Exhibit 10.01

CHANGE OF CONTROL

SEVERANCE AGREEMENT

CHANGE OF CONTROL SEVERANCE AGREEMENT, dated as of October 31, 2018 (this
“Agreement”), by and between Valero Energy Corporation, a Delaware corporation
(the “Company”), and Jason W. Fraser (the “Executive”).

WHEREAS, the Board of Directors of the Company (the “Board”), has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined herein). The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the current Company in the event of
any threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control that are
generally competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

Section 1.    Certain Definitions and References.

(a)    “Effective Date” means the first date during the Change of Control Period
(as defined herein) on which a Change of Control occurs. Notwithstanding
anything in this Agreement to the contrary, if a Change of Control occurs and if
the Executive’s employment with the Company is terminated within six months
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (1) was at the
request of a third party that has taken steps reasonably calculated to effect a
Change of Control or (2) otherwise arose in connection with or anticipation of a
Change of Control (a “Pre-Change of Control Termination”), then “Effective Date”
means the date immediately prior to the date of such termination of employment.

(b)    “Change of Control Period” means the period commencing on the date hereof
and ending on the third anniversary of the date hereof; provided, however, that,
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof, the
“Renewal Date”), unless previously terminated, the Change of Control Period
shall be automatically extended so as to terminate three years from such Renewal
Date, unless, at least 60 days prior to the Renewal Date, the Company shall give
notice to the Executive that the Change of Control Period shall not be so
extended.

(c)    “Affiliated Company” means any company controlled by, controlling or
under common control with the Company.

(d)    “Change of Control” means:

(1)    The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either
(A) the then-outstanding shares

--------------------------------------------------------------------------------

of common stock of the Company (the “Outstanding Company Common Stock”) or
(B) the combined voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that, for purposes
of this Section 1(d)(1), the following acquisitions of Outstanding Company
Common Stock or of Outstanding Company Voting Securities shall not constitute a
Change of Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any Affiliated
Company or (iv) any acquisition by any corporation pursuant to a transaction
that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C);

(2)    Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof 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 other than the Board;

(3)    Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company (each, a “Business Combination”), in each case unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities that were the beneficial owners of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that, as a result of such transaction, owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination;
or

(4)    Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

(e)    “Accounting Firm” is defined in Section 8(b).

 

Page 2

--------------------------------------------------------------------------------

(f)    “Accrued Obligations” is defined in Section 5(a)(1)(A).

(g)    “Annual Base Salary” is defined in Section 3(b)(1).

(h)    “Annual Bonus” is defined in Section 3(b)(2).

(i)    “Bonus Target Amount” is defined in Section 3(b)(2).

(j)    “Cause” is defined in Section 4(b).

(k)    “Company” is defined in the Preamble and in Section 10(c).

(l)    “Date of Termination” is defined in Section 4(e).

(m)    “Disability” is defined in Section 4(a).

(n)    “Employment Period” is defined in Section 2.

(o)    “Good Reason” is defined in Section 4(c).

(p)    “Notice of Termination” is defined in Section 4(d).

(q)    “Other Benefits” is defined in Section 5(a)(4).

(r)    “Performance Awards” is defined in Section 3(b)(9).

(s)    “Pre-Change of Control Termination” is defined in Section 1(a).

(t)    “Trigger Date” is defined in Section 3(b)(9).

Section 2.    Employment Period. The Company hereby agrees to continue the
Executive in its employ, subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the third
anniversary of the Effective Date (the “Employment Period”). The Employment
Period shall terminate upon the Executive’s termination of employment for any
reason.

Section 3.    Terms of Employment.

(a) Position and Duties.

(1)    During the Employment Period, (A) the Executive’s position (including
status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date and (B) the
Executive’s services shall be performed at the office where the Executive was
employed immediately preceding the Effective Date or at any other location less
than 35 miles from such office.

(2)    During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and

 

Page 3

--------------------------------------------------------------------------------

time during normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive’s reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period,
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood and agreed
that, to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such activities
(or the conduct of activities similar in nature and scope thereto) subsequent to
the Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the Company.

(b)    Compensation.

