exv10w08






Exhibit 10.08




VALERO ENERGY CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN




(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008)




 









 





VALERO ENERGY CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN




TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS
	 	 	1	 
	1.1 Accrued Benefit
	 	 	1	 
	1.2 Actuarial Equivalent or Actuarially Equivalent Basis
	 	 	1	 
	1.3 Board of Directors
	 	 	1	 
	1.4 Change in Control
	 	 	1	 
	1.5 Code
	 	 	2	 
	1.6 Company
	 	 	2	 
	1.7 Committee
	 	 	2	 
	1.8 Covered Compensation
	 	 	2	 
	1.9 Credited Service
	 	 	3	 
	1.10 Eligible Earnings
	 	 	3	 
	1.11 Final Average Compensation
	 	 	3	 
	1.12 Monthly Covered Compensation
	 	 	3	 
	1.13 Monthly FICA Amount
	 	 	3	 
	1.14 Normal Retirement Date
	 	 	4	 
	1.15 NuStar
	 	 	4	 
	1.16 NuStar Excess Pension Plan
	 	 	4	 
	1.17 NuStar SERP
	 	 	4	 
	1.18 Participant
	 	 	4	 
	1.19 Plan
	 	 	4	 
	1.20 Plan of Deferred Compensation
	 	 	4	 
	1.21 Plan Year
	 	 	4	 
	1.22 Retirement
	 	 	4	 
	1.23 Rules
	 	 	4	 
	1.24 Securities Act
	 	 	4	 
	1.25 Separation from Service
	 	 	4	 
	1.26 Subsidiary
	 	 	4	 
	1.27 Surviving Spouse
	 	 	5	 
	1.28 Trust
	 	 	5	 
	1.29 Trustee
	 	 	5	 
	1.30 Valero
	 	 	5	 
	1.31 Valero Pension Plan
	 	 	5	 
	1.32 Valero Pension Plan Benefit
	 	 	5	 
	ARTICLE II ELIGIBILITY
	 	 	5	 
	2.1 Eligibility
	 	 	5	 
	2.2 Frozen Participation
	 	 	5	 
	2.3 Renewed Eligibility
	 	 	6	 
	ARTICLE III VESTING
	 	 	6	 
	ARTICLE IV RETIREMENT BENEFIT
	 	 	6	 






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	 	 	Page
	4.1 Calculation of Retirement Benefit
	 	 	6	 
	4.2 Form and Time of Payment
	 	 	7	 
	4.3 Modification of Pension
	 	 	7	 
	4.4 Delay of Certain Payments
	 	 	7	 
	4.5 Application of Code Section 409A Transition Relief Provisions
	 	 	7	 
	ARTICLE V PRERETIREMENT SPOUSAL DEATH BENEFIT
	 	 	8	 
	5.1 Death Prior to Retirement
	 	 	8	 
	5.2 Beneficiary Designation Prohibited
	 	 	8	 
	ARTICLE VI PROVISIONS RELATING TO ALL BENEFITS
	 	 	8	 
	6.1 Effect of This Article
	 	 	8	 
	6.2 No Duplication of Benefits
	 	 	8	 
	6.3 Forfeiture Upon Termination for Cause
	 	 	8	 
	6.4 Forfeiture for Competition
	 	 	8	 
	6.5 Expenses Incurred in Enforcing the Plan
	 	 	9	 
	6.6 No Restrictions on any Portion of Benefits Determined to be Excess
Parachute Payments 
	 	 	9	 
	ARTICLE VII ADMINISTRATION
	 	 	9	 
	7.1 Committee Appointment
	 	 	9	 
	7.2 Committee Organization and Voting
	 	 	9	 
	7.3 Powers of the Committee
	 	 	9	 
	7.4 Committee Discretion
	 	 	10	 
	7.5 Reliance Upon Information
	 	 	10	 
	7.6 Approval of Benefit Modifications
	 	 	10	 
	ARTICLE VIII ADOPTION BY SUBSIDIARIES
	 	 	10	 
	8.1 Procedure for and Status After Adoption
	 	 	10	 
	8.2 Termination of Participation By Adopting Subsidiary
	 	 	11	 
	8.3 Spinoff Plan
	 	 	11	 
	ARTICLE IX AMENDMENT AND/OR TERMINATION
	 	 	11	 
	9.1 Amendment or Termination of the Plan
	 	 	11	 
	9.2 No Retroactive Effect on Annual Benefits
	 	 	11	 
	9.3 Effect of Termination
	 	 	12	 
	9.4 Effect of Change in Control
	 	 	12	 
	ARTICLE X FUNDING
	 	 	12	 
	10.1 Payments from Trust
	 	 	12	 
	10.2 Plan May Be Funded Through Life Insurance
	 	 	12	 
	10.3 Required Funding of Rabbi Trust
	 	 	12	 
	10.4 Ownership of Assets; Release
	 	 	13	 
	10.5 Reversion of Excess Assets
	 	 	14	 
	10.6 Repurchase of Valero Stock
	 	 	14	 
	10.7 Participants Must Rely Only on General Credit of the Companies
	 	 	14	 
	ARTICLE XI MISCELLANEOUS
	 	 	15	 
	11.1 Responsibility for Distributions and Withholding of Taxes
	 	 	15	 
	11.2 Limitation of Rights
	 	 	15	 
	11.3 Arbitration of Disputes
	 	 	15	 
	11.4 Distributions to Incompetents
	 	 	17	 
	11.5 Nonalienation of Benefits
	 	 	17	 






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	 	 	Page
	11.6 Severability
	 	 	18	 
	11.7 Notice
	 	 	18	 
	11.8 Gender and Number
	 	 	18	 
	11.9 Administration and Interpretation Consistent with Code Section 409A
	 	 	18	 
	11.10 Governing Law
	 	 	18	 
	11.11 Effective Date
	 	 	 	 






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VALERO ENERGY CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN




     WHEREAS, Valero Energy Corporation (the “Company”) established the Valero Energy Corporation
Supplemental Executive Retirement Plan (the “Plan”), originally effective January 1, 1983 which
provides, for certain highly compensated, management personnel, a supplement to their benefits
under the Valero Pension Plan so as to retain their loyalty and to offer a further incentive to
them to maintain and increase their standard of performance; and



     WHEREAS, pursuant to Section 9.1, the Committee may amend the Plan at any time by an
instrument in writing; and



     WHEREAS, the Committee has determined that the Plan should be amended and restated to reflect
the spinoff of liabilities relating to eligible Employees of NuStar Energy, LLC (formerly Valero
GP, LLC) into a separate plan effective as of July 1, 2006, and to make certain other changes
consistent with Code section 409A;



     NOW, THEREFORE, the Company amends and restates the Plan as follows:



ARTICLE I




DEFINITIONS




     All defined terms used in the Valero Pension Plan shall have the same meaning for this Plan,
except as otherwise set forth below.



