Exhibit 10.04
VALERO ENERGY CORPORATION
DEFERRED COMPENSATION PLAN
MARCH 1, 1998
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VALERO ENERGY CORPORATION
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
<Table>
ARTICLE I DEFINITIONS.............................................................................................1
1.1 ACCOUNT.........................................................................................1
1.2 AFFILIATE.......................................................................................1
1.3 BENEFICIARY.....................................................................................1
1.4 BOARD OF DIRECTORS..............................................................................1
1.5 BONUS...........................................................................................2
1.6 CHANGE OF CONTROL...............................................................................2
1.7 CODE............................................................................................3
1.8 COMMITTEE.......................................................................................3
1.9 COMPANY.........................................................................................3
1.10 DEFERRED COMPENSATION LEDGER....................................................................3
1.11 DIRECTOR........................................................................................3
1.12 DISABILITY......................................................................................3
1.13 DISCRETIONARY CREDIT............................................................................4
1.14 ELECTIVE DEFERRAL...............................................................................4
1.15 ELECTIVE DEFERRAL AGREEMENT.....................................................................4
1.16 EMPLOYEE........................................................................................4
1.17 EMPLOYER........................................................................................4
1.18 FEES............................................................................................4
1.19 FUND............................................................................................4
1.20 INSIDER.........................................................................................4
1.21 PARTICIPANT.....................................................................................4
1.22 PLAN............................................................................................4
1.23 PLAN YEAR.......................................................................................4
1.24 RETAINER........................................................................................4
1.25 RETIREMENT......................................................................................4
1.26 SALARY..........................................................................................4
1.27 STOCK FUND......................................................................................5
1.28 TRUST...........................................................................................5
1.29 TRUSTEE.........................................................................................5
ARTICLE II ELIGIBILITY............................................................................................5
2.1 INITIAL ELIGIBILITY.............................................................................5
2.2 FROZEN PARTICIPATION............................................................................5
2.3 RENEWED ELIGIBILITY.............................................................................5
ARTICLE III DEFERRAL..............................................................................................5
3.1 DEFERRAL ELECTION...............................................................................5
3.2 DEFERRAL AMOUNT.................................................................................6
4.1 ESTABLISHING A PARTICIPANT'S ACCOUNT............................................................6
4.2 CREDIT OF THE PARTICIPANT'S DEFERRAL............................................................6
4.3 CREDIT OF DISCRETIONARY CREDITS.................................................................6
4.4 GAUGE FOR DETERMINING BENEFITS..................................................................7
ARTICLE V VESTING.................................................................................................8
5.1 VESTING OF ELECTIVE DEFERRALS...................................................................8
5.2 VESTING OF DISCRETIONARY CREDITS................................................................8
ARTICLE VI DISTRIBUTIONS..........................................................................................8
6.1 DEATH/BENEFICIARY DESIGNATION...................................................................8
</Table>
<Table>
6.2 DISABILITY......................................................................................9
6.3 RETIREMENT......................................................................................9
6.4 TERMINATION PRIOR TO DEATH, DISABILITY OR RETIREMENT...........................................10
6.5 PAYMENT ON SPECIFIED EVENT.....................................................................10
6.6 PAYMENT UPON UNFORESEEABLE EMERGENCY...........................................................10
6.7 RESPONSIBILITY FOR DISTRIBUTIONS AND WITHHOLDING OF TAXES......................................10
6.8 FORFEITURE FOR CAUSE...........................................................................11
6.9 RIGHT TO DEMAND ACCELERATED PAYMENT............................................................11
6.10 ELECTION OF FIVE OR TEN YEAR INSTALLMENT PAYMENT...............................................11
ARTICLE VII ADMINISTRATION.......................................................................................12
7.1 COMMITTEE APPOINTMENT..........................................................................12
7.2 COMMITTEE ORGANIZATION AND VOTING..............................................................12
7.3 POWERS OF THE COMMITTEE........................................................................12
7.4 COMMITTEE DISCRETION...........................................................................13
7.5 DELEGATION.....................................................................................14
7.6 ANNUAL STATEMENTS..............................................................................14
7.7 REIMBURSEMENT OF EXPENSES......................................................................15
ARTICLE VIII AMENDMENT AND/OR TERMINATION........................................................................15
8.1 AMENDMENT OR TERMINATION OF THE PLAN...........................................................15
8.2 NO RETROACTIVE EFFECT ON ACCOUNT...............................................................15
8.3 EFFECT OF CHANGE OF CONTROL....................................................................15
8.4 EFFECT OF TERMINATION..........................................................................15
ARTICLE IX FUNDING...............................................................................................16
9.1 PAYMENTS UNDER THIS AGREEMENT ARE THE OBLIGATION OF THE COMPANY................................16
9.2 AGREEMENT MAY BE FUNDED THROUGH RABBI TRUST....................................................16
9.3 PARTICIPANTS MUST RELY ONLY ON GENERAL CREDIT OF THE COMPANY...................................16
ARTICLE X ADOPTION BY AFFILIATED EMPLOYERS.......................................................................17
10.1 PROCEDURE FOR AND STATUS AFTER ADOPTION........................................................17
10.2 GUARANTY.......................................................................................17
10.3 TERMINATION OF PARTICIPATION BY ADOPTING AFFILIATE.............................................17
ARTICLE XI CLAIMS; ARBITRATION OF DISPUTES.......................................................................18
11.1. FILING OF CLAIMS...............................................................................18
11.2 REVIEW OF DENIAL...............................................................................18
11.3 ARBITRATION OF DISPUTES........................................................................18
ARTICLE XII MISCELLANEOUS........................................................................................19
12.1 LIMITATION OF RIGHTS...........................................................................19
12.2 DISTRIBUTIONS TO INCOMPETENTS OR MINORS........................................................20
12.3 NON-ALIENATION OF BENEFITS.....................................................................20
12.4 RELIANCE UPON INFORMATION......................................................................20
12.5 SEVERABILITY...................................................................................20
12.6 NOTICE.........................................................................................20
12.7 GENDER AND NUMBER..............................................................................21
12.8 GOVERNING LAW..................................................................................21
12.9 EFFECTIVE DATE.................................................................................21
</Table>
VALERO ENERGY CORPORATION
DEFERRED COMPENSATION PLAN
WHEREAS, Valero Energy Corporation (the "Company") desires to establish
a deferred compensation plan for certain officers and directors of the Company;
and
WHEREAS, the Company wishes to also establish a grantor rabbi trust
consistent with the requirements of Revenue Procedure 92-64 coincident with this
establishment of the Plan;
NOW, THEREFORE, the Company adopts the Deferred Compensation Plan as
set forth in the following Valero Energy Corporation Deferred Compensation Plan
as follows:
ARTICLE I
DEFINITIONS
1.1 ACCOUNT. "Account" means a Participant's Account in the Deferred
Compensation Ledger maintained by the Committee which reflects the benefits a
Participant is entitled to under this Plan as a result of his deferral of Salary
and/or Bonuses (or Fees and/or Retainers in the case of a Director) under the
Plan.