(1)    Base Salary. During the Employment Period, the Executive shall receive an
annual base salary (the “Annual Base Salary”) at an annual rate at least equal
to 12 times the highest monthly base salary paid or payable, including any base
salary that has been earned but deferred, to the Executive by the Company and
the Affiliated Companies in respect of the 12-month period immediately preceding
the month in which the Effective Date occurs. The Annual Base Salary shall be
paid at such intervals as the Company pays executive salaries generally. During
the Employment Period, the Annual Base Salary shall be reviewed at least
annually, beginning no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date. Any increase in the Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. The Annual Base Salary shall not be reduced
after any such increase and the term “Annual Base Salary” shall refer to the
Annual Base Salary as so increased.

(2)    Annual Bonus. In addition to the Annual Base Salary, for each fiscal year
ending during the Employment Period, the Executive shall be entitled to
participate in an annual bonus (the “Annual Bonus”) that offers substantially
comparable target bonus opportunities as existed in the most recent full bonus
year prior to the year in which the Change in Control occurs. For this purpose,
a bonus opportunity shall be deemed to be substantially comparable if the
targeted bonus amount (expressed as a percent of the Executive’s Annual Base
Salary for the year, and based on achievement of reasonably attainable goals) is
at least equal to the Executive’s target bonus (expressed as a percent of the
Executive’s Annual Base Salary for the relevant year) that was established in
the most recent full bonus year prior to the year in which the Change in Control
occurs (the latter being hereafter referred to as the “Bonus Target Amount”)
Each such Annual Bonus shall be paid no later than the end of the third month of
the fiscal year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus.

(3)    Incentive, Savings and Retirement Plans. During the Employment Period,
the Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies, and programs applicable generally to
other peer executives of the Company and the Affiliated Companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, materially less favorable, in the aggregate, than the most favorable of
those provided by the Company and the Affiliated

 

Page 4

--------------------------------------------------------------------------------

Companies for the Executive under such plans, practices, policies and programs
as in effect at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
the Affiliated Companies.

(4)    Welfare Benefit Plans. During the Employment Period, the Executive and/or
the Executive’s family, as the case may be, shall be eligible for participation
in and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and the Affiliated Companies
(including, without limitation, medical, prescription, dental, vision,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and the Affiliated Companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
that are materially less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for the Executive at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and the Affiliated
Companies.

(5)    Expenses. During the Employment Period, the Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and
procedures of the Company and the Affiliated Companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and the
Affiliated Companies.

(6)    Fringe Benefits. During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and the
Affiliated Companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and the Affiliated Companies that are, in the
aggregate, generally commensurate with those provided to similarly situated
executives within the Company following the Change of Control.

(7)    [reserved]

(8)    Vacation. During the Employment Period, the Executive shall be entitled
to paid vacation in accordance with the most favorable plans, policies, programs
and practices of the Company and the Affiliated Companies as in effect for the
Executive during the 120-day period immediately preceding the Effective Date.

(9)    Vesting of Outstanding Equity Incentive Awards.

(A)    Time-Based Equity Incentive Awards. Notwithstanding any provision in the
Company’s stock incentive plans or the award agreements thereunder, immediately
upon the Executive’s termination of employment for any reason other than (i) for
Cause or (ii) voluntary termination by the Executive other than for Good Reason
or retirement, (1) all stock options (incentive or non-qualified) outstanding as
of the Date of Termination, which are not then exercisable and vested, shall
become fully

 

Page 5

--------------------------------------------------------------------------------

exercisable and vested to the full extent of the original grant and all
outstanding stock options (whether they are vested as of the Date of Termination
or become vested as a result of this provision) shall remain exercisable for the
remainder of the original option term; and (2) all restrictions and deferral
limitations applicable to any time-based restricted stock and restricted stock
unit awards outstanding as of the Date of Termination shall lapse, and such
restricted stock and restricted stock unit awards shall become free of all
restrictions and become fully vested and transferable to the full extent of the
original grant.