     1.1 Accrued Benefit. “Accrued Benefit” means, as of any given date of determination, the
Retirement benefit calculated under Section 4.1 with Final Average Compensation, but with the
offsets for benefits provided by the Valero Pension Plan and Credited Service determined as of that
date.



     1.2 Actuarial Equivalent or Actuarially Equivalent Basis. “Actuarial Equivalent” or
“Actuarially Equivalent Basis” means an equality in value of the aggregate amounts expected to be
received under different forms of payment based on the same mortality and interest rate
assumptions. For this purpose, the mortality and interest rate assumptions used in computing
benefits under the Valero Pension Plan will be used. If there is no Valero Pension Plan or
successor qualified defined benefit plan, then the actuarial assumptions to be used will be those
actuarial assumptions deemed appropriate by the actuarial firm, which last served as independent
actuary for the Valero Pension Plan prior to its termination or merger had the Valero Pension
Plan remained in existence with its last participant census.



     1.3 Board of Directors. “Board of Directors” means the Board of Directors of Valero.



     1.4 Change in Control. “Change in Control” means the occurrence of one or more of the
following events:



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     (a) Change in Ownership of Valero. The acquisition by any one person, or more
than one person acting as a group (within the meaning of Code § 409A), of ownership of stock
of Valero that, together with stock held by such person or group, constitutes more than
fifty percent (50%) of the total fair market value or total voting power of the stock of
Valero.




     (b) Change in Effective Control of Valero. Either of the following:




(i) The acquisition, during any 12-month period, by any one person, or more
than one person acting as a group (within the meaning of Code § 409A), of
stock of Valero comprising thirty percent (30%) or more of the total voting
power of the stock of Valero; or




(ii) The replacement, during any 12-month period, of a majority of the
members of the Board of Directors with directors whose appointment or
election is not endorsed by the majority of the members of the Board of
Directors before the date of such appointment or election.




     (c) Change in Ownership of a Substantial Portion of Valero’s Assets. The
acquisition by any one person, or more than one person acting as a group (within the meaning
of Code § 409A), during the 12 month period ending on the date of the most recent
acquisition by such person or persons, of assets of Valero that have a total gross fair
market value equal to or more than forty percent (40%) of the total gross fair market value
of all of the assets of Valero immediately before such acquisition or acquisitions. For
purposes of this provision, “gross fair market value” means the value of the assets of
Valero, or the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.




The provisions of this Plan relating to a Change in Control shall be interpreted and
administered in a manner consistent with Code section 409A.



     1.5 Code. “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     1.6 Company. “Company” means Valero and any Subsidiary adopting the Plan.



     1.7 Committee. “Committee” means the Compensation Committee of the Board of Directors.



     1.8 Covered Compensation. “Covered Compensation” means the average (without indexing) of the
Taxable Wage Base for the 35 calendar years ending with the calendar year in which a Participant
attains social security retirement age (as defined in Section 415(b)(8) of the Code). A 35-year
period shall be used for all Participants regardless of the year of birth of such Participant. In
determining a Participant’s Covered Compensation prior to the Participant attaining social security
retirement age, it shall be assumed that the Taxable Wage Base in effect at the beginning of the
Plan Year in which such determination is made will remain constant for all future years.



2









 





     1.9 Credited Service. “Credited Service” means a Participant’s continuing period of
employment with a Company (whether or not contiguous), commencing on the first day for which such
Participant is paid, or entitled to payment, for the performance of duties with a Company and
terminating with the Participant’s final cessation of participation in the Plan. With respect to
any full calendar year in which a Participant receives Eligible Earnings in each payroll period as
an active employee, he shall be credited with one year of Credited Service. With respect to any
partial calendar year in which a Participant receives Eligible Earnings as an active employee (such
as the calendar year in which employment commences or participation ceases) he shall be credited
with a fraction of a year of Credited Service, in the same proportion that the number of payroll
periods during such calendar year that he received Eligible Earnings as an active employee bears to
the total number of payroll periods during such year. All partial years of Credited Service shall
be aggregated so that a Participant receives credit for all periods of employment regardless of
whether the Credited Service is interrupted. Credited Service shall also include, and a Participant
shall be credited with, such additional periods of time, if any, as may have been agreed upon by
the Participant and a Company in connection with the Participant’s employment, termination or
otherwise. Notwithstanding any other provision of this Plan, for purposes of calculating a
Participant’s benefit hereunder, Credited Service shall not include any period of service with a
Company for which a Participant has received a payment hereunder, or under the Excess Pension Plan,
the NuStar SERP, the NuStar Excess Pension Plan, the Ultramar Diamond Shamrock Corporation
Supplemental Executive Retirement Plan, or a lump sum payment made prior to January 1, 2002 under
the Ultramar Diamond Shamrock Corporation Employees’ Retirement Plan.



     1.10 Eligible Earnings. “Eligible Earnings” means all compensation paid or payable by a
Company to the employee in the form of base salary or wages and annual performance related bonuses
(whether paid or payable in cash or securities or any combination thereof), including therein any
amounts of such base salary or wages and annual bonuses earned which, at the employee’s election,
in lieu of a cash payment to him, are contributed to a Plan of Deferred Compensation maintained by
the Company. During a leave of absence from work, with or without pay, such as disability leave of
absence or personal leave of absence, the Participant’s base rate of pay in effect immediately
prior to the leave of absence and his most recent annual bonus amount earned shall be used in
computing his Eligible Earnings.



     1.11 Final Average Compensation. “Final Average Compensation” means a Participant’s average
monthly Eligible Earnings from any Company for the thirty-six consecutive calendar months that give
the highest average monthly rate of Eligible Earnings for the Participant out of all calendar
months next preceding the earliest of (a) the date upon which a
Participant becomes ineligible for participation in this Plan pursuant to Section 2.2; (b) his
Retirement; or (c) the termination of the Plan.



     1.12 Monthly Covered Compensation. “Monthly Covered Compensation” means the quotient
resulting from dividing Covered Compensation by 12.



