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                                                                    EXHIBIT 10.1

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement (the "Agreement") is made and
entered into this lst day of July, 2003, between Valero Energy Corporation, a
Delaware corporation (the "Company"), and Orion Refining Corporation, a Delaware
corporation ("Orion").

                              W I T N E S S E T H:

         WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company is issuing to Orion preferred stock ("Preferred Stock")
which is convertible into common stock, $.01 par value, of the Company ("Common
Stock") pursuant to a Purchase and Sale Agreement dated as of May 13, 2003, and,
in connection with that issuance, the Company has agreed to provide the
following persons or entities with registration rights as provided herein: (i)
Orion, (ii) any trustee appointed in the bankruptcy of Orion (a "Trustee"),
(iii) any trust or other entity created as part of the bankruptcy of Orion for
the benefit of any equity holder, debtholder or other creditor of Orion (each,
an "Orion Trust") to which Securities are Transferred and (iv) any Transferee
(as defined herein), including without limitation any of the stockholders and
debtholders of Orion who acquire the Preferred Stock through the bankruptcy
proceedings of Orion, (Orion, any Trustees, any Orion Trusts and any Transferees
are collectively referred to herein as the "Holders"). The Preferred Stock and
the Common Stock issuable upon conversion of the Preferred Stock are
collectively referred to as "Securities" and each referred to singularly as a
"Security." Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Purchase and Sale Agreement.

         In consideration of the foregoing, the parties hereto agree as follows:

         1.       Shelf Registration. So long as any Transfer Restricted
Security (as defined in Section 5 hereof) exists until the second anniversary of
the date of issuance of the Preferred Stock, the Company shall take the
following actions:

                  (a)      The Company shall, within ten days after the date of
         issuance of the Preferred Stock, file with the Securities and Exchange
         Commission (the "Commission") and thereafter use its commercially
         reasonable best efforts to cause to be declared effective as soon as
         practicable following such filing (but in any event no later than 90
         days after the date of issuance of the Preferred Stock) a registration
         statement (the "Shelf Registration Statement") on an appropriate form
         under the Securities Act relating to the offer and sale of the Transfer
         Restricted Securities by the Holders thereof from time to time in
         accordance with the methods of distribution set forth in the Shelf
         Registration Statement and Rule 415 (or any successor provision) under
         the Securities Act (hereinafter, the "Shelf Registration"); provided,
         however, that no Holder shall be entitled to have the Securities held
         by it covered by such Shelf Registration Statement unless such Holder
         agrees in writing to be bound by all the provisions of this Agreement
         applicable to such Holder.

                  (b)      The Company shall use its commercially reasonable
         best efforts to keep the Shelf Registration Statement continuously
         effective, and, when necessary for that purpose, to amend the Shelf
         Registration Statement or to supplement the prospectus included therein

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         all as required by the Securities Act, in order to permit the
         prospectus included therein to be lawfully delivered by the Holders of
         the relevant Securities, until such time as all the Securities covered
         by the Shelf Registration Statement have been sold pursuant thereto or
         are eligible to be sold under Rule 144(k) under the Securities Act (or
         any successor rule thereof), assuming for this purpose that the Holders
         thereof are not affiliates of the Company (in any such case, such
         period being called the "Shelf Registration Period"); provided,
         however, that the Company shall not be obligated to keep such Shelf
         Registration Statement usable during a Suspension Period (as defined
         below) if:

                           (i)      (A) at such time the Company is engaged in
                  confidential negotiations or other confidential business
                  activities and (B) the Company determines, in its reasonable
                  judgment, upon advice of counsel, that the continued usability
                  of such Shelf Registration Statement (x) would require the
                  disclosure of such confidential negotiations or other
                  confidential business activities (but disclosure would not be
                  otherwise required) and (y) such disclosure could be
                  reasonably be expected to be detrimental to the Company in any
                  material respect (a "Confidential Event");