(B)    Performance Shares, Performance Units, and Other Long-Term
Performance-Based Awards (“Performance Awards”). Notwithstanding any provisions
in the Company’s stock incentive plan or the award agreements thereunder, if the
Executive’s employment is terminated by death, Disability or for Good Reason, or
is involuntarily terminated without Cause (the effective date of termination in
connection with these types of termination events is referred to hereafter as a
“Trigger Date”), then each then-outstanding performance period with respect to
any Performance Awards that have not vested or been forfeited as of the Trigger
Date shall be terminated effective as of such Trigger Date; the degree of
achievement of all performance conditions shall be determined based on actual
performance prior to the Trigger Date in accordance with the governing award
agreements (or, in the event not covered in an award agreement, by Valero’s
Compensation Committee in its sole discretion); and a pro rata portion of the
earned values under such Performance Awards shall be distributed to the
Executive as soon as administratively practicable (and in any case within 30
days) after the Trigger Date, or in the case of a Pre-Change of Control
Termination, as soon as administratively practicable (and in any case within 30
days) after the Change of Control. For this purpose, the proration shall be
determined as a function of the number of full months worked from the date of
grant to the Trigger Date, in relation to the full number of months in the
originally scheduled performance period covering the Performance Awards.

In the event that dividend equivalents have been granted in connection with such
Performance Awards, then the settlement of such dividend equivalents shall be
determined in a similar manner to the underlying Performance Awards (i.e., with
the amount of the dividend equivalents being based on actual performance of the
Performance Awards prior to the Trigger Date, and the amount of such dividend
equivalents to be paid based on a pro ration, as described above).

Section 4.    Termination of Employment.

(a)    Death or Disability. The Executive’s employment shall terminate
automatically if the Executive dies during the Employment Period. If the Company
determines in good faith that the Executive has a Disability (as defined herein)
that has occurred during the Employment Period (pursuant to the definition of
Disability), it may give to the Executive written notice in accordance with
Section 12(b) of its intention to terminate the Executive’s employment. In such
event, the Executive’s employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s
duties. “Disability” means the absence of the Executive from the Executive’s
duties with the Company on a full-time basis for 180 consecutive business days
as a result of incapacity due to mental or physical illness that is determined
to be total and permanent by a physician selected by the Company or its insurers
and acceptable to the Executive or the Executive’s legal representative.

 

Page 6

--------------------------------------------------------------------------------

(b)    Cause. The Company may terminate the Executive’s employment during the
Employment Period for Cause. “Cause” means:

(1)    the willful and continued failure of the Executive to perform
substantially the Executive’s duties (as contemplated by Section 3(a)(1)(A))
with the Company or any Affiliated Company (other than any such failure
resulting from incapacity due to physical or mental illness or following the
Executive’s delivery of a Notice of Termination for Good Reason), after a
written demand for substantial performance is delivered to the Executive by the
Board or the Chief Executive Officer of the Company that specifically identifies
the manner in which the Board or the Chief Executive Officer of the Company
believes that the Executive has not substantially performed the Executive’s
duties, or

(2)    the willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the Company.

For purposes of this Section 4(b), no act, or failure to act, on the part of the
Executive shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel for
the Executive, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof in detail.

(c)    Good Reason. The Executive’s employment may be terminated by the
Executive for Good Reason or by the Executive voluntarily without Good Reason.
“Good Reason” means:

(1)    the assignment to the Executive of any duties inconsistent in any respect
with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by
Section 3(a)(1)(A), or any other action by the Company that results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;

(2)    any failure by the Company to comply with any of the provisions of
Section 3(b), other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and that is remedied by the Company promptly after
receipt of notice thereof given by the Executive;

(3)    the Company’s requiring the Executive (i) to be based at any office or
location other than as provided in Section 3(a)(1)(B), (ii) to be based at a
location other than the principal executive offices of the Company if the
Executive was employed at such location immediately preceding the Effective
Date, or (iii) to travel on Company business to a substantially greater extent
than required immediately prior to the Effective Date;

 

Page 7

--------------------------------------------------------------------------------

(4)    any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement; or

(5)    any failure by the Company to comply with and satisfy Section 10(c).

The Executive’s mental or physical incapacity following the occurrence of an
event described above in clauses (1) through (5) shall not affect the
Executive’s ability to terminate employment for Good Reason.

(d)    Notice of Termination. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 12(b). “Notice of
Termination” means a written notice that (1) indicates the specific termination
provision in this Agreement relied upon, (2) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated, and (3) if the Date of Termination (as defined herein) is other than
the date of receipt of such notice, specifies the Date of Termination (which
Date of Termination shall be not more than 30 days after the giving of such
notice). The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s respective rights hereunder.