1.2 AFFILIATE. "Affiliate" means any subsidiary corporation of the
Company. The term "subsidiary corporation" means any corporation in an unbroken
chain of corporations beginning with the Company if, at the time of the action
or transaction, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
1.3 BENEFICIARY. "Beneficiary" means a person or entity designated by
the Participant under the terms of this Plan to receive any amounts distributed
under the Plan upon the death of the Participant.
1.4 BOARD OF DIRECTORS. "Board of Directors" means the Board of
Directors of Valero Energy Corporation.
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1.5 BONUS. "Bonus" or "Bonuses" shall include all bonuses paid to a
Participant who is an Employee regardless of whether or not said bonus is
discretionary, mandatory or determined by formula.
1.6 CHANGE OF CONTROL. "Change of Control" means each occurrence of one
or more of the following events:
(a) the stockholders of the Company approve any agreement or
transaction pursuant to which: (i) 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); (ii) 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 (iii)
the Company will be liquidated or dissolved; or
(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 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 as of June 18, 1997 between the Company and Harris Trust and
Savings Bank, as Rights Agent, as amended and in effect from time to
time ("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
(c) any "person" or "group" shall commence a tender offer or
exchange offer for 30% or more of the shares of the common stock of the
Company then outstanding, or for any number or amount of common stock
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 common stock of the Company then outstanding; or
(d) individuals who, as of any date, constitute the Board of
Directors of the Company (the "Incumbent Board") thereafter cease for
any reason to constitute at least
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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
(e) the occurrence of the Distribution Date (as defined in the
Rights Agreement); or
(f) any other event determined by the Board of Directors or
the Committee to constitute a "Change of Control" hereunder.
1.7 CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
1.8 COMMITTEE. Subject to Article VII, "Committee" means the committee
administering this Plan, comprised of those Directors of the Company serving as
the Company's Compensation Committee.
1.9 COMPANY. "Company" means Valero Energy Corporation, sponsor of the
Plan.
1.10 DEFERRED COMPENSATION LEDGER. "Deferred Compensation Ledger"
means the ledger maintained by the Committee for each Participant which reflects
the amount of Salary and/or Bonuses (or Fee and/or Retainers) deferred by the
Participant under this Plan pursuant to his Elective Deferral Agreement and the
amount of earnings credited to his Account.
1.11 DIRECTOR. Unless specified, "Director" means an individual who is
a member of the Board of Directors of the Employer (i.e., either the Company or
an Affiliate of the Company). For all purposes herein, the "service" of an
individual as a Director shall be deemed to be equivalent to "employment" with
the Employer.
1.12 DISABILITY. "Disability" means a physical or mental condition that
meets the eligibility requirements for the receipt of long term disability
income under the Employer's then existing long term disability plan and as may
be determined or defined from time to time by the Committee in its sole
discretion, whether applied to one or more Participants. The Committee shall
have the authority to determine whether a Participant is temporarily or
permanently disabled for purposes of this Plan and when such disability
commenced and such determinations shall be binding and conclusive on all
parties, but such
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determinations shall not bind any party with respect to any other Employer
benefit or other plan or insurance policy and need not be consistent with any
determinations made under any such benefit, plan or policy.
1.13 DISCRETIONARY CREDIT. "Discretionary Credit" means a discretionary
credit to the Participant's Account under the Plan pursuant to Section 4.3.
1.14 ELECTIVE DEFERRAL. "Elective Deferral" means the amount of Salary
and/or Bonuses (or Fees and/or Retainers) the Participant elects to defer under
the terms of this Plan.
1.15 ELECTIVE DEFERRAL AGREEMENT. "Elective Deferral Agreement" means
the agreement entered into by the Participant from time to time setting forth
his Elective Deferrals under the Plan.
1.16 EMPLOYEE. "Employee" means an individual who is employed by the
Employer.
1.17 EMPLOYER. "Employer" means the Company or any Affiliate which
adopts this Plan.
1.18 FEES. "Fees" mean the meeting fees paid to a participant who is a
Director.
1.19 FUND. "Fund" means the investment fund or funds, or portfolio or
portfolios selected by the Committee and attached to and incorporated in this
Plan, which shall be used to measure the benefits to be provided by this Plan.
1.20 INSIDER. "Insider" means an officer or director of the Company
subject to Section 16(b) of the Securities Exchange Act of 1934.
1.21 PARTICIPANT. "Participant" means a member of a select group of
management or highly compensated Employees, or a Director, determined by the
Committee to be eligible to participate in the Plan in accordance with Article
II.
1.22 PLAN. "Plan" means the Valero Energy Corporation Deferred
Compensation Plan set forth in this document, as amended from time to time.
1.23 PLAN YEAR. "Plan Year" means the calendar year.
1.24 RETAINER. "Retainer" means the retainer paid to a Participant who
is a Director.
1.25 RETIREMENT. "Retirement" means the retirement of a Participant
from the Employer, or in the case of a Director, from the Board of Directors,
whether normal, early or late, in accordance with the Company's then prevailing
retirement policies.
1.26 SALARY. "Salary" means the regular rate of pay paid to the
Participant who is an Employee or Director during the Plan Year. Provided,
however, in the event a Participant has Elective Deferrals under Article III, or
elective deferrals under a plan maintained by the
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Employer pursuant to Section 401(k) of the Code, then the Participant's Salary
shall be deemed to include the amounts so deferred by the Participant.
1.27 STOCK FUND. "Stock Fund" means a Fund deemed to be invested in the
common stock of the Company.