     1.13 Monthly FICA Amount. “Monthly FICA Amount” means the quotient resulting from dividing by
12 the Taxable Wage Base in effect or assumed to be in effect at the beginning of the calendar year
in which a Participant attains social security retirement age (as defined in Section 415(b)(8) of
the Code).



3









 





     1.14 Normal Retirement Date. “Normal Retirement Date” means the first day of the month
coincident with or next following the date on which the Participant attains the age of 65 years.



     1.15 NuStar. “NuStar” means NuStar GP, LLC, formerly known as Valero GP, LLC.



     1.16 NuStar Excess Pension Plan. “NuStar Excess Pension Plan” means the NuStar Excess Pension
Plan, as amended from time to time, or any successor plan.



     1.17 NuStar SERP. “NuStar SERP” means the NuStar Supplemental Executive Retirement Plan, as
amended from time to time, or any successor plan.



     1.18 Participant. “Participant” means either (a) an employee of a Company who is eligible for
and is participating in the Plan or (b) a former employee of a Company who is eligible to receive
benefits under the Plan upon such former employee’s Retirement.



     1.19 Plan. “Plan” means the Valero Energy Corporation Supplemental Executive Retirement Plan
as set forth in this document, as amended from time to time.



     1.20 Plan of Deferred Compensation. “Plan of Deferred Compensation” means the Valero Energy
Corporation Executive Deferred Compensation Plan, any successor, alternative or additional
nonqualified plan of deferred compensation, and any contributions made under a salary reduction
agreement to a Code Section 125 cafeteria plan or Code Section 401(k) cash or deferred arrangement
maintained by the Company.



     1.21 Plan Year. “Plan Year” means the calendar year.



     1.22 Retirement. “Retirement”, “Retires”, “Retire” or “Retired” means the first day of the
month coincident with or next following the date that a Participant incurs a Separation from
Service after having attained at least age 55 and completing at least five (5) years of Credited
Service.



     1.23 Rules. “Rules” means the Commercial Arbitration Rules of the American Arbitration
Association in effect at the date of commencement of any arbitration hereunder.



     1.24 Securities Act. “Securities Act” means the Securities Exchange Act of 1934, as amended
from time to time.



     1.25 Separation from Service. “Separation from Service” means a separation from service
within the meaning of Code section 409A.



     1.26 Subsidiary. “Subsidiary” means (i) any corporation 50% or more of whose stock having
ordinary voting power to elect directors (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned, directly or indirectly, by Valero, and (ii) any
partnership, association, joint venture or other entity in which, Valero, directly or indirectly,
has a 50% or greater equity interest at the time.



4









 





     1.27 Surviving Spouse. “Surviving Spouse” means the spouse of a Participant who is eligible
to receive a Qualified Preretirement Survivor Annuity benefit under the Valero Pension Plan.



     1.28 Trust. “Trust” or “Trust Agreement” shall mean the Valero Energy Corporation
Supplemental Executive Retirement Plan Trust as is created by the terms and conditions of said
Trust and as may be amended from time to time.



     1.29 Trustee. “Trustee” means collectively one or more persons or corporations with trust
power which have been appointed by the Committee and have accepted the duties of Trustee of the
Trust and any and all successor or successors appointed by Valero.



     1.30 Valero. “Valero” means Valero Energy Corporation, the sponsor of this Plan, and its
successors.



     1.31 Valero Pension Plan. “Valero Pension Plan” means the Valero Energy Corporation Pension
Plan, a defined benefit plan qualified under Section 401(a) of the Code, as it may be amended from
time to time and any successor qualified defined benefit plan.



     1.32 Valero Pension Plan Benefit. “Valero Pension Plan Benefit” means the amount of monthly
benefit payable from the Valero Pension Plan which is based on a lifetime annuity payable to the
Participant pursuant to the provisions of Article 4 of the Valero Pension Plan, or any successor
provision.



ARTICLE II




ELIGIBILITY




     2.1 Eligibility. An employee shall become a Participant in the Plan as of the date he is
selected by the Committee for inclusion as a Participant in the Plan. Ongoing eligibility and
participation of Participants shall be determined by the Committee in its sole discretion, and no
employee shall have a right to initial or ongoing participation in this Plan.



     2.2 Frozen Participation. If, at any time, the Committee determines that an employee who is a
Participant is no longer eligible to continue to participate, and such employee is still employed
by a Company, his Accrued Benefit will be frozen as of the last day of the Plan Year prior to the
Plan Year during which he initially became ineligible to participate. He will later be entitled to
that frozen Accrued Benefit upon his Retirement (if, at the time of such
Retirement, his Accrued Benefit is vested), subject to the requirements of Articles III and
IV. The frozen Accrued Benefit will be payable at the time and in the form set forth in Article IV.



     Notwithstanding the foregoing provisions, in the event that the Participant has, as of the
date of his Retirement, accrued a vested benefit in the Valero Energy Corporation Excess Pension
Plan which is greater than his frozen accrued benefit hereunder, such Participant shall be entitled
to receive his accrued benefit under the Valero Energy Corporation Excess Pension Plan, and shall
not be eligible for any benefits hereunder. Under no circumstances shall a Participant be entitled
to benefits under both this Plan and the Valero Energy Corporation Excess Pension Plan. The
Surviving Spouse of a Participant whose Accrued Benefit is frozen at the time of the



5









 







Participant’s
death shall not be entitled to any death benefit under this Plan. A Participant whose Accrued
Benefit is frozen at the time of incurring a disability shall not accrue any further Credited
Service either for accrual or vesting purposes after the disability occurs so long as the
Participant’s Accrued Benefit in this Plan is frozen. If the frozen Accrued Benefit is less than
the benefit which could otherwise be provided without this limitation, then the benefit will not
exceed the Participant’s frozen Accrued Benefit. Additionally, if any of the events described in
Article VI should occur, the Participant whose Accrued Benefit is frozen shall be subject to having
his frozen Accrued Benefit either restricted in amount or forfeited in accordance with Article VI.



     2.3 Renewed Eligibility. If an employee who is a Participant becomes ineligible to continue
to participate but remains employed by a Company, and the Committee later determines that the
employee is again eligible to participate, the Participant will be given Credited Service for the
intervening period, will have his Final Average Compensation computed as though the freeze had
never occurred, and will be treated for all purposes as though he had not had his participation
interrupted.