(e)    Date of Termination. “Date of Termination” means (1) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified in the Notice of Termination, as the case may be, (2) if the
Executive’s employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (3) if the Executive’s
employment is terminated by reason of death or Disability, the Date of
Termination shall be the Executive’s date of death or the Disability Effective
Date, as the case may be.

Section 5.    Obligations of the Company upon Termination.

(a)    Good Reason; Other Than for Cause, Death or Disability. If, during the
Employment Period, the Company terminates the Executive’s employment other than
for Cause, death or Disability or the Executive terminates employment for Good
Reason:

(1)    the Company shall pay to the Executive, in a lump sum in cash within
30 days after the Date of Termination (or, in the case of a Pre-Change of
Control Termination, within 30 days after the Change of Control), the aggregate
of the following amounts:

(A)    the sum of (i) the Executive’s Annual Base Salary through the Date of
Termination, (ii) the product of (x) the Bonus Target Amount and (y) a fraction,
the numerator of which is the number of days in the current fiscal year through
the Date of Termination and the denominator of which is 365, and (iii) any
accrued vacation pay, in each case, to the extent not theretofore paid (the sum
of the amounts described in subclauses (i), (ii) and (iii), the “Accrued
Obligations”); and

(B)    the amount equal to the product of (i) two and (ii) the sum of (x) the
Executive’s Annual Base Salary and (y) the Bonus Target Amount; and

 

Page 8

--------------------------------------------------------------------------------

(2)    for two years after the Executive’s Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to the Executive and/or
the Executive’s family at least equal to those that would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 3(b)(4) if the Executive’s employment had not been terminated or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and the Affiliated
Companies and their families, provided that, in the event the Company determines
that such continued benefit coverage may not be provided under the terms of the
applicable plan, program, practice or policy, or under applicable law, then, for
the remainder of the period described in this subsection, the Company shall, in
lieu of such continued coverage, provide Executive with a monthly cash payment
equal to the difference between the full cost of such coverage (as determined by
the Company for purposes of COBRA coverage) and the monthly employee
contribution required for such coverage; and provided further, however, that, if
the Executive becomes reemployed with another employer and is eligible to
receive such benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility, or, if the
Company is paying Executive the monthly cash payment in lieu of such coverage as
described above, such payments shall cease. For purposes of determining
eligibility (but not the time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed (for purposes of both
age and service credit) until two years after the Date of Termination and to
have retired on the last day of such period;

(3)    during the 12-month period following the Date of Termination (or, in the
case of a Pre-Change of Control Termination, the 12-month period following the
Change of Control), the Company shall, at its sole expense as incurred, provide
the Executive with outplacement services the scope and provider of which shall
be selected by the Executive in the Executive’s sole discretion, provided that,
the cost of such outplacement shall not exceed $25,000 (as adjusted for
inflation based on the Consumer Price Index or another nationally recognized
published inflation index); and

(4)    to the extent not theretofore paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits required to be
paid or provided or that the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and the
Affiliated Companies (such other amounts and benefits, the “Other Benefits”).

(b)    Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, the Company shall provide the
Executive’s estate or beneficiaries with the Accrued Obligations and the timely
payment or delivery of the Other Benefits, and shall have no other severance
obligations under this Agreement. The Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination (or, in the case of a Pre-Change of Control
Termination, and to the extent not previously provided to Executive following
Executive’s death, within 30 days following the Change of Control). With respect
to the provision of the Other Benefits, the term “Other Benefits” as utilized in
this Section 5(b) shall include, without limitation, and the Executive’s estate
and/or beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company and the Affiliated Companies
to the estates and beneficiaries of peer executives of the Company and the
Affiliated Companies under such plans, programs, practices and policies relating
to death benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive’s estate
and/or the Executive’s beneficiaries, as in effect on the date of the
Executive’s death with respect to other peer executives of the Company and the
Affiliated Companies and their beneficiaries.