                           (ii)     the Company determines, in its reasonable
                  judgment, upon written advice of a nationally recognized
                  investment banking firm selected by the Company to the effect
                  that resales of the Transfer Restricted Securities pursuant to
                  the Shelf Registration Statement could reasonably be expected
                  to interfere in any material respect with the success of a
                  public offering by the Company of its equity securities for
                  which the Company has a good faith intention to promptly
                  commence marketing efforts or other material transaction in
                  which the Company is engaged involving the issuance of equity
                  securities by the Company (a "Company Offering Event"); or

                           (iii)    any event occurs or facts are discovered
                  ("Misstatement Event") which make any statement made in such
                  Shelf Registration Statement or the related prospectus untrue
                  in any material respect or which require the making of any
                  changes in such Registration Statement or prospectus in order
                  to make the statements therein not misleading (a "Material
                  Misstatement") and the Company thereafter complies with the
                  requirements of Section 2(h) hereof;

provided, further, that the failure to keep such Shelf Registration Statement
usable for offers and sales of Securities for any of the foregoing reasons (X)
for the first six months following the effective date of the Shelf Registration
Statement, shall occur no more than once and in such instance shall last no
longer than 30 days, and (Y) after the sixth-month anniversary of such effective
date, shall occur no more than four times in any 365 day period and shall last
no longer than 60 days in any 365 day period; provided, further, that the
failure to keep such Shelf Registration Statement usable for offers and sales of
Securities for a single Company Offering Event or a single Misstatement Event
shall last no longer than 30 days in respect of such event. Any such period
during which the Company is excused from keeping the Shelf Registration
Statement usable for offers and sales of Securities is referred to herein as a
"Suspension Period"; a Suspension Period shall commence on and include the date
that the Company gives prompt notice to the Holders that the Shelf Registration
Statement and the prospectus included therein is no longer usable for offers and
sales of Securities as a result of the application of the proviso (which

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contains clauses (i), (ii) and (iii)) of the foregoing sentence and shall end on
the earliest to occur of (1) in the event of a Confidential Event, two business
days following the public announcement by the Company of the related
transaction, (2) in the event of a Confidential Event or a Company Offering
Event, the abandonment by the Company of negotiations regarding the Confidential
Event or the Company Offering (upon which the Company shall promptly notify the
Holders in writing), (3) in the event of a Misstatement Event, two business days
following the day on which, whether through the filing of an amendment to the
Registration Statement, the making of another filing with the Commission or
otherwise, there is no longer a Material Misstatement, (4) the date on which
each Holder of Securities covered by the Shelf Registration Statement either
receives the copies of the supplemented or amended prospectus contemplated by
Section 2(h) hereof or is advised in writing by the Company, which shall occur
as promptly as practicable following its determination, that use of the
prospectus may be resumed, (5) the expiration of 60 days in the aggregate in any
365 day period and (6) in the event of a Company Offering Event or a
Misstatement Event, the expiration of 30 days. The Company shall extend the
Shelf Registration Period by the number of days during any Suspension Period or
any period during which the prospectus has been suspended pursuant to Section
2(h). Notwithstanding anything contained in this Section 1 to the contrary, the
Company shall not be excused from keeping the Shelf Registration Statement
usable for offers and sales of Securities during any applicable Holder Resale
Period due to a Company Offering Event of which the Holders did not have notice
prior to initiating such Holder Resale Period, unless on or after the date of
the commencement of the applicable Holder Resale Period and prior to the later
to occur of 9:00 p.m., Houston time, on the business day immediately following
the date of such commencement or 48 hours from receipt of notice of the
commencement of a Holder Resale Period, the Company provides written notice to
such Holders that the Company elects to commence a Suspension Period as a result
of a Company Offering Event in accordance with the terms of this Section 1. A
"Holder Resale Period" shall mean a period commencing on the day that Holders of
at least 25% of the Transfer Restricted Securities shall have provided written
notice to the Company of a current intention to sell Transfer Restricted
Securities pursuant to the Shelf Registration Statement and ending at 5:00 p.m.,
Houston time, on the 12th business day thereafter.