1.28 TRUST. "Trust" means the Valero Energy Corporation Deferred
Compensation Trust, a grantor's trust established by the Company and the
Trustee, pursuant to Revenue Procedure 92-64, which is intended to constitute a
model "rabbi trust" for the purpose of establishing a funding vehicle for the
payment of benefits under the Plan.
1.29 TRUSTEE. "Trustee" means Frost National Bank, or any successor
Trustee that may be appointed by the Company from time to time.
ARTICLE II
ELIGIBILITY
2.1 INITIAL ELIGIBILITY. The individuals who shall be eligible to
participate in the Plan shall be such Employees and/or Directors as the
Committee shall determine from time to time. Such Employees or Directors shall
in all events constitute a select group of management or highly compensated
individuals within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA.
2.2 FROZEN PARTICIPATION. If a Participant in this Plan later becomes
ineligible to continue to participate in this Plan but still is employed by an
Affiliate, his Salary and/or Bonus (or Fees and/or Retainers) previously
deferred, if any, will be payable in accordance with Article VI of the Plan.
2.3 RENEWED ELIGIBILITY. If a Participant in this Plan becomes
ineligible to continue to participate but remains employed by an Affiliate and
then later again becomes eligible to participate, the Participant will renew his
participation. Thereafter, subject to Section 2.2, he will become entitled to
benefits as before, subject to any of the forfeiture events described in Section
6.8.
ARTICLE III
DEFERRAL
3.1 DEFERRAL ELECTION. A Participant may elect within 30 days after
becoming eligible to participate in the Plan, or not later than the 30 day
period preceding the beginning of any future Plan Year by properly completing an
Elective Deferral Agreement what, if any,
Page 5
percentage of his Salary and/or Bonuses (or Fees and/or Retainers), as
applicable, earned during the ensuing Plan Year is to be deferred under this
Plan. Once an election has been made under the Elective Deferral Agreement as to
the percentage of Salary and/or Bonuses (or Fees and/or Retainers), as
applicable, to be deferred, it becomes irrevocable for that Plan Year. The
election to participate in the Plan for a given Plan Year will be effective only
upon receipt by the Committee of the Participant's Elective Deferral Agreement
on such form and at such time as will be determined by the Committee from time
to time. If the Committee fails to receive a Participant's Elective Deferral
Agreement prior to the beginning of a subsequent Plan Year, that Participant
will be deemed to have elected not to defer any part of his Salary and/or
Bonuses (or Fees and/or Retainers), as applicable, for that Plan Year.
3.2 DEFERRAL AMOUNT. A Participant who elects to defer a percentage of
his Salary and/or Bonuses (or Fees and/or Retainers), as applicable, for the
ensuing year may defer a maximum of 30% of his Salary (or Fees) and/or 50% of
the cash portion of any Bonuses (or Retainers), or any lesser percentage (in
minimum 1% increments) as he or she may elect.
ARTICLE IV
ACCOUNTS
4.1 ESTABLISHING A PARTICIPANT'S ACCOUNT. The Committee will establish
an Account for each Participant in a special Deferred Compensation Ledger which
will be maintained by the Company. The Account will reflect the amount of the
Company's obligation to the Participant at any given time.
4.2 CREDIT OF THE PARTICIPANT'S DEFERRAL. The Committee will credit the
amount of a Participant's deferral to the Participant's Account in the Deferred
Compensation Ledger as it would have been paid during the Plan Year but for the
deferral which was elected.
4.3 CREDIT OF DISCRETIONARY CREDITS. The Company may from time to time
may credit to a Participant's Account a Discretionary Credit on behalf of such
Participant in such amount, if any, as shall be determined or determinable under
a formula and announced to Participants. Subject to the terms of the Plan, the
Bylaws of the Company and applicable law, the making of Discretionary Credits,
or cancellation, modification or waiver of rights with respect to, or
amendments, suspension or termination of Discretionary Credits, to:
Page 6
(a) any Director of the Company, the Chief Executive Officer
of the Company or the President of the Company, shall be upon
recommendation by the Committee and approval of the Board of Directors;
(b) any "executive officer" of the Company (i.e., one
designated by the Company's Board of Directors as an "officer" for
purposes of Section 16 of the Securities Exchange Act of 1934 and as an
"executive officer" for purposes of Regulation 14A), other than the
Chief Executive Officer or the President, shall be upon recommendation
of the Chief Executive Officer and approval of the Committee; and
(c) any other Employee, shall be upon approval of the Chief
Executive Officer.
4.4 GAUGE FOR DETERMINING BENEFITS. The Salary and/or Bonuses (or Fees
and/or Retainers), as applicable, deferred pursuant to the Elective Deferral
Agreement, if any, when allocated to the Account of the Participant, shall be
treated as if it were invested in the Fund as of the date of allocation. The
amounts entered in the Account shall then begin accruing gains and losses and
income at the rate set forth under the Fund as if those amounts were actually
invested in the Fund and shall be entered as of the last day of each calendar
month of each Plan Year, and shall continue to accrue such gains and losses and
income at the rate set forth under the Fund until such time as amounts are
distributed from the Account to the Participant pursuant to Article VI of the
Plan. If permitted by the Committee, each Participant shall have the right to
select the particular Fund or Funds for the deemed investment of his Account in
accordance with the procedures established by the Committee, which may include
the Stock Fund. No election of a conversion designation by an Insider which has
the effect of increasing the total amount allocated to the Stock Fund may be
made on a date which is less than six months following (i) the date of any prior
election of a conversion designation by such Insider which had the effect of
decreasing the total amount allocated to the Stock Fund or (ii) the date of any
election by such Insider with respect to any other plan of the Company or any
subsidiary thereof which had the effect (directly or indirectly) of making a
disposition on behalf of such Insider of the same class of equity security as
that which is the subject of the Stock Fund. No election of a conversion
designation by an Insider which has the effect of decreasing the total amount
allocated to the Stock Fund may be made on a date which is less than six months
following (i) the date of any prior election of a conversion designation by such
Insider which had the effect of increasing the total amount allocated to the
Stock Fund or (ii) the date of any
Page 7
election by such Insider with respect to any other plan of the Company or any
subsidiary thereof which had the effect (directly or indirectly) of making an
acquisition on behalf of the Insider of the same class of equity security as
that which is the subject of the Stock Fund. The restrictions contained herein
regarding investment conversions by Insiders respecting the Stock Fund are
intended to comply with, and enable Insiders to rely upon, the exemption
provided by Rule 16b-3 under the Securities Exchange Act of 1934. Any future
amendment to Rule 16b-3 or any successor rule promulgated by the Securities and
Exchange Commission affecting the investment by Insiders in the Stock Fund shall
be incorporated by reference herein and be deemed to be an amendment to the Plan
in order that Insiders shall continue to be entitled to rely upon the exemption
provided by such rule without any interruption. Notwithstanding the foregoing,
the Committee may alter the conversion restrictions applicable to an Insider, as
set forth herein, as a result of changes in Rule 16b-3 under the Securities
Exchange Act of 1934.
