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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
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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
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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
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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,
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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:
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(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 a