                  (c)      Notwithstanding any other provisions of this
         Agreement to the contrary, the Company shall cause the Shelf
         Registration Statement and the related prospectus and any amendment or
         supplement thereto, as of the effective date of the Shelf Registration
         Statement or any amendment and as of the date of the related prospectus
         or any supplement, (i) to comply in all material respects with the
         applicable requirements of the Securities Act and the rules and
         regulations of the Commission and (ii) not to contain any untrue
         statement of a material fact or omit to state a material fact required
         to be stated therein or necessary in order to make the statements
         therein, in light of the circumstances under which they were made, not
         misleading; provided, however, the Company shall have no such
         obligations or liabilities with respect to any written information
         pertaining to any Holder and furnished to the Company by or on behalf
         of such Holder specifically for inclusion therein.

                  (d)      The Shelf Registration Statement shall not include
         any securities other than the Securities.

                  (e)      The methods of distribution of the Securities
         specified in the Shelf Registration Statement shall include, without
         limitation, an offering "at market," a firm underwriting and a "best
         efforts" underwriting.

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         2.       Registration Procedures. In connection with the Shelf
Registration contemplated by Section 1 hereof and the intended method of
disposition thereof, the following provisions shall apply so long as any
Transfer Restricted Security exists:

                  (a)      The Company shall (i), if requested by Orion or a
         Holder of more than 15% of the Transfer Restricted Securities, furnish,
         without charge, to Orion or such Holder, prior to the filing thereof
         with the Commission on a timely basis so as to permit review thereof, a
         copy of the Shelf Registration Statement and each amendment thereof and
         each supplement, if any, to the prospectus included therein (except any
         supplement reflecting only previous sales by the Holders listed
         therein) and, in the event that Orion or such Holder is participating
         in the Shelf Registration Statement, the Company shall use its best
         efforts to reflect in each such document, when so filed with the
         Commission, such comments as Orion or such Holder reasonably may
         propose, (ii) include in each such document the names of the Holders
         who have delivered written notice to the Company at least three
         business days prior to the filing thereof that they propose to sell
         Transfer Restricted Securities pursuant to the Shelf Registration
         Statement as selling securityholders and (iii) file pursuant to Rule
         424(b) under the Securities Act, or as otherwise required by the
         Securities Act, an amendment to the Shelf Registration Statement or
         supplement the prospectus to cover new Holders of Securities upon at
         least seven business days' prior written notice by such new Holders to
         such effect.

                  (b)      The Company shall give written notice to Orion, the
         Holders of the Securities and the Holders of Transfer Restricted
         Securities included within the coverage of the Shelf Registration
         Statement (which notice pursuant to clauses (ii)-(v) hereof shall be
         accompanied by an instruction to suspend the use of the prospectus
         until the requisite changes have been made):

                           (i)      (1) when the Shelf Registration Statement or
                  any amendment or supplement thereto has been filed with the
                  Commission and (2) when the Shelf Registration Statement or
                  any post-effective amendment thereto has become effective;

                           (ii)     of any request by the Commission for
                  amendments or supplements to the Shelf Registration Statement
                  after it has been declared effective or the prospectus
                  included therein or for additional information;

                           (iii)    of the issuance by the Commission of any
                  stop order suspending the effectiveness of the Shelf
                  Registration Statement or the initiation of any proceedings
                  for that purpose;

                           (iv)     of the receipt by the Company or its legal
                  counsel of any notification with respect to the suspension of
                  the qualification of the Securities for sale in any
                  jurisdiction or the initiation or threatening of any
                  proceeding for such purpose; and

                           (v)      of the happening of any event that requires
                  the Company to make changes in the Shelf Registration
                  Statement or the prospectus in order that the Shelf
                  Registration Statement or the prospectus do not contain an
                  untrue statement of a

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<PAGE>

                  material fact nor omit to state a material fact required to be
                  stated therein or necessary to make the statements therein (in
                  the case of the prospectus, in light of the circumstances
                  under which they were made) not misleading.

         The Company shall also give notice to Orion and one person designated
         by the Holders of a majority of the Transfer Restricted Securities to
         act on behalf of the Holders of the receipt of any comments from the
         Commission or the staff thereof on the Shelf Registration Statement or
         the receipt of any other written communications from the Commission or
         the staff thereof in respect of the Shelf Registration Statement.

                  (c)      The Company shall make every commercially reasonable
         effort to obtain the withdrawal at the earliest possible time, of any
         order suspending the effectiveness of the Shelf Registration Statement.