ARTICLE III




VESTING




     Except as otherwise set forth herein, a Participant shall vest in his Accrued Benefits only
upon the Participant’s death, disability or Retirement. The foregoing notwithstanding, a
Participant’s Accrued Benefit shall become fully vested upon: (i) the occurrence of a Change in
Control; (ii) termination of the Plan pursuant to Section 9.1; or (iii) the termination of
participation in this Plan by the Subsidiary employing the Participant, if such Participant’s
participation in the Plan is not promptly continued through employment by another adopting
Subsidiary.



     Upon a Participant’s Separation from Service for any reason prior to becoming fully vested
hereunder, the Participant and any Surviving Spouse shall forfeit any interest in and under this
Plan, and shall have no right to any benefit hereunder.



ARTICLE IV




RETIREMENT BENEFIT




     4.1 Calculation of Retirement Benefit. Subject to the following provisions of this Section
4.1, the provisions of Section 4.3 and Article III; the benefit payable under the Plan shall be an
amount equal to the lump sum of the Accrued Benefit payable for life from Normal Retirement Date
where the Accrued Benefit is equal to the sum of (i) plus (ii) minus (iii) where (i) equals: 1.60%
of the Participant’s Final Average Compensation multiplied by his number of years of Credited
Service; (ii) equals .35% multiplied by the product of his years of Credited Service (not to exceed
35 years) times the excess of his Final Average Compensation over the lesser of (a) 1.25 times his
Monthly Covered Compensation or (b) the Monthly FICA Amount; and (iii) equals the Participant’s
Valero Pension Plan Benefit. The lump sum amount payable hereunder shall be determined using the
lump sum actuarial factors provided for, and/or used under, the Valero Pension Plan.



6









 





     4.2 Form and Time of Payment. Except as otherwise specifically provided herein, effective for
benefit payments commencing as a result of a Participant’s Retirement on or after January 1, 2008,
benefits shall be made in a single lump sum payment as of the Participant’s Retirement. Such lump
sum amount shall be calculated as of the Participant’s Retirement by the actuary for the Pension
Plan applying actuarial factors used under the Pension Plan, and shall be made as soon as practical
following the Participant’s Retirement and, in any event, within ninety (90) days thereafter.



     4.3 Modification of Pension. The Committee shall have the right to modify the calculation of
the benefit payable as to any Participant as it may desire from time to time; provided, however,
that any such modification shall not result in a reduction of the benefit payable below the amount
set forth above in Section 4.1. The amount of the benefits payable to a Participant under this
Plan may be modified by written agreement entered into between the Participant and a Company and
approved pursuant to Section 7.6. If so modified, the provisions of such written agreement shall
prevail in determining the amount of the benefits payable to the Participant under this Plan. In
addition, benefits payable under this Plan to any Participant shall not affect any other right or
entitlement a Participant may have by contract or otherwise, except as may be provided in any such
contract.



     4.4 Delay of Certain Payments. With respect to any Participant who is a “Specified Employee”,
as defined in Code section 409A and the regulations and rulings issued thereunder, any benefit that
becomes payable by reason of such Participant’s Separation from Service shall not commence prior to
the date that is six (6) months following such Participant’s Separation from Service (except to the
extent that the payment of such benefit is not subject to Code section 409A, or is subject to an
exception to such delay in payment). Such delayed payment shall be made in a single lump sum
payment as soon as practical following the expiration of such 6-month delay period (and in any
event with ninety (90) days thereof) and shall be calculated as of the Participant’s Separation
from Service by the actuary for the Pension Plan applying actuarial factors used under the Pension
Plan. The provisions of this Section 4.4 shall not apply (a) with respect to any benefit that
becomes payable due to the death of the Participant, or (b) if, at the
time of such Participant’s Separation from Service, no stock of the Company is publicly traded
on an established securities market or otherwise.



     4.5 Application of Code Section 409A Transition Relief Provisions. Notwithstanding any other
provision of this Plan, between January 1, 2005 and December 31, 2007, the Plan was administered in
compliance with the applicable transition relief provided by the U.S. Treasury Department and the
Internal Revenue Service under applicable guidance, including Notice 2005-1, the Temporary
Regulations issued under Code section 409A, Notice 2007-78 and Notice 2007-86. Specifically, but
without limitation, Participants whose Retirement occurred between January 1, 2005 and December 31,
2007, received or commenced their benefits under this Plan at the time and in the form provided for
under the Plan as in effect on October 3, 2004, or pursuant to a special form and time of payment
election permitted under such transition relief.



7









 





ARTICLE V




PRERETIREMENT SPOUSAL DEATH BENEFIT




     5.1 Death Prior to Retirement. In the event that a Participant who has attained age 55 and
completed five years of Credited Service dies while employed by a Company but has not Retired, the
Participant’s Surviving Spouse shall receive a Surviving Spouse benefit under the Plan equal to
fifty percent (50%) of the amount the Participant would have received under Section 4.1 if he had
Retired on the date of his death. Such death benefit shall be paid in the form of a single lump
sum payment as soon as administratively practical following the Participant’s death (and in any
event within ninety (90) days thereof), and shall be calculated by the actuary for the Pension Plan
applying actuarial assumptions used under the Pension Plan.



     5.2 Beneficiary Designation Prohibited. Since the only death benefit payable under the Plan
is to a Surviving Spouse as provided in Section 5.1 above, no Participant shall have the right to
designate a beneficiary to receive any benefits hereunder.



ARTICLE VI




PROVISIONS RELATING TO ALL BENEFITS




     6.1 Effect of This Article. The provisions of this Article will control over all other
provisions of this Plan.



     6.2 No Duplication of Benefits. It is not intended that there be any duplication of benefits.
Therefore, in no event will a Participant and such Participant’s Surviving Spouse qualify for
separate benefit payments under Articles IV and V.



     6.3 Forfeiture Upon Termination for Cause. If the Committee finds, after full consideration
of the facts presented on behalf of both the Company and a Participant, that the Participant was
discharged by a Company for fraud, embezzlement, theft, commission of a felony, proven dishonesty
in the course of his employment by a Company which damaged the Company, or for disclosing trade
secrets of a Company, the entire Accrued Benefit of the Participant will be forfeited even though
it may have been previously vested, and the Participant
and any Surviving Spouse shall have no right to a benefit hereunder. The decision of the
Committee as to the cause of a former Participant’s discharge and the damage done to the Company
will be final and binding on all parties. No decision of the Committee will affect the finality of
the discharge of the Participant by the Company in any manner. Notwithstanding the foregoing, no
forfeiture should be permitted pursuant to this Section following Plan termination or a Change in
Control unless pursuant to arbitration consistent with the provisions of Section 11.3.