 

Page 9

--------------------------------------------------------------------------------

(c)    Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, the Company shall provide
the Executive with the Accrued Obligations and the timely payment or delivery of
the Other Benefits, and shall have no other severance obligations under this
Agreement. The Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination (or, in the case of a
Pre-Change of Control Termination, and to the extent not previously provided to
Executive following the Executive’s Disability, within 30 days following the
Change of Control). With respect to the provision of the Other Benefits, the
term “Other Benefits” as utilized in this Section 5(c) shall include, and the
Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and the Affiliated Companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect generally
with respect to other peer executives and their families at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive’s family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and the
Affiliated Companies and their families.

(d)    Cause; Voluntary Termination Other Than for Good Reason.

(1)    If the Executive’s employment is terminated for Cause during the
Employment Period, the Company shall provide to the Executive (A) the
Executive’s Annual Base Salary through the Date of Termination, (B) any accrued
vacation pay, and (C) the Other Benefits, in each case, to the extent
theretofore unpaid, and shall have no other severance obligations under this
Agreement.

(2)    If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, the Company shall provide to
the Executive the Accrued Obligations and the timely payment or delivery of the
Other Benefits, and shall have no other severance obligations under this
Agreement. In such case, all the Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.

Section 6.    Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive’s continuing or future participation in any plan,
program, policy or practice provided by the Company or the Affiliated Companies
and for which the Executive may qualify, nor, subject to Section 12(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any other contract or agreement with the Company or the Affiliated
Companies. Amounts that are vested benefits or that the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any other
contract or agreement with the Company or the Affiliated Companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement, except as explicitly
modified by this Agreement. Notwithstanding the foregoing, if the Executive
receives payments and benefits pursuant to Section 5(a) of this Agreement, the
Executive shall not be entitled to any severance pay or benefits under any
severance plan, program or policy of the Company and the Affiliated Companies,
unless otherwise specifically provided therein by a specific reference to this
Agreement.

 

Page 10

--------------------------------------------------------------------------------

Section 7.    Full Settlement. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right or action that the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses that the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended (the “Code”).

Section 8.    Potential Limitation on Payments.

(a)    Anything in this Agreement to the contrary notwithstanding, if it shall
be determined that any payment or distribution by the Company or its Affiliated
Companies to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 8) (all such payments and benefits, including the payments
and benefits under Section 5 hereof, being hereinafter referred to as the “Total
Payments”) would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties,
collectively the “Excise Tax”), then, after taking into account any reduction in
the Total Payments provided by reason of Section 280G of the Code in such other
plan, arrangement or agreement, the payments under this Agreement shall be
reduced in the order specified below, to the extent necessary so that no portion
of the Total Payments is subject to the Excise Tax but only if (i) the net
amount of such Total Payments, as so reduced (and after subtracting the net
amount of federal, state and local income taxes on such reduced Total Payments
and after taking into account the phase out of itemized deductions and personal
exemptions attributable to such reduced Total Payments) is greater than or equal
to (ii) the net amount of such Total Payments without such reduction (but after
subtracting the net amount of federal, state and local income taxes on such
Total Payments and the amount of Excise Tax to which the Executive would be
subject in respect of such unreduced Total Payments and after taking into
account the phase out of itemized deductions and personal exemptions
attributable to such unreduced Total Payments). The payments and benefits under
this Plan shall be reduced in the following order: (A) reduction of any cash
severance payments otherwise payable to the Executive that are exempt from
Section 409A of the Code; (B) reduction of any other cash payments or benefits
otherwise payable to the Executive that are exempt from Section 409A of the
Code, but excluding any payments attributable to any acceleration of vesting or
payments with respect to any equity award that are exempt from Section 409A of
the Code; (C) reduction of any other payments or benefits otherwise payable to
the Executive on a pro-rata basis or such other manner that complies with
Section 409A of the Code, but excluding any payments attributable to any
acceleration of vesting and payments with respect to any equity award that are
exempt from Section 409A of the Code; and (D) reduction of any payments
attributable to any acceleration of vesting or payments with respect to any
equity award that are exempt from Section 409A of the Code, in each case
beginning with payments that would otherwise be made last in time.

(b)    Subject to the provisions of Section 8(c) hereof, all determinations
required to be made under this Section 8, including whether and when Total
Payments should be reduced, the amount of such Total Payments, Excise Taxes and
all other related determinations, as well as all assumptions to be utilized in
arriving at such determinations, shall be made by Ernst & Young, LLP, or such
other

 

Page 11

--------------------------------------------------------------------------------

nationally recognized certified public accounting firm as may be designated by
the Executive, subject to the Company’s approval which will not be unreasonably
withheld (the “Accounting Firm”). The Accounting Firm shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Executive, subject to the
Company’s approval which will not be unreasonably withheld, may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive.