                  (d)      The Company shall furnish to each Holder of Transfer
         Restricted Securities included within the coverage of the Shelf
         Registration, without charge, if the Holder so requests in writing, at
         least one copy of the Shelf Registration Statement and any
         post-effective amendment thereto, including financial statements and
         schedules and all exhibits thereto (including those, if any,
         incorporated by reference).

                  (e)      The Company shall, during the Shelf Registration
         Period, deliver to each Holder of Transfer Restricted Securities
         included within the coverage of the Shelf Registration Statement,
         without charge, as many copies of the prospectus (including each
         preliminary prospectus) included in the Shelf Registration Statement
         and any amendment or supplement thereto as such person may reasonably
         request. The Company consents, subject to the provisions of this
         Agreement, to the use of the prospectus or any amendment or supplement
         thereto by each of the selling Holders in connection with the offering
         and sale of the Transfer Restricted Securities covered by the
         prospectus, or any amendment or supplement thereto, included in the
         Shelf Registration Statement.

                  (f)      Prior to any public offering of the Securities
         pursuant to the Shelf Registration Statement, the Company shall
         register or qualify or cooperate with the Holders of the Transfer
         Restricted Securities included therein and their respective counsel in
         connection with the registration or qualification of the Securities for
         offer and sale under the securities or "blue sky" laws of such states
         of the United States as any Holder reasonably requests in writing and
         do any and all other acts or things necessary or advisable to enable
         the offer and sale in such jurisdictions of the Securities covered by
         the Shelf Registration Statement; provided, however, that the Company
         shall not be required to (i) qualify generally to do business in any
         jurisdiction where it is not then so qualified or (ii) take any action
         which would subject it to general service of process or to taxation in
         any jurisdiction where it is not then so subject.

                  (g)      The Company shall cooperate with the Holders of the
         Transfer Restricted Securities to facilitate the timely preparation and
         delivery of certificates representing the Securities to be sold
         pursuant to the Shelf Registration Statement free of any restrictive
         legends and in such denominations and registered in such names as the
         Holders may request

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         a reasonable period of time prior to sales of the Securities pursuant
         to the Shelf Registration Statement.

                  (h)      Upon the occurrence of any event contemplated by
         paragraphs (ii) through (v) of Section 2(b) above during the Shelf
         Registration Period, the Company shall promptly prepare and file a
         post-effective amendment to the Shelf Registration Statement or a
         supplement to the related prospectus and any other required document so
         that, as thereafter delivered to Holders of the Securities or
         purchasers of Securities, the prospectus will not contain an untrue
         statement of a material fact or omit to state any material fact
         required to be stated therein or necessary to make the statements
         therein, in light of the circumstances under which they were made, not
         misleading and furnish promptly to each such Holder a copy of the
         prospectus as so amended or supplemented and such additional copies as
         any such Holder may reasonably request. If the Company notifies Orion
         or the Holders of Transfer Restricted Securities included within the
         coverage of the Shelf Registration Statement that it is invoking a
         Suspension Period pursuant to Section 1(b) and to suspend the use of
         the prospectus until the requisite changes to the prospectus have been
         made, then Orion and the Holders shall suspend use of such prospectus
         during such Suspension Period.

                  (i)      Not later than the effective date of the Shelf
         Registration Statement, the Company will provide CUSIP numbers for the
         Preferred Stock registered for resale under the Shelf Registration
         Statement, and provide one or more certificates for such Preferred
         Stock, in a form eligible for deposit with The Depository Trust
         Company.

                  (j)      The Company will comply with all rules and
         regulations of the Commission to the extent and so long as they are
         applicable to the Shelf Registration and will make generally available
         to its security holders (or otherwise provide in accordance with
         Section 11(a) of the Securities Act) an earnings statement satisfying
         the provisions of Section 11(a) of the Securities Act, no later than 45
         days after the end of a 12-month period (or 90 days, if such period is
         a fiscal year) beginning with the first month of the Company's first
         fiscal quarter commencing after the effective date of the Shelf
         Registration Statement, which statement shall cover such 12-month
         period.