     6.4 Forfeiture for Competition. If the Committee finds, after full consideration of the facts
presented on behalf of the Company and a Participant, that the Participant, at any time within two
years following his termination of employment from all Companies and without written consent of a
Company, directly or indirectly owns, operates, manages, controls or participates in the ownership
(other than through ownership of less than 5% of the voting equity



8









 







securities or other interests of
a publicly traded entity), management, operation or control of or is employed by, or is paid as a
consultant or other independent contractor by a business which competes with the Company, and if
the Participant continues to be so engaged sixty (60) days after written notice has been given to
him: (a) the Participant shall, upon the demand of the Committee, repay to Valero the full amount
of the payment previously made to the Participant hereunder; or (b) if the Participant has not yet
received the payment of his vested Accrued Benefit, the Participant and any Surviving Spouse shall
forfeit any rights under this Plan and shall not be entitled to receive any benefit hereunder.



     6.5 Expenses Incurred in Enforcing the Plan. Valero will pay a Participant for all reasonable
legal fees and expenses incurred by him in successfully contesting or disputing his termination of
employment by a Company or in successfully seeking to obtain or enforce any benefit provided by
this Plan if such termination occurs or a benefit is payable following a Change in Control. Any
such fees and expenses shall be paid to the Participant as soon as reasonably practical after they
are incurred by the Participant and, in any event, by no later than the end of the year following
the year in which they are incurred by the Participant.



     6.6 No Restrictions on any Portion of Benefits Determined to be Excess Parachute Payments.
Notwithstanding that any benefit received or to be received by a Participant in connection with a
Change in Control, or the termination of his employment by a Company, would not be deductible,
whether in whole or in part, by a Company or any affiliated company, as a result of Section 280G of
the Code, the benefit payable under this Plan shall nevertheless not be reduced.



ARTICLE VII




ADMINISTRATION




     7.1 Committee Appointment. The members of the Compensation Committee of the Board of
Directors shall serve as the Committee; provided, that 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. Each Committee member will serve until his or her
resignation or removal.



     7.2 Committee Organization and Voting. The Committee shall be organized and shall conduct its
business in accordance with the bylaws of Valero, provided, however, that a member
of the Committee who is also a Participant will not vote or act on any matter relating to himself
or which is otherwise reasonably likely to enhance the benefits payable to such Participant
hereunder.



     7.3 Powers of the Committee. The Committee will have the exclusive responsibility for the
general administration of this Plan according to the terms and provisions of this 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 this Plan;




          (b) to construe all terms, provisions, conditions and limitations of this Plan;





9









 








          (c) to correct any defect, supply any omission or reconcile any inconsistency that may
appear in this Plan;




          (d) to determine all controversies relating to the administration of this Plan,
including but not limited to:





     (1) differences of opinion arising between a Company and a Participant except
when the difference of opinion relates to the entitlement to, the amount of or the
method or timing of payment of a benefit affected by a Change of Control, in which
event it shall be decided only pursuant to arbitration as set forth in Section 11.3,
and




     (2) any question it deems advisable to determine in order to promote the
uniform administration of this Plan for the benefit of all interested parties; and




     (e) to delegate powers of investment and administration, as well as those clerical and
recordation duties of the Committee, as it deems necessary or advisable for the proper and
efficient administration of this Plan.



     7.4 Committee Discretion. The Committee in exercising any power or authority granted under
this Plan or in making any determination under this Plan may use its sole discretion and judgment.
Any decision made or any act or omission, by the Committee in good faith shall be final and binding
on all parties and, except as otherwise set forth in Sections 6.4, 6.5 and 7.3(d)(1), shall not be
subject to de novo review.



     7.5 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
actuary, 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.



     7.6 Approval of Benefit Modifications. The Chief Executive Officer (“CEO”) of Valero shall
have authority to approve enhancements to the Credited Service, or other modifications to the
benefits, of any Participant or prospective Participant under the Plan in connection with the
employment, retention, retirement or termination of a Participant; provided however, that any such
modification made with respect to the benefits of the CEO or President of Valero shall be
recommended to and approved by the Board of Directors.



ARTICLE VIII




ADOPTION BY SUBSIDIARIES




     8.1 Procedure for and Status After Adoption. Any Subsidiary of Valero at the date of adoption
of this Plan, and any entity becoming a Subsidiary of Valero after such date of adoption, may adopt
this Plan by appropriate action of its board of directors or other governing body. Any power
reserved under this Plan to
the Company may be exercised separately by each such Subsidiary
adopting the Plan; provided, however, that (i) powers reserved under this Plan to



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the Board of
Directors or the Committee shall be exercised only by the Board of Directors of Valero or Committee
thereof and (ii) powers reserved under this Plan to Valero shall be exercised only by Valero. Each
Subsidiary adopting the Plan delegates to Valero exclusive administrative responsibility for the
Plan. However, Valero may allocate the costs of Plan benefits among the Companies in any reasonable
manner such that each Company shall bear the costs of participation by those Participants who are
or were employees of such Company. Each Subsidiary, by adopting this Plan, and in consideration of
the like undertakings of the other adopting Subsidiaries, agrees that the obligations and
liabilities of the Company(ies) for the payment of benefits to any Participants (and to any person
claiming through a Participant) hereunder shall be the joint and several obligation of each
Subsidiary adopting the Plan, not solely of the Company employing or previously employing a
Participant. Accordingly, each such adopting Subsidiary agrees that, to the extent permitted
under-Section 10.4, each Participant (and any person claiming through a Participant) shall have
recourse and a right of action to enforce benefits payable under this Plan against any and all
Companies contemporaneously participating in the Plan during the period of such Participant’s
Credited Service.



     8.2 Termination of Participation By Adopting Subsidiary. Any Subsidiary adopting this Plan
may, by appropriate action of its board of directors or other governing body, terminate its
participation in this Plan. The Committee may, in its discretion, also terminate a Subsidiary’s
participation in this Plan at any time. The termination of the participation in this Plan by a
Subsidiary will not, however, affect the rights of any Participant who is working or has worked for
the Subsidiary as to benefits previously vested under Article III of this Plan.