ARTICLE V
VESTING
5.1 VESTING OF ELECTIVE DEFERRALS. Salary and/or Bonuses (or Fees
and/or Retainers), as applicable, pursuant to the Elective Deferral Agreement
will be 100% vested at all times. The gains, losses and earnings allocated on
those deferrals will be 100% vested.
5.2 VESTING OF DISCRETIONARY CREDITS. Any Discretionary Credits made
pursuant to Section 4.3 shall be subject to such vesting schedule as determined
thereunder and announced to Participants prior to the crediting of said
Discretionary Credits to their Account.
ARTICLE VI
DISTRIBUTIONS
6.1 DEATH/BENEFICIARY DESIGNATION. (a) Upon the death of a Participant,
the Participant's Beneficiary or Beneficiaries will receive the balance then
credited to the Participant's Account in the Deferred Compensation Ledger in one
lump sum payment. The payment will be made within 90 days after the
Participant's death.
(b) Each Participant, at the time of entering into his initial Elective
Deferral Agreement, must file with the Committee a designation of one or more
Beneficiaries to whom distributions otherwise due the Participant will be made
in the event of his death prior to the complete distribution of the amount
credited to his Account in the Deferred Compensation
Page 8
Ledger. The designation will be effective upon receipt by the Committee of a
properly executed form which the Committee has approved for that purpose. The
Participant may from time to time revoke or change any designation of
Beneficiary by filing another approved Beneficiary designation form with the
Committee. If there is no valid designation of Beneficiary on file with the
Committee at the time of the Participant's death, or if all of the Beneficiaries
designated in the last Beneficiary designation have predeceased the Participant
or otherwise ceased to exist, the Beneficiary will be the Participant's spouse,
if the spouse survives the Participant, or otherwise the Participant's estate. A
Beneficiary must survive the Participant by 60 days in order to be considered to
be living on the date of the Participant's death. If any Beneficiary survives
the Participant but dies or otherwise ceases to exist before receiving all
amounts due the Beneficiary from the Participant's Account, the balance of the
amount which would have been paid to that Beneficiary will, unless the
Participant's designation provides otherwise, be distributed to the individual
deceased Beneficiary's estate or to the Participant's estate in the case of a
Beneficiary which is not an individual. Any Beneficiary designation which
designates any person or entity other than the Participant's spouse must be
consented to in writing in a form acceptable to the Committee in order to be
effective.
6.2 DISABILITY. Upon the Disability of the Participant, the Participant
shall receive in fifteen annual installments (recalculated annually for each
installment) the value of the amounts credited to his Account at the date of
Disability. Distribution shall commence as determined by the Committee, and if
no determination is made within 90 days of the date of Disability, then within
90 days after the earlier of (i) the date Participant reaches his normal
retirement age under the then prevailing retirement policies in effect at the
Company or (ii) in the case of a Participant who remains Disabled, the earlier
of (x) the date long-term disability payments (if any) made to the Participant
under a long-term disability program maintained by the Company have ceased
because of the Participant's attainment of a stated age or (y) within 90 days of
the date of determination by the Committee that no long-term disability payments
are payable. Upon the death of the Participant prior to receipt of all of the
annual installments, the remaining installments shall be paid to the
Participant's Beneficiary in one lump sum payment in accordance with Section
6.1.
6.3 RETIREMENT. Upon the Retirement of the Participant, the Participant
shall, unless otherwise elected in accordance with Section 6.10 below, receive
in fifteen annual installments (recalculated annually for each installment) the
value of the amounts credited to his Account at
Page 9
the date of his Retirement. Distribution shall commence within 90 days after the
Participant's Retirement. Upon the death of the Participant prior to receipt of
all of the annual installments, the remaining installments shall be paid to the
Participant's Beneficiary in one lump sum payment in accordance with Section
6.1.
6.4 TERMINATION PRIOR TO DEATH, DISABILITY OR RETIREMENT. Upon the
Participant's termination from the employ of the Employer or, in the case of a
Director, cessation of service as a Director, prior to Death, Disability or
Retirement, the Participant shall receive in one lump-sum the value of the
amounts credited his Account as of the last day of the calendar month which
includes such termination from employment or cessation of service as a Director.
Distribution shall be made within 90 days after the Participant's termination
from employment or cessation of services as a Director, as the case may be.
6.5 PAYMENT ON SPECIFIED EVENT. Upon election by the Participant on
forms provided by the Committee, the Participant may elect at the time of
executing his Elective Deferral Agreement for a particular Plan Year to receive
in one lump-sum that portion of his Elective Deferrals on the date or dates
specified in his Elective Deferral Agreement (provided such date is at least 5
years after the year of the Elective Deferral) or the balance of his Account, if
less. Any amounts distributed under his Elective Deferral Agreement pursuant to
this Section shall immediately reduce the Participant's Account for purposes of
any further income accrual and for distributions on or after that date.
6.6 PAYMENT UPON UNFORESEEABLE EMERGENCY. In the event of an
unforeseeable emergency that is caused by an event beyond the control of the
Participant, and that would result in severe financial hardship to the
Participant if early withdrawal or acceleration of payment were not permitted,
the Participant may, notwithstanding the preceding provisions of this Article VI
of the Plan, upon approval by the Committee, receive a distribution from his
Account or receive acceleration of payment in an amount not to exceed the lesser
of (i) the amount in the Participant's Account at the time of the unforeseeable
emergency or (ii) the amount necessary to meet the emergency. It is the intent
of the Company that this Section be interpreted in a manner consistent with
Internal Revenue Service Revenue Procedure 92-65, as it may be amended or
superseded from time to time.