                  (k)      The Company may require each Holder of Securities to
         be sold pursuant to the Shelf Registration Statement to furnish to the
         Company such information regarding the Holder and the distribution of
         the Securities as the Company may from time to time reasonably require
         for inclusion in the Shelf Registration Statement, and the Company may
         exclude from such Shelf Registration Statement the Securities of a
         Holder until such Holder furnishes such information to the Company.

                  (l)      The Company shall enter into such customary
         agreements (including, if requested, an underwriting agreement in
         customary form) and take all such other action, if any, as any Holder
         of the Securities shall reasonably request in order to facilitate the
         disposition of the Securities pursuant to the Shelf Registration.

                  (m)      In the case of the Shelf Registration, the Company
         shall (i) make reasonably available for inspection by a single
         representative of the Holders that is designated by a majority of the
         Transfer Restricted Securities, any underwriter participating in any

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         disposition pursuant to the Shelf Registration Statement and any
         attorney, accountant or other agent retained by the Holders of the
         Securities or any such underwriter all relevant financial and other
         records, pertinent corporate documents and properties of the Company
         and (ii) cause the Company's officers, directors, employees,
         accountants and auditors to supply all relevant information reasonably
         requested by such representative of the Holders of the Securities or
         any such underwriter, attorney, accountant or agent in connection with
         the Shelf Registration Statement, in each case, as shall be reasonably
         necessary to enable such persons, to conduct a reasonable investigation
         within the meaning of Section 11 of the Securities Act; provided,
         however, that the foregoing inspection and information gathering shall
         be coordinated on behalf of the Holders by one person or entity
         designated by a majority of the Transfer Restricted Securities and on
         behalf of the other parties, by one counsel designated by and on behalf
         of such other parties.

                  (n)      In the case of any Shelf Registration, the Company,
         if requested by any Holder of Securities covered thereby selling such
         Securities in an underwritten public offering, shall cause (i) its
         counsel to deliver an opinion and updates thereof relating to the
         Securities in customary form addressed to such Holders and the managing
         underwriters thereof and dated the closing date of such sale (it being
         agreed that the matters to be covered by such opinion shall include,
         without limitation, the due incorporation and good standing of the
         Company and its subsidiaries; the qualification of the Company and its
         subsidiaries to transact business as foreign corporations; the due
         authorization, execution and delivery of the relevant agreement of the
         type referred to in Section 2(l) hereof; the due authorization,
         execution, authentication and issuance, and the validity and
         enforceability, of the applicable Securities; the absence of
         governmental approvals required to be obtained in connection with the
         Shelf Registration Statement, the offering and sale of the applicable
         Securities, or any agreement of the type referred to in Section 2(l)
         hereof; the compliance as to form of such Shelf Registration Statement
         and any documents incorporated by reference therein with the
         requirements of the Securities Act; and, as of the date of the opinion
         and as of the effective date of the Shelf Registration Statement or
         most recent post-effective amendment thereto, as the case may be, the
         absence from such Shelf Registration Statement and the prospectus
         included therein, as then amended or supplemented, and from any
         documents incorporated by reference therein of an untrue statement of a
         material fact or the omission to state therein a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading (in the case of any such documents, in the light of the
         circumstances existing at the time that such documents were filed with
         the Commission under the Securities and Exchange Act of 1934, as
         amended (the "Exchange Act")); (ii) its officers to execute and deliver
         all customary documents and certificates and updates thereof requested
         by any underwriters of the applicable Securities and (iii) its
         independent public accountants to provide to any underwriter therefor a
         comfort letter in customary form and covering matters of the type
         customarily covered in comfort letters in connection with primary
         underwritten offerings, subject to receipt of appropriate documentation
         as contemplated, and only if permitted, by Statement of Auditing
         Standards No. 72.

                  (o)      The Company shall use its commercially reasonable
         best efforts to cause the Common Stock included in such Shelf
         Registration Statement to be, upon resale thereunder, listed on each
         securities exchange, if any, on which any shares of Common Stock are
         then listed.

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                  (p)      The Company shall use its commercially reasonable
         best efforts to take all other steps necessary to effect the
         registration of the Transfer Restricted Securities covered by the Shelf
         Registration Statement contemplated hereby.