     8.3 Spinoff Plan. Notwithstanding the foregoing, effective as of July 1, 2006, all benefits
accrued under this Plan with respect to Participants employed by NuStar were spun off into the
NuStar SERP. In this regard, effective as of July 1, 2006, NuStar established what is now known as
the NuStar Pension Plan, a defined benefit plan qualified under Code section 401(a), which will
provide benefits to eligible employees of NuStar with respect to service earned by eligible
employees of NuStar and its participating affiliated companies from and after July 1, 2006. It is
the intent of the Company that the NuStar SERP assumed the current liabilities of this Plan with
respect to such NuStar Participants, and shall provide a single
supplemental benefit to such employees that is based upon the benefits such Participant
receives under the Valero Pension Plan, as well as the NuStar Pension Plan. From and after July 1,
2006, employees of NuStar who had been participating in this Plan ceased participating in this
Plan. This Plan shall have no liability of any kind to such individuals. Additionally, from and
after July 1, 2006, NuStar ceased being a participating Subsidiary under this Plan.



ARTICLE IX




AMENDMENT AND/OR TERMINATION




     9.1 Amendment or Termination of the Plan. The Committee may amend or terminate this Plan at
any time by an instrument in writing without the consent of any Company.



     9.2 No Retroactive Effect on Annual Benefits. No amendment will affect the rights of any
Participant to the Retirement benefit provided in Article IV previously accrued by the Participant
or will change a Participant’s rights under any provision relating to a Change of



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Control after a
Change in Control has occurred without his consent. However, the Board of Directors retains the
right at any time to change in any manner the Retirement benefit provided in Article IV but only as
to accruals after the date of the amendment.



     9.3 Effect of Termination. If this Plan is terminated, the accrued benefit of all
Participants shall immediately become fully vested, and the benefit of each Participant (determined
as of the date of the Plan termination and calculated in the manner provided in this Plan) shall,
except as provided in Section 9.4, be paid at the time it would otherwise be paid under the terms
of the Plan.



     9.4 Effect of Change in Control. In the event of a Change in Control, the accrued benefit of
all Participants in the Plan shall immediately become fully vested. Additionally, the Committee
may, within the period beginning thirty (30) days prior to the effective date of the Change in
Control, and ending twelve (12) months after the effective date of the Change in Control, make an
irrevocable decision to terminate the Plan (and all deferred compensation plans maintained by
Valero which must be aggregated with the Plan under Code section 409A) and distribute all benefits
to Participants. In the event of such termination following a Change in Control, the accrued
benefits of each Participant (determined as of the date of Plan termination and calculated in the
manner provided for in this Plan) shall be distributed in the form of a lump sum payment within
twelve (12) months following the termination of this Plan. In the absence of such Plan
termination, a Change in Control shall not alter the time and manner of the payment of benefits
hereunder, and all benefits shall be paid at the time and in the manner as they would otherwise be
paid in accordance with the provisions of this Plan.



ARTICLE X




FUNDING




     10.1 Payments from Trust. As set forth in Section 8.1, the Companies are jointly and
severally liable to pay the benefits due under this Plan; however should they fail to do so when a
benefit is due, the Participant, Surviving Spouse or other person entitled to payment of a benefit
hereunder may apply for payment of such benefit to the Trustee of the Trust, which shall pay
such benefit in accordance with the provisions of the Trust Agreement. In any event, if the Trust
fails to pay for any reason, the Companies shall remain jointly and severally liable for the
payment of all benefits provided by this Plan.



     10.2 Plan May Be Funded Through Life Insurance. It is specifically recognized that Valero
may, but is not required to, purchase life insurance so as to accumulate assets sufficient to fund
obligations under this Plan and that Valero may, but is not required to contribute any policy or
policies it may purchase and any amount it finds desirable to the Trust or any other trust
established to accumulate assets to fund obligations under this Plan. However, under all
circumstances, the Participants will have no rights in or to any such policies.



     10.3 Required Funding of Rabbi Trust. Except to the extent prohibited by law or to the extent
the Committee determines that making any contribution to the Trust may result in any unintended tax
or other adverse consequences, Valero will make contributions of cash or other assets sufficient to
fund the Trust on an actuarially sound basis so as to ensure that at all times



12









 







assets within the
Trust equal or exceed the Actuarial Equivalent of Accrued Benefits of all Participants under the
Plan, assuming the Accrued Benefits to be fully vested (whether they are or not). As of the end of
each Plan Year, Valero shall cause the actuary who last performed the annual actuarial evaluation
of the Valero Pension Plan, to determine the Actuarial Equivalent of the Accrued Benefits of all
Plan Participants, assuming the Accrued Benefits to be fully vested (whether they are or not) as of
the end of the preceding Plan Year. This annual determination shall be performed by the actuary, as
soon as practicable following the close of the Plan Year, and the actuary shall prepare and provide
to Valero a written report detailing the Accrued Benefits of the Participants. If such report shows
that the Plan assets are less than the Actuarial Equivalent of the Accrued Benefits, then Valero,
commencing within 60 days of receipt of the written report from the actuary, shall, except to the
extent prohibited by law or to the extent the Committee determines that making any contribution to
the Trust may result in any unintended tax or other adverse consequences, contribute to the Trust
(which contribution may be made, at Valero’s sole discretion, in up to four quarterly installments,
the last such installment to be made not later than December 31 of the Plan Year during which, such
report is received) such assets that it may choose in its sole discretion in an amount necessary to
ensure that the sum of (i) the fair market value of the Trust assets as of the end of such
preceding Plan Year, and (ii) the fair market value of such contributions as of the date each such
contribution is made, equals or exceeds the Actuarial Equivalent of the Accrued Benefits of all
Participants so reported, assuming the Accrued Benefits to be fully vested (whether they are or
not) as of the end of the prior Plan Year. Upon request, a Participant shall be entitled to a copy
of the report prepared by the actuary and likewise shall be furnished a schedule of Trust assets
reflecting Valero’s satisfaction of its funding obligation under this Section 10.3, such report to
be furnished to each Plan Participant within 30 days following the due date of Valero’s final
contribution to the Trust for the Plan Year, if any may be required for the particular Plan Year.



