially increase any other benefits accruing to the Non-Employee
Directors under the Plan or materially modify the requirements as to eligibility
for participation in the Plan

unless the Board of Directors shall have obtained an opinion of legal counsel to the effect
that stockholder approval of the amendment is not required by law or the applicable rules and
regulations of, or any agreement with, the New York Stock Exchange. In addition, the terms
of the Plan relating to the number of shares that may be subject to an Option, the times at
which Options are to be granted, and the means by which the Option Price for the Options
granted is to be determined shall not be amended more than once every six months, other than
to comport with changes in the Internal Revenue Code of 1986, the Employee Retirement Income
Security Act or the rules under either of those laws. All Options granted under this Plan
shall be subject to the terms and provisions of this Plan, and any amendment, modification or
revision of this Plan shall be deemed to amend, modify or revise all Options outstanding
under this Plan at the time of the amendment, modification or revision, except with respect
to the date of expiration, the vesting schedule, or the exercise price

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of the outstanding Option(s), which shall remain subject to the terms and conditions of the stock option
agreement between the Non-Employee Director and the Company.

	18.  	Written Agreement. Each Option granted under this Plan shall be embodied in
a written option agreement, which shall be subject to the terms and conditions prescribed
above, and shall be signed by the optionee and by the appropriate officer of the Company for
and in the name and on behalf of the Company. Each option agreement shall contain any other
provisions that the Committee in its discretion shall deem advisable so long as they do not
conflict with the terms of this Plan.

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