(c)    For purposes of determining whether and the extent to which the Total
Payments will be subject to the Excise Tax, (i) no portion of the Total Payments
the receipt or enjoyment of which the Executive shall have waived at such time
and in such manner as not to constitute a “payment” within the meaning of
Section 280G(b) of the Code shall be taken into account; (ii) no portion of the
Total Payments shall be taken into account which, in the written opinion of the
Accounting Firm, does not constitute a “parachute payment” within the meaning of
Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of
the Code) and, in calculating the Excise Tax, no portion of such Total Payments
shall be taken into account which, in the opinion of the Accounting Firm,
constitutes reasonable compensation for services actually rendered, within the
meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount (as
defined in Section 280G(b)(3) of the Code) allocable to such reasonable
compensation; and (iii) the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments shall be determined by the
Accounting Firm in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.

(d)    As a result of uncertainty in the application of Section 280G and
Section 4999 of the Code at the time of the initial calculation by the
Accounting Firm hereunder, it is possible that the cash severance payment made
by the Company will have been less than the Company should have paid pursuant to
Section 5 hereof (the amount of any such deficiency, the “Underpayment”), or
more than the Company should have paid pursuant to Section 5 hereof (the amount
of any such overage, the “Overpayment”). In the event of an Underpayment, the
Company shall pay the Executive the amount of such Underpayment (together with
interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) not
later than five business days after the amount of such Underpayment is
subsequently determined, provided, however, such Underpayment shall not be paid
later than the end of the calendar year following the calendar year in which the
Executive remitted the related taxes. In the event of an Overpayment, the amount
of such Overpayment shall by paid to the Company by the Executive not later than
five business days after the amount of such Overpayment is subsequently
determined (together with interest at 120% of the rate provided in
Section 1274(b)(2)(B) of the Code).

Section 9.    Confidential Information.

(a)    The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or the Affiliated Companies, and their respective businesses, which
information, knowledge or data shall have been obtained by the Executive during
the Executive’s employment by the Company or the Affiliated Companies and which
information, knowledge or data shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those persons designated by the Company. In no event shall an asserted
violation of the provisions of this Section 9 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.

 

Page 12

--------------------------------------------------------------------------------

(b)    Notwithstanding the foregoing, nothing in this Agreement shall be
construed to prohibit or impede the Executive from reporting possible violations
of federal law or regulation to any governmental agency or entity, including but
not limited to the U.S. Equal Opportunity Commission, the Department of Justice,
the Securities and Exchange Commission, Congress and any agency Inspector
General, or making other disclosures that are protected under the whistleblower
provisions of federal law or regulation. This Agreement does not limit the
Executive’s ability to communicate with any government agencies or entities or
participate in any investigation or proceeding that may be conducted by any such
government agency or entity, including providing documents or other information
or disclosures, without the prior authorization of or the need to provide any
notice to the Company. In addition, this Agreement does not limit the
Executive’s right to receive an award for information provided to any government
agencies or entities. Further, the Executive acknowledges that the Executive has
been advised that an individual shall not be held criminally or civilly liable
under any federal or state trade secret law for the disclosure of a trade secret
that (a) is made (i) in confidence to a federal, state, or local government
official, either directly or indirectly, or to an attorney; and (ii) solely for
the purpose of reporting or investigating a suspected violation of law; or
(b) is made in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal. An individual who files a lawsuit
for retaliation by an employer for reporting a suspected violation of law may
disclose the trade secret to the attorney of the individual and use the trade
secret information in the court proceeding, if the individual (A) files any
document containing the trade secret under seal; and (B) does not disclose the
trade secret, except pursuant to court order.

Section 10.    Successors.

(a)    This Agreement is personal to the Executive, and, without the prior
written consent of the Company, shall not be assignable by the Executive other
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive’s legal representatives.

(b)    This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. Except as provided in Section 10(c),
without the prior written consent of the Executive, this Agreement shall not be
assignable by the Company.

(c)    The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. “Company” means
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law or otherwise.