6.7 RESPONSIBILITY FOR DISTRIBUTIONS AND WITHHOLDING OF TAXES. The
Committee will furnish information to the Company concerning the amount and form
of distribution to any Participant entitled to a distribution so that the
Company may make or cause the Trust to make
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the distribution required. The Committee will also calculate the deductions from
the amount of the benefit paid under the Plan for any taxes required to be
withheld by federal, state or local government and will cause them to be
withheld.
6.8 FORFEITURE FOR CAUSE. If the Committee finds, after full
consideration of the facts presented on behalf of both the Employer and the
former Participant that the Participant was discharged by the Employer for
fraud, embezzlement, theft, commission of a felony or proven dishonesty in the
course of his employment by the Employer, his Account shall be forfeited to the
extent necessary to recoup any loss to the Employer resulting from such fraud,
embezzlement, theft, felony or dishonesty, even though it may have previously
vested. The decision of the Committee as to the cause of a Participant's
discharge shall be final. Notwithstanding the foregoing, the right of set-off as
provided herein shall not affect any other rights or set-off available to the
Employer under common-law or under any other agreement.
6.9 RIGHT TO DEMAND ACCELERATED PAYMENT. The Committee, acting upon the
request of a Participant, shall permit the Participant to receive an immediate
lump sum payment of the amount credited to his Account. Payment of such
accelerated lump sum benefit at the demand of a Participant shall be reduced by
a ten percent (10%) forfeiture. Such lump sum distribution shall be paid as soon
as administratively practicable, but in any event within 90 days following
receipt of written demand by a Participant (or his Beneficiary) eligible for an
accelerated lump sum distribution. The amount of the lump sum distribution to be
made to the Participant (or his Beneficiary), as well as the ten percent (10%)
forfeiture to be applied against the amount distributable to the Participant (or
his Beneficiary), shall be based on the last valuation of the Participant's
Account preceding the Participant's (or his Beneficiary's) written demand for an
accelerated lump sum distribution. No demand for accelerated payment of an
amount allocated to the Stock Fund may be made by an Insider on a date which is
less than six months following (i) the date of any prior election to convert
such Insider's deemed investment designation which had the effect of increasing
the total amount allocated to the Stock Fund or (ii) the date of any election by
such Insider with respect to any other plan of the Company or any subsidiary
thereof which had the effect (directly or indirectly) of making an acquisition
on behalf of such Insider of the same class of equity security as that which is
the subject of the Stock Fund.
6.10 ELECTION OF FIVE OR TEN YEAR INSTALLMENT PAYMENT. A Participant
may, at least one year prior to his Retirement, elect to receive the value of
the amounts credited to his
Page 11
Account in either five or ten annual installments (recalculated annually for
each installment) in lieu of the fifteen year installment method normally
provided for under Section 6.3. Such election by the Participant shall be made
in such manner as may be directed by the Committee and must in all circumstances
be elected at least one year prior to the Participant's Retirement from the
employment of the Employer. In the absence of any such conforming election, the
Participant's Account shall be paid in the normal fifteen year installment
method set forth in Section 6.3 herein.
ARTICLE VII
ADMINISTRATION
7.1 COMMITTEE APPOINTMENT. The Committee will be comprised of two or
more non-employee Directors which shall, except as hereinafter set forth, be the
Compensation Committee of the Board of Directors of the Company as it may exist
from time to time. The Board of Directors will have the sole discretion to
remove any one or more Committee members and appoint one or more replacement or
additional Committee members from time to time.
7.2 COMMITTEE ORGANIZATION AND VOTING. The Chairman of the Compensation
Committee shall be the chairman of the Committee, and if there is no Chairman of
the Compensation Committee, then the Board of Directors will select from among
the members of the Committee a chairman who will preside at all of its meetings
and who will likewise select a secretary without regard to whether that person
is a member of the Committee. The secretary will keep all records, documents and
data pertaining to the Committee's supervision and administration of the Plan. A
majority of the members of the Committee will constitute a quorum for the
transaction of business and the vote of a majority of the members present at any
meeting will decide any question brought before the meeting. In addition, the
Committee may decide any question by vote, taken without a meeting, of a
majority of its members. A member of the Committee who is also a Participant
will not vote or act on any matter relating solely to himself.
7.3 POWERS OF THE COMMITTEE. The Committee will have the exclusive
responsibility for the general administration of the Plan according to the terms
and provisions of the Plan and will have all powers necessary to accomplish
those purposes, including but not by way of limitation the right, power and
authority:
(a) to make rules and regulations for the administration of
the Plan;
Page 12
(b) to construe all terms, provisions, conditions and
limitations of the Plan; and adopt amendments to the Plan
(c) to determine whether a Change of Control has occurred;
(d) to correct any defect, supply any omission, reconcile any
inconsistency that may appear in the Plan, make equitable adjustments
deemed necessary or advisable as the result of any unusual situation or
any ambiguity in the Plan, in the manner and to the extent it deems
expedient to carry the Plan into effect for the greatest benefit of all
parties at interest;
(e) to designate the persons eligible to become Participants;
(f) to determine all controversies relating to the
administration of the Plan, including but not limited to:
(1) differences of opinion arising between the
Company and a Participant, except when the difference of
opinion relates to the entitlement to the amount of payment of
a benefit affected by a Change of Control, in which event it
shall be decided by arbitration pursuant to Article XI; and
(2) any question it deems advisable to determine in
order to promote the uniform administration of the Plan for
the benefit of all parties at interest; and
(g) to delegate by written notice those clerical and
recordation duties of the Committee, as it deems necessary or advisable
for the proper and efficient administration of the Plan including
delegation of its powers to the officers of the Company; and
(h) to select, employ and compensate consultants, accountants,
attorneys and other agents as the Committee may deem necessary or
advisable for administering the Plan.