     10.4 Ownership of Assets; Release. All policies of insurance or other assets contributed to
the Trust (or to any other trust established for the purpose of funding benefits hereunder)
pursuant to Sections 10.2, 10.3 or otherwise shall be contributed by Valero, and all such policies
or other assets shall be owned solely by Valero immediately prior to such contribution. No Company,
other than Valero, shall contribute policies or assets to the Trust. As
an internal accounting matter, as between Valero and the other Companies, Valero may charge or
allocate all or any part of such contributions to other Companies in any reasonable manner
determined by Valero in accordance with generally accepted accounting principles, and may record
the amounts so allocated as obligations owing among Valero and such Companies. Valero may also
allocate or distribute assets received by it from the Trust pursuant to Section 10.5 hereof to
other Companies in any reasonable manner determined by Valero in accordance with generally accepted
accounting principles. However, notwithstanding the fact that a Company may be deemed to have a
claim against Valero with respect to such contributions or distributions, no Company (other than
Valero) shall at any time own or be deemed to own or have any contingent, reversionary or other
beneficial interest in any portion of the policies and other assets held in the Trust or any claim,
against the Trustee or otherwise, with respect thereto. Each Company (other than Valero), by its
adoption of this Plan, and in consideration of the mutual covenants herein contained, for itself,
its successors, assigns, representatives, administrators, trustees and other persons claiming by,
through or under such Company, hereby irrevocably and forever releases and relinquishes (i) any and
all rights, claims and interests (beneficial, reversionary, actual, contingent or otherwise), known
or unknown, asserted or unasserted, which



13









 







it has or may have, or may hereafter have, in or with
respect to the Trust, the Trust Fund (as such term is defined in the Trust Agreement) and the
policies and assets now or hereafter from time to time contributed or contributable thereto, held
therein or thereby, or distributable therefrom or thereby, and (ii) any claim, demand, action or
cause of action whatsoever which it has or may have, or may hereafter have, against the Trustee,
its successors or assigns, with respect thereto.



     10.5 Reversion of Excess Assets. Assets held pursuant to the Trust shall not be loaned to any
Company. However, Valero may, at any time, request the actuary who last performed the annual
actuarial valuation of the Valero Pension Plan to determine the Actuarial Equivalent of the Accrued
Benefits, assuming the Accrued Benefits to be fully vested (whether they are or not), as of the end
of the previous Plan Year. If the fair market value of the assets held in the Trust, as determined
by the actuary, exceeds the Actuarial Equivalent of the Accrued Benefits of all such Participants
by not less than 25%, then Valero may direct the Trustee to return to Valero that part of the
assets which is in excess of 125% of the Actuarial Equivalent of the Accrued Benefits.
Additionally, Valero may direct the Trustee to return to Valero any assets of the Trust in order to
comply with any legal requirement or to avoid any unintended tax or other adverse consequences as
determined by the Committee. Following the termination of the Plan and the final distribution of
all Accrued Benefits and the full satisfaction of all obligations of the Plan and the Trust, any
remaining assets in the Trust shall revert to Valero.



     10.6 Repurchase of Valero Stock. In order to facilitate diversification of Plan assets,
Valero shall be entitled, from time to time, upon notice to the Trustee, to repurchase shares of
Valero equity securities held in the Trust. Such repurchases shall be made for cash or in exchange
for other assets having a fair market value, as determined by the Trustee, equal to the fair market
value of such Valero securities at such date of purchase.



     10.7 Participants Must Rely Only on General Credit of the Companies. The provisions of
Sections 10.2 and 10.3 notwithstanding, it is specifically recognized by the Companies and the
Participants that this Plan is an unsecured corporate commitment and that each Participant (and any
Surviving Spouse or other person claiming through a Participant) must rely upon the general credit
of the Companies for the fulfillment of their obligations under this
Plan. Nothing contained in this Plan or in the Trust Agreement will constitute a
representation, covenant or guarantee by any Company that the policies and assets transferred to
the Trust (or any other trust established for the purpose of funding benefits hereunder) or the
general assets of such Company (or Companies) will be sufficient to pay any or all benefits under
this Plan. Neither this Plan nor the Trust creates any secured or priority position, preferential
right, lien, claim, encumbrance, right, title or other interest of any kind in any Participant in
any policy or other asset held by any Company, contributed to the Trust (or any other trust
established for the purpose of funding benefits hereunder) or otherwise designated to be used for
payment of any obligations created in this Plan. No policy or other specific asset of any Company
has otherwise been or will be set aside, or has been or will be pledged in any way for the
performance of obligations under this Plan, which would remove the policy or asset from being
subject to the claims of the general creditors of the respective Company. The Trust Agreement (and
any other agreement entered into to fund obligations under this Plan) shall specify that, with
respect to their benefits under this Plan, the Participants (and any Surviving Spouse or other
person claiming through a Participant) are only unsecured general creditors.



14









 





ARTICLE XI




MISCELLANEOUS




     11.1 Responsibility for Distributions and Withholding of Taxes. Valero shall calculate the
amount of any distribution payable to a Participant hereunder, and the amounts of any deductions
required with respect to federal, state or local tax withholding, and shall withhold or cause the
same to be withheld. However, any and all taxes payable with respect to any distribution or benefit
hereunder shall be the sole responsibility of the Participant, not of Valero or any Company,
whether or not Valero or any Company shall have withheld or collected from the Participant any sums
required to be so withheld or collected in respect thereof and whether or not any sums so withheld
or collected shall be sufficient to provide for any such taxes. Without limitation of the
foregoing, and except as may otherwise be provided in any separate employment, severance or other
agreement between the Participant and any Company, the individual Participant or Surviving Spouse,
as the case may be, shall be solely responsible for payment of any excise, income or other tax
imposed (i) upon any payment hereunder which may be deemed to constitute an “excess parachute
payment” pursuant to Section 4999 of the Code, or (ii) based upon any theory of “constructive
receipt” of any lump-sum or other amount hereunder.



     11.2 Limitation of Rights. Nothing in this Plan will be construed:




     (a) to give a Participant or other person claiming through him any right with respect
to any benefit except in accordance with the terms of this Plan or an agreement modifying
rights under this Plan;




     (b) to limit m any way the right of the Company to terminate a Participant’s employment
with the Company at any time;




     (c) to evidence any agreement or understanding, expressed or implied, that the Company
will employ a Participant in any particular position or for any particular remuneration; or




     (d) 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.



     11.3 Arbitration of Disputes.



     A. It is agreed that any and all disputes, claims, (whether tort, contract, statutory or
otherwise) and/or controversies which relate, in any manner to the Plan shall be submitted to final
and binding arbitration. The claims covered by this agreement to arbitrate include, but are not
limited to, those which relate to the following:




     a. The application and interpretation of the Plan.




     b. Forfeitures pursuant to Section 6.5 or 6.6 of the Plan.




     c. Eligibility for and the calculation of benefits from the Plan.