Section 11.    Code Section 409A. This Agreement is intended to comply, and
shall be administered consistently in all respects, with Code Section 409A of
the Internal Revenue Code of 1986, as amended (“Code”), and the regulations and
additional guidance promulgated thereunder, to the extent applicable. In this
connection, the Company shall have authority to take any action, or refrain from
taking any action, with respect to this Agreement that is reasonably necessary
to ensure compliance with Code Section 409A (provided that the Company shall
choose the action that best preserves the value of the payments and benefits
provided to the Executive under this Agreement that is consistent with Code
Section 409A), and the parties agree that this Agreement shall be interpreted in
a manner that is consistent with Code Section 409A.

 

Page 13

--------------------------------------------------------------------------------

In furtherance, but not in limitation of the foregoing:

(a)    in no event may Executive designate, directly or indirectly, the calendar
year of any payment to be made hereunder;

(b)    whenever a payment specifies a payment period with reference to a number
of days, the actual date of payment within the specified period shall be within
the sole discretion of the Company;

(c)    neither the Company nor Executive will have the right to accelerate or
defer the delivery of any payments except to the extent specifically permitted
or required by Code Section 409A;

(d)    in the event that Executive is a “specified employee” within the meaning
of Code Section 409A, payments which constitute a “deferral of compensation”
under Code Section 409A and which would otherwise become due during the first
six months following Executive’s Date of Termination shall be delayed and all
such delayed payments shall be paid in full in the seventh month after the
Executive’s termination of employment or, if earlier, upon the Executive’s
death, provided that the above delay shall not apply to any payment that is
excepted from coverage by Code Section 409A, such as a payment covered by the
short-term deferral exception described in Treasury Regulations
Section 1.409A-1(b)(4);

(e)    notwithstanding any other provision of this Agreement, a termination,
resignation or retirement of Executive’s employment hereunder, shall mean, and
be interpreted consistent with, a “separation from service” within the meaning
of Code Section 409A, and “Date of Termination,” for purposes of determining the
date that any payment or benefit is required to be provided hereunder, shall be
deemed to mean the date of Executive’s separation from service within the
meaning of Code Section 409A; and

(f)    with respect to any reimbursement of fees and expenses, or similar
payments or any in-kind benefits, the following shall apply: (i) unless a
specific time period during which such expense reimbursements and payments may
be incurred is provided for herein, such time period shall be deemed to be
Executive’s lifetime; (ii) the amount of expenses eligible for reimbursement
hereunder, or in-kind benefits to which Executive is entitled hereunder, in any
particular year shall not affect the expenses eligible for reimbursement or
in-kind benefits in any other year; (iii) the right to reimbursement of expenses
or in-kind benefits shall not be subject to liquidation or exchange for any
other benefit; and (iv) the reimbursement of an eligible expense or a payment
shall be made on or before the last day of the calendar year following the
calendar year in which the expense was incurred or the payment was remitted, as
the case may be.

Section 12.    Miscellaneous.

(a)    This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
other than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

 

Page 14

--------------------------------------------------------------------------------

(b)    All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

 

if to the Executive:

     At the most recent address on file in the Company’s records

if to the Company:

     Valero Energy Corporation      One Valero Way      San Antonio, Texas 78249
     Attention: Corporate Secretary

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

(c)    The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.

(d)    The Company may withhold from any amounts payable under this Agreement
such United States federal, state or local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

(e)    The Executive’s or the Company’s failure to insist upon strict compliance
with any provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

(f)    The Executive and the Company acknowledge that, except as may otherwise
be provided under any other written agreement between the Executive and the
Company, the employment of the Executive by the Company is “at will” and,
subject to Section 1(a), prior to the Effective Date, the Executive’s employment
may be terminated by either the Executive or the Company at any time prior to
the Effective Date, in which case the Executive shall have no further rights
under this Agreement.

(g)    From and after the Effective Date, except as specifically provided
herein, this Agreement shall supersede any other agreement between the parties
with respect to the subject matter hereof.

 

Page 15

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.

 

/s/ Jason W. Fraser Jason W. Fraser VALERO ENERGY CORPORATION by:   /s/ Joseph
W. Gorder name: Joseph W. Gorder title: President and Chief Executive Officer

 

Page 16