7.4 COMMITTEE DISCRETION. The foregoing list of powers granted to the
Committee is not exclusive and the Committee shall have such additional powers
that it may deem necessary or advisable for administering the Plan. The
Committee in exercising any power or authority granted under this Plan or in
making any determination under this Plan shall perform or refrain from
performing those acts using its sole discretion and judgment. Any decision made
by the Committee, its designees or others exercising a power designated to them
pursuant to this Plan, to act or refrain not to act or any act taken in good
faith shall be final and binding on all parties; and no such decision shall ever
be subject to de novo review. Notwithstanding the
Page 13
foregoing, the Committee's or such others' decisions, refraining to act, or
acting is to be subject to arbitration pursuant to Article XI for those
incidents occurring during the Plan Year in which a Change of Control occurs and
during the Plan Year following a Change of Control.
7.5 DELEGATION. Subject to the terms of the Plan , the Bylaws of the
Company and applicable law, the Committee may delegate to one or more officers
or managers of the Company or any Affiliate, including the Administrative
Committee of the Company, or to a committee of such officers or managers, the
authority, subject to the terms and limitations the Committee shall determine,
to administer this Plan. Subject to review by the Committee, the Chief Executive
Officer of the Company is authorized to exercise all powers of the Committee
with respect to determinations regarding Accounts of Employees who are not
"executive officers" of the Company (i.e., those not deemed "officers" or
"directors" of the Company for purposes of Section 16 of the Securities Exchange
Act of 1934). The Chief Executive Officer is also authorized to determine,
approve and cause to be placed into effect amendments to this Plan deemed
necessary or appropriate in order to comply with any applicable federal or state
statute or regulation or otherwise deemed advisable by the Chief Executive
Officer, provided however, that each such amendment or related series of
amendments so approved shall involve costs to the Company not exceeding the
expenditure approval authority of the Chief Executive Officer as established
from time to time by the Board of Directors of the Company, and provided
further, that the Chief Executive Officer shall not have the authority to
approve any such amendment if such amendment would (a) materially increase the
benefits accruing to Participants under this Plan, (b) materially modify the
requirements for eligibility for participation in this Plan, or (c) require
stockholder approval under any provision of the Restated Certificate of
Incorporation of the Company, the By-Laws of the Company, or any federal or
state statute or regulation or the rules of the New York Stock Exchange.
7.6 ANNUAL STATEMENTS. The Committee will cause each Participant to
receive an annual (or more frequent, as determined by the Committee) statement
as soon as administratively practicable after the conclusion of each Plan Year
(or other more frequent reporting period, as applicable) containing the amounts
deferred through that Plan Year (or other more frequent reporting period, as
applicable) and the gains or loses and income applicable to the deferred
amounts.
Page 14
7.7 REIMBURSEMENT OF EXPENSES. The Committee will serve without
additional compensation for their services but will be reimbursed by the Company
for all expenses properly and actually incurred in the performance of their
duties under the Plan.
ARTICLE VIII
AMENDMENT AND/OR TERMINATION
8.1 AMENDMENT OR TERMINATION OF THE PLAN. This Plan may be amended or
terminated as set forth in the Plan without approval of the Participants, at any
time by an instrument in writing.
8.2 NO RETROACTIVE EFFECT ON ACCOUNT. No amendment will affect the
rights of any Participant to the amounts then standing to his credit in his
Account in the Deferred Compensation Ledger, to change the method of calculating
the rate of earnings under the Fund already accrued on amounts deferred by him
prior to the date of the amendment. Further, no amendment will affect a
Participant's rights under any provision relating to a Change of Control after a
Change of Control has previously occurred without his consent. However, the
Committee shall retain the right at any time to change in any manner the method
of calculating the rate of earnings under the Fund on all amounts deferred by a
Participant after the date of the amendment if it has been announced to the
Participants.
8.3 EFFECT OF CHANGE OF CONTROL. In the event of a Change of Control of
the Company, this Plan shall not automatically terminate effective as of the
Change of Control. Rather, Accounts of each Participant shall (i) become fully
vested (if not already vested), and (ii) be paid out in accordance with the
provisions of Article VI of this Plan.
8.4 EFFECT OF TERMINATION. If the Plan is terminated, all amounts
deferred by Participants or credited as Discretionary Credits and credited to a
Participant's Account shall become fully vested under Article V (if not already
fully vested), and earnings under the Fund will be applied to the Account in
accordance with Section 4.4 as if the Participant were entitled to and did
retire on the date the Plan terminated. At the sole discretion of the Board of
Directors, following Plan termination, either (i) distribution will commence in
accordance with Section 6.3 as soon as conveniently practicable following Plan
termination and earnings under the Fund during the distribution period would be
calculated and credited in accordance with Section 4.4 or (ii) distribution
shall be made at such time as provided for under the Plan if the Plan were not
terminated.
Page 15
ARTICLE IX
FUNDING
9.1 PAYMENTS UNDER THIS AGREEMENT ARE THE OBLIGATION OF THE COMPANY.
The Company will pay the benefits due the Participants under this Plan; however
should it fail to do so when a benefit is due, the benefit will be paid by the
trustee of the Trust entered by and between the Company and Frost National Bank,
should such a Trust be established. In any event, if the Trust, should such a
Trust be established, fails to pay for any reason, the Company remains liable
for the payment of all benefits provided by this Plan.
9.2 AGREEMENT MAY BE FUNDED THROUGH RABBI TRUST. Except in the event of
a Change of Control, it is specifically recognized by both the Company and the
Participants that the Company may, but is not required to, contribute any amount
it finds desirable to a so-called "Rabbi Trust," established to accumulate
assets sufficient to fund the obligations of the Company under this Plan. In the
event of a Change of Control, however, the Company agrees that it shall
establish the so-called "Rabbi Trust" if none has been established or, in the
event one has been established contribute cash or other assets sufficient to
place in the Trust assets equaling or exceeding the total of all liabilities
under the Plan to all Participants and their beneficiaries as of such date. Plan
liabilities to Participants and their beneficiaries shall be determined based on
the Account balances as of a given date. Under all circumstances, the rights of
the Participants to the assets held in the Trust will be no greater than the
rights expressed in this agreement. Nothing contained in any trust agreement
which creates any funding trust or trusts will constitute a guarantee by the
Company that assets of the Company transferred to that trust or those trusts
will be sufficient to pay any benefits under this Plan or would place the
Participant in a secured position ahead of general creditors should the Company
become insolvent or bankrupt. Any trust agreement prepared to fund the Company's
obligations under this agreement must specifically set out these principles so
it is clear in that trust agreement that the Participants in this Plan are only
unsecured general creditors of the Company in relation to their benefits under
this Plan.