15









 






     d. That in interpreting or applying the provisions of the Plan, the Company has treated
the Participant unfairly or discriminated against the Participant in connection with a
work-related injury, disease or death, or claim for benefits under the Plan in violation of
the Texas Commission on Human Rights Act, Title VII of the Civil Rights Act of 1964, as
amended, The Equal Pay Act of 1963, as amended, the Americans with Disabilities Act, the Age
Discrimination in Employment Act of 1967, as amended, the Rehabilitation Act of 1973, as
amended, or any other provision forbidding discrimination in employment on any basis.




     e. That Valero or the Committee in interpreting or applying the provisions of the Plan,
breached any contract or covenant (express or implied), committed a tort or act of
discrimination (including, but not limited to race, sex, religion, national origin, age,
marital status, or medical condition, handicap or disability), or violated any federal,
state or other governmental law, statute, regulation, or ordinance.




     f. That a Company has discharged or in any manner discriminated against the Participant
because the Participant in good faith filed a claim, hired a lawyer to represent him or her
in a claim, instituted, or caused to be instituted, in good faith, any proceeding under the
Plan or the TWCA, or has testified in any such proceeding.



     B. This Arbitration provision is expressly made pursuant to and shall be governed by the
Federal Arbitration Act, 9 U.S.C. §§ 1-14. Except to the extent herein modified, all arbitration
proceedings shall be conducted in accordance with the Rules. The parties hereto agree that,
pursuant to Section 9 of the Federal Arbitration Act, a judgment of the United States District
Court for the Western District of Texas, San Antonio Division, or of any other court of competent
jurisdiction, may be entered upon an award made pursuant to arbitration.



     C. The neutral arbitrator (“Arbitrator”) shall be appointed in the manner prescribed in Rule
13 of the Rules. The decision of the Arbitrator selected thereunder shall be final and binding on
all parties.



     D. Except as may be modified by the Arbitrator for good cause shown, the following procedures
shall be followed in addition to those set forth within the Rules themselves. (1) At least twenty
(20) days before the arbitration, the parties must exchange lists of witnesses, including any
experts, and copies of all exhibits intended to be used at the arbitration. Except for good cause,
the Arbitrator may refuse to allow into evidence the testimony of any witness not timely disclosed.
In addition, except for good cause, the Arbitrator may exclude from evidence any exhibit not
previously tendered to the opposing parry in a timely fashion. (2) Each party may take the
deposition of one individual and any or all expert witnesses designated by another party.
Additional discovery, including but not limited to interrogatories and requests for production of
documents, medical or psychological examinations, may be had, upon a showing of substantial need,
where the Arbitrator so orders. (3) The Arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of the State of Texas, or federal law or both as applicable to the
claim(s) asserted. (4) The Arbitrator shall have the authority to entertain a motion to dismiss
and/or a motion for summary judgment by any party and shall apply the standards governing such
motions under the Federal Rules of Civil Procedure. (5) Rule 31 of the Rules is amended to allow
for the use of sworn depositions taken in conformity with the Federal Rules of Civil Procedure. (6)
The results of the arbitration shall be confidential and shall not be publicly released or reported
by the Arbitrator or by either parry.



16









 





     E. The Participant (or other person claiming through him) shall pay one half of the fees and
cost of the Arbitrator. Funds or other appropriate security shall be posted by each party for its
share of the Arbitrator’s fee, in an amount and manner determined by the Arbitrator, ten (10) days
before the first day of hearing. Each party shall pay for its own cost and attorneys fees, if any.
However, if any parry prevails on a statutory claim which affords the prevailing party attorney’s
fees, or if there is a written agreement providing for fees, the Arbitrator may award reasonable
fees to the prevailing party.



     F. This agreement to arbitrate shall survive the termination of Participant’s employment. It
can only be revoked or modified by a writing signed by the parties which specifically states an
intent to revoke or modify the provisions of this Section 11.3.



     G. Should one or more provisions of this Section 11.3 be rendered or declared invalid by
reason of any existing or subsequently enacted legislation, or by a decree of a court of competent
jurisdiction, such invalidation of such provision or provisions hereof shall not affect the
remaining portions of this agreement to arbitrate.



     H. Any arbitration proceeding commenced under this Section 11.3 shall, to the extent
practicable, be consolidated with any arbitration proceeding relating to the same or similar facts
and circumstances between the Trustee and Valero pursuant to the Trust Agreement.



     11.4 Distributions to Incompetents. Should a Participant or a Surviving Spouse be incompetent
at the time any payment is due hereunder, as determined by the Committee in its sole discretion,
Valero is authorized to make such payment to the guardian or conservator of the incompetent
Participant or Surviving Spouse or directly to the Participant or Surviving Spouse or to apply
those funds for the benefit of the incompetent Participant or Surviving Spouse in any manner the
Committee determines in its sole discretion.



     11.5 Nonalienation of Benefits. No right or benefit provided in this Plan will be
transferable by the Participant, except upon his death to a Surviving Spouse 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 Surviving Spouse 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 Valero hold or apply the right or benefit or any part of it to the benefit of
the Participant or Surviving Spouse, 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.



17









 





     11.6 Severability. If any term, provision, covenant or condition of this Plan is held to be
invalid, void or otherwise unenforceable, the rest of this Plan will remain in full force and
effect and will in no way be affected, impaired or invalidated.



     11.7 Notice. Any notice or filing required or permitted to be given to a Company, 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 Valero, acting on behalf of the Company or Committee, 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.



     11.8 Gender and Number. If the context requires it, words of one gender when used in this
Plan will include the other gender, and words used in the singular or plural will include the
other.



     11.9 Administration and Interpretation Consistent with Code Section 409A. The Plan, as
amended and restated, is intended to satisfy the requirements of Code section 409A and the rules
and regulations issued thereunder, and shall be construed, interpreted and administered consistent
with such intent.



     11.10 Governing Law. The Plan will be construed, administered and governed in all respects by
the laws of the State of Texas.



     11.11 Effective Date. Except as otherwise provided herein, this amendment and restatement of
the Plan is effective as of January 1, 2008.



     IN WITNESS WHEREOF, Valero has executed this amendment and restatement of the Supplemental
Executive Retirement Plan on November 10, 2008, to be effective as of January 1, 2008.



	 	 	 	 	 
	 	VALERO ENERGY CORPORATION

 	 
	 	By:  	/s/ William R. Klesse
 	 
	 	 	 	 
	 	 	 	 
	 




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