VALERO ENERGY CORPORATION 2001 EXECUTIVE STOCK INCENTIVE PLAN

 

TABLE OF CONTENTS

 

SECTION 1. Purpose.
SECTION 2. Definitions.
SECTION 3. Administration.
SECTION 4. Shares and Other Property Available For Awards.
Shares Available
Sources of Shares Deliverable Under Awards
Adjustments
SECTION 5. Eligibility.
SECTION 6. Awards.
Options
Exercise Price
Incentive Stock Options
Stock Appreciation Rights
Grant Price
Other Terms and Conditions
Restricted Stock
Dividends
Registration
Forfeiture.
Performance Awards
Payment of Performance Awards
Stock Compensation
Other Stock-Based Awards
Exercise of Option or SAR Awards
Notice
Payment
Tax Payment Election
Payment with Stock
Valuation
Rights as Stockholder
General
Grants
Forms of Payment by Company
Limits on Transfer
Term of Awards
Share Certificates
Delivery of Shares or Other Securities and Payment of Consideration
Termination of Employment
Award Agreements
Deferral of Receipt

 

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SECTION 7. Amendment and Termination.
Amendments to the Plan
Amendments to Awards
Unusual or Nonrecurring Events
SECTION 8. Change Of Control.
Effect
Defined
Actions of Committee
SECTION 9. General Provisions.
No Rights to Awards
Delegation
Withholding
No Limit on Other Compensation Arrangements
Governing Law
Severability
NYSE Listing and Other Laws and Regulations
No Trust or Fund Created
No Fractional Shares
Headings
Construction
SECTION 10. Effective Date of the Plan.
SECTION 11. Term of the Plan.

 

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2001 EXECUTIVE STOCK INCENTIVE PLAN

 

SECTION 1.  Purpose.

 

The purposes of this 2001 Executive Stock Incentive Plan (the “Plan”) are to promote the interests of the Company and its stockholders by (i) attracting and retaining executive personnel and other key employees of the Company and its affiliates; (ii) motivating these employees by using performance-related incentives to achieve longer range performance goals; and (iii) enabling these employees to participate in the long-term growth and financial success of the Company.

 

SECTION 2.  Definitions.

 

As used in the Plan, the following terms shall have the meanings set forth below:

 

(a)       “Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.

 

(b)       “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Performance Award, Stock Compensation Award or Other Stock-Based Award.

 

(c)       “Award Agreement” shall mean any written agreement, contract, or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

 

(d)       “Board” shall mean the Board of Directors of the Company.

 

(e)       “Cause” shall mean the (i) conviction of the Participant by a state or federal court of a felony involving moral turpitude, (ii) conviction of the Participant by a state or federal court of embezzlement or misappropriation of funds of the Company, (iii) negligence or misconduct of the Participant which causes material loss, damage or injury to the Company, any of its Affiliates or their respective employees, or (iv) Participant’s failure to satisfactorily perform the material stated duties of Participant’s position with the Company or any of its Affiliates.

 

(f)        “Change of Control” is defined in Section 8(b) of the Plan.

 

(g)       “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

(h)       “Committee” or “Compensation Committee” shall mean the Compensation Committee of the Board as further described in Section 3 of the Plan.

 

(i)        “Company” shall mean Valero Energy Corporation, a Delaware corporation, formerly known as “Valero Refining and Marketing Company.”

 

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(j)        “Employee” shall mean any employee of the Company or of any Affiliate.

 

(k)       “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(l)        “Exercisable Award” is defined in Section 6(h)(vii)(A).

 

(m)      “Exercise Notice” is defined in Section 6(g)(i) of the Plan.

 

(n)       “Fair Market Value” shall mean the average of the “high” and “low” reported sales price per Share (as reported in the NYSE - Composite Transactions listing) as of the relevant measuring date, or if there are no sales on the NYSE on that measuring date, then as of the next following day on which there were sales.

 

(o)       “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

 

(p)       “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.

 

(q)       “Notice Date” is defined in Section 6(g)(i) of the Plan.

 

(r)        “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

 

(s)       “Other Stock-Based Award” shall mean any right granted under Section 6(f) of the Plan.

 

(t)        “Participant” shall mean any Employee granted an Award under the Plan.

 

(u)       “Performance Award” shall mean any right granted under Section 6(d) of the Plan.

 

(v)       “Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.

 

(w)      “Restricted Stock” shall mean any Share, prior to the lapse of restrictions thereon, granted under Section 6(c) of the Plan.

 

(x)        “Rights Agreement” shall mean the Rights Agreement, dated as of June 18, 1997, between the Company and Computershare Investor Services, L.L.C., as Rights Agent (successor Rights Agent to Harris Trust and Savings Bank), as amended.

 

(y)       “Rule 16b-3” shall mean Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time.

 

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(z)        “SAR” or “stock appreciation right”is further described in Section 6(b) of the Plan and shall mean the right, subject to the provisions of this Plan, to receive a payment in cash equal to the difference between the specified exercise price of the SAR and the Fair Market Value of one Share.

 

(aa)     “SEC” shall mean the Securities and Exchange Commission.

 

(bb)     “Settlement Date” is defined in Section 6(g)(i) of the Plan.

 

(cc)     “Share” or “Shares” shall mean the common stock of the Company, $0.01 par value, and other securities or property that may become the subject of Awards or become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan.

 

(dd)     “Stock Compensation” shall mean any right granted under Section 6(e) of the Plan.

 

(ee)     “Tax Payment” is defined in Section 6(g)(ii) of the Plan.

 

SECTION 3.  Administration.

 

The Plan shall be administered by a committee composed solely of two or more “Non-Employee Directors” (as defined in Rule 16b-3) of the Company who are also “Outside Directors” (as defined in Section 162(m) of the Code) of the Company, which Committee shall be, except as hereinafter set forth, the Compensation Committee. In the event that the membership of the Compensation Committee shall fail to meet the foregoing criteria, then additional or different members of the Board of Directors shall be appointed by the Board to act for purposes of administering this Plan so that the committee administering this Plan shall consist solely of two or more “Non-Employee Directors.”  Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have authority to:

 

(a)               designate Participants;

(b)               determine the type or types of Awards to be granted to an eligible Employee;