9.3 PARTICIPANTS MUST RELY ONLY ON GENERAL CREDIT OF THE COMPANY. It is
also specifically recognized by both the Company and the Participants that this
Plan is only a general corporate commitment and that each Participant must rely
upon the general credit of the Company for the fulfillment of its obligations
hereunder. Under all circumstances the rights of Participants to any asset held
by the Company will be no greater than the rights expressed in
Page 16
this agreement. Nothing contained in this agreement will constitute a guarantee
by the Company that the assets of the Company will be sufficient to pay any
benefits under this Plan or would place the Participant in a secured position
ahead of general creditors of the Company. Though the Company may establish and
may fund a Rabbi Trust, as indicated in Section 9.2, to accumulate assets to
fulfill its obligations, the Plan and any such trust will not create any lien,
claim, encumbrance, right, title or other interest of any kind whatsoever in any
Participant in any asset held by the Company, contributed to any such trust or
otherwise designated to be used for payment of any of its obligations created in
this agreement. No specific assets of the Company have been or will be set
aside, or will in any way be transferred to any trust or will be pledged in any
way for the performance of the Company's obligations under this Plan which would
remove such assets from being subject to the general creditors of the Company.
ARTICLE X
ADOPTION BY AFFILIATED EMPLOYERS
10.1 PROCEDURE FOR AND STATUS AFTER ADOPTION. Any Affiliate may, with
the approval of the Committee, adopt this Plan by appropriate action of its
board of directors. The terms of the Plan will apply separately to each
Affiliate adopting the Plan and its Participants in the same manner as is
expressly provided for the Company and its Participants except that the powers
of the Board of Directors and the Committee under the Plan will be exercised by
the Board of Directors of the Company alone. The Company and each Affiliate
adopting the Plan will bear the cost of providing plan benefits for its own
Participants. It is intended that the obligation of the Company and each
Affiliate with respect to its Participants will be the sole obligation of the
Employer that is employing the Participant and will not bind any other Employer.
10.2 GUARANTY. Plan provisions to the contrary notwithstanding, in the
event any Affiliate that adopts the Plan pursuant to Article X fails to make
payment of the benefits due under the Plan on behalf of its Participants,
whether directly or through the Trust, the Company shall be liable for and shall
make payment of such benefits due as a guarantor of such entity's obligations
hereunder. The guaranty obligations provided herein shall be satisfied directly
and not through the Trust.
10.3 TERMINATION OF PARTICIPATION BY ADOPTING AFFILIATE. Any Affiliate
adopting the Plan may, by appropriate action of its board of directors,
terminate its participation in the Plan. The Committee may, in its discretion,
also terminate an Affiliate's participation in the Plan at any
Page 17
time. The termination of the participation in this Plan by an Affiliate will
not, however, affect the rights of any Participant who is working or has worked
for the Affiliate as to benefits previously accrued by the Participant under the
Plan without his consent.
ARTICLE XI
CLAIMS; ARBITRATION OF DISPUTES
11.1. FILING OF CLAIMS. A Participant or other person claiming to have
been denied any benefit or right provided under this Plan shall have the right
to file a written claim with the Committee. All claims shall be submitted on a
form provided by the Committee, which shall be signed by the claimant and shall
be considered filed on the date the claim is received by the Committee. The
claim will be reviewed and a written decision will be rendered by a member of
the Committee designated by the Committee for such purpose within 90 days
following receipt of the claim.
11.2 REVIEW OF DENIAL. Within 90 days after receipt of a notice of any
denial of benefits, the claimant or his authorized representative may request,
in writing, to appear before the full Committee for a review of his or her
claim. The Committee in its discretion may elect to grant the Participant's
request to personally appear before the Committee. Any decision of the Committee
thereafter to deny a benefit or right shall be in writing and shall include the
specific reasons for the decision and references to relevant Plan provisions on
which the decision is based. The decision of the Committee shall be final,
conclusive and binding upon the Participant or other claimant and all persons
claiming by, through or under such claimant.
11.3 ARBITRATION OF DISPUTES. Subject to Sections 11.1 and 11.2 and
subject to the provisions of this Plan that provide that decisions of the
Committee, the Chief Executive Officers or other designees are final and binding
on all parties and not subject to de novo review (except as set forth in Section
7.3(f)(1), relating to the entitlement to the amount of payment of a benefit
affected by a Change of Control, and Section 7.4, relating to decisions during
the Plan Year in which a Change of Control occurs and during the Plan Year
following a Change of Control), any controversy of any nature whatsoever,
including but not limited to tort claims or contract disputes, between the
Participant and the Company, any Affiliate or Employer, Participant's heirs,
executors, administrators, legal representatives, successors, and assigns and
the Company, any Affiliates or Employers, arising out of or related to this
Plan, including to the extent such affects the rights or obligations of a party
under the Plan, an Employee's
Page 18
employment with the Company, any resignation from or termination of such
employment and/or the participation in, including the implementation,
applicability and interpretation of, this Plan, shall, upon the written request
of one party served upon the other, be submitted to and settled by arbitration
in accordance with the provisions of the Federal Arbitration Act, 9 U.S.C.
Sections 1-15, as amended. Each of the parties to any such dispute shall appoint
one person as an arbitrator to hear and determine such disputes, and if they
should be unable to agree, then the two arbitrators shall chose a third
arbitrator from a panel made up of experienced arbitrators selected pursuant to
the procedures of the American Arbitration Association (the "AAA") and, once
chosen, the third arbitrator's decision shall be final, binding and conclusive
upon the parties to this Agreement. Each party shall be responsible for the fees
and expenses of its arbitrator and the fees and expenses of the third arbitrator
shall be shared equally by the parties. The terms of the commercial arbitration
rules of AAA shall apply except to the extent they conflict with the provisions
of this paragraph. It is further agreed that any of the parties to any such
dispute may petition the United States District Court for the Western District
of Texas, San Antonio Division, for a judgment to be entered upon any award
entered through such arbitration proceedings.
ARTICLE XII
MISCELLANEOUS
12.1 LIMITATION OF RIGHTS. Nothing in this Plan will be construed:
(a) to give any employee or Director the right to be
designated a Participant in the Plan;
(b) to give a Participant any right with respect to the fee or
compensation deferred or the gains or loses and income credited in the
Deferred Compensation Ledger, except in accordance with the terms of
this Plan;
(c) to limit in any way the right of the Company to terminate
a Participant from the employment of the Employer or to preclude
removal of a Director from the Board at any time;
(d) to evidence any agreement or understanding, expressed or
implied, that the Company will retain a Participant as an employee for
any particular remuneration; or
(e) to give a Participant or any other person claiming through
him any interest or right under this Plan other than that of any
unsecured general creditor of the Company.
Page 19
12.2 DISTRIBUTIONS TO INCOMPETENTS OR MINORS. Should a Participant
become incompetent or should a Participant designate a Beneficiary who is a
minor or incompetent, the Committee is authorized to pay the funds due to the
parent of the minor or to the guardian of the minor or incompetent or directly
to the minor or to apply those funds for the benefit of the minor or incompetent
in any manner the Committee determines in its sole discretion.
12.3 NON-ALIENATION OF BENEFITS. No right or benefit provided in this
Plan will be transferable by the Participant except, upon his death, to a named
Beneficiary as provided in this Plan. No right or benefit under this Plan will
be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber,
or charge the same will be void. No right or benefit under this Plan will in any
manner be liable for or subject to any debts, contracts, liabilities or torts of
the person entitled to such benefits. If any Participant or any Beneficiary
becomes bankrupt or attempts to anticipate, alienate, sell, assign, pledge,
encumber or charge any right or benefit under this Plan, that right or benefit
will, in the discretion of the Committee, cease. In that event, the Committee
may have the Company hold or apply the right or benefit or any part of it to the
benefit of the Participant or Beneficiary, his or her spouse, children or other
dependents or any of them in any manner and in any proportion the Committee
believes to be proper in its sole and absolute discretion, but is not required
to do so.
12.4 RELIANCE UPON INFORMATION. The Committee will not be liable for
any decision or action taken in good faith in connection with the administration
of this Plan. Without limiting the generality of the foregoing, any decision or
action taken by the Committee when it relies upon information supplied it by any
officer of the Company, the Company's legal counsel, the Company's independent
accountants or other advisors in connection with the administration of this Plan
will be deemed to have been taken in good faith.
12.5 SEVERABILITY. If any term, provision, covenant or condition of the
Plan is held to be invalid, void or otherwise unenforceable, the rest of the
Plan will remain in full force and effect and will in no way be affected,
impaired or invalidated.
12.6 NOTICE. Any notice or filing required or permitted to be given to
the Committee or a Participant will be sufficient if in writing and hand
delivered or sent by U.S. mail to the principal office of the Company or to the
residential mailing address of the Participant. Notice will be deemed to be
given as of the date of hand delivery or if delivery is by mail, as of the date
shown on the postmark.
Page 20
12.7 GENDER AND NUMBER. Words used in this Plan of one gender are to be
construed as though they were also used in another gender in all cases where
they would so apply and likewise words in the singular or plural are to be
construed as though they also included the other in all cases where they would
so apply.
12.8 GOVERNING LAW. The Plan will be construed, administered and
governed in all respects by the laws of the State of Texas.
12.9 EFFECTIVE DATE. This Plan will be operative and effective as of
March 1, 1998.
(SIGNATURE PAGE FOLLOWS)
Page 21
IN WITNESS WHEREOF, the Company has executed this document on this
_____ day of July, 1998, as authorized by the Compensation Committee of the
Board of Directors of the Company on the 28th day of January, 1998.
VALERO ENERGY CORPORATION
By:
--------------------------------
Keith D. Booke
Vice President-Administration
and Human Resources
Page 22
FIRST AMENDMENT TO THE
VALERO ENERGY CORPORATION
DEFERRED COMPENSATION PLAN
THIS AGREEMENT by Valero Energy Corporation (the "Sponsor"),
WITNESSETH:
WHEREAS, the Sponsor has executed and maintains a non-qualified
deferred compensation plan entitled "Valero Energy Corporation Deferred
Compensation Plan" (the "Plan"); and
WHEREAS, the Sponsor retained the right to amend the Plan from time to
time; and
WHEREAS, the Sponsor has determined that it will amend the Plan to
allow for terminated and retired employees to make certain elections as to time
and form of payment;
NOW, THEREFORE, the Sponsor declares that the Plan is hereby amended,
effective as of January 1, 2003, as follows:
1. Section 6.3 of the Plan is hereby amended in its entirety to read as
follows:
6.3 RETIREMENT. Upon the Retirement of the Participant, the
Participant shall receive the value of the amounts credited to his
Account as of the date of his Retirement at the time and in the manner
provided for pursuant to the Participant's election described in
section 6.10 below.
2. Section 6.4 of the Plan is hereby amended in its entirety to read as
follows:
6.4 TERMINATION PRIOR TO DEATH, DISABILITY OR RETIREMENT. Upon
the Participant's termination from the employ of the Employer prior to
Death, Disability or Retirement, the Participant shall receive the
value of the amounts credited to his Account as of the last day of the
calendar month which includes his termination date at the time and in
the manner elected by the Participant in section 6.10 below.
3. Section 6.10 of the Plan is hereby amended in its entirety to read
as follows:
6.10 PARTICIPANT ELECTIONS. A Participant may elect, at least
one year prior to either (i) his termination from the employment of the
Employer or (ii) his Retirement, to receive his distribution
immediately following termination of employment or Retirement or as of
the January 1 following termination of employment or Retirement. In the
absence of such an election by the Participant, distribution shall be
made as soon as
administratively practicable after the Participant's termination of
employment or Retirement. In addition, a Participant shall also be able
to elect to receive said distribution following Retirement in a lump
sum, or in five, ten or fifteen year installments. In the absence of
such an election, a Participant at Retirement shall receive his
distribution in fifteen annual installments (recalculated annually for
each installment). Participants terminating employment from the
Employer other than as a result of Retirement, Death or Disability may
elect to receive their distribution in a lump sum or five annual
installments (recalculated annually for each installment). In the
absence of such an election, the terminating Participant shall receive
his distribution in a lump sum.
IN WITNESS WHEREOF, the Sponsor has executed this Agreement this 20th
day of December, 2002.
VALERO ENERGY CORPORATION
By: /s/ William E. Greehey
---------------------------------
Chief Executive Officer