                  (q)      In the case of an underwritten offering and if
         requested by the managing underwriter or agent or any Holder, the
         Company shall promptly incorporate in a prospectus supplement or
         post-effective amendment to the Shelf Registration Statement such
         information as the managing underwriter or agent or such Holder
         reasonably requests to be included therein, including, with respect to
         the number of Securities being sold by such Holder to such underwriter
         or agent, the purchase price being paid therefor by such underwriter or
         agent and with respect to any other terms of any underwritten offering
         of the Securities to be sold in such offering; and make all required
         filings of such prospectus supplement or post-effective amendment as
         soon as practicable after being notified of the matters incorporated in
         such prospectus supplement or post-effective amendment.

                  (r)      If any of the Transfer Restricted Securities covered
         by any Shelf Registration are to be sold in an underwritten offering,
         the investment banker or investment bankers and manager or managers
         that will administer the offering ("Managing Underwriters") will be
         selected by the Holders of a majority in number of shares of such
         Transfer Restricted Securities to be included in such offering and will
         be a firm to which the Company shall not have reasonably objected.
         Notwithstanding anything to the contrary contained herein, the Company
         shall not be required to participate in an underwritten public offering
         of the Transfer Restricted Securities in the manner contemplated by
         this Agreement unless requested in writing by a majority in number of
         the Transfer Restricted Securities.

                  (s)      No person may participate in any underwritten
         registration hereunder unless such person (i) agrees to sell such
         person's Transfer Restricted Securities on the basis reasonably
         provided in any underwriting arrangements approved by the persons
         entitled hereunder to approve such arrangements and (ii) completes and
         executes all questionnaires, powers of attorney, indemnities,
         underwriting agreements and other documents reasonably required under
         the terms of such underwriting arrangements.

                  (t)      The Company shall use its commercially reasonable
         best efforts to make available the executive officers of the Company as
         reasonably designated by the Company to participate with the Holders of
         the Securities and any underwriters in one "road show" and associated
         selling efforts that may be reasonably requested by the Holders in
         connection with such road show.

         3.       Registration Expenses.

                  (a)      All expenses incident to the Company's performance of
         and compliance with this Agreement will be borne by the Company,
         regardless of whether the Shelf Registration Statement is ever filed or
         becomes effective, including without limitation:

                           (i)      all registration and filing fees and
                  expenses (including filings made with the National Association
                  of Securities Dealers, Inc.);

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                           (ii)     all fees and expenses of compliance with
                  federal securities and state "blue sky" or securities laws;

                           (iii)    all expenses of providing certificates and
                  prospectuses;

                           (iv)     all fees and disbursements of counsel for
                  the Company;

                           (v)      all application and filing fees in
                  connection with listing on a national securities exchange or
                  automated quotation system pursuant to the requirements
                  hereof; and

                           (vi)     all fees and disbursements of independent
                  certified public accountants of the Company (including the
                  expenses of any special audit and comfort letters required by
                  or incident to such performance).

         The Company will bear its internal expenses (including, without
         limitation, all salaries and expenses of its officers and employees
         performing legal or accounting duties), the expenses of any annual
         audit and the fees and expenses of any person, including special
         experts, retained by the Company.

                  (b)      In connection with the Shelf Registration Statement,
         Orion and the Holders of Transfer Restricted Securities who are selling
         or reselling Securities pursuant to the "Plan of Distribution"
         contained in the Shelf Registration Statement shall bear their own
         expenses.

         4.       Indemnification.

                  (a)      The Company agrees to indemnify and hold harmless
         each Holder of the Transfer Restricted Securities included within the
         coverage of the Shelf Registration Statement, each director or officer
         of such Holder and each other person, if any, who controls such Holder
         within the meaning of the Securities Act or the Exchange Act (each
         Holder and such directors, officers and controlling persons are
         referred to collectively as the "Indemnified Parties") from and against
         any losses, claims, damages or liabilities, joint or several, or any
         actions in respect thereof (including, but not limited to, any losses,
         claims, damages, liabilities or actions relating to purchases and sales
         of the Securities) to which each Indemnified Party may become subject
         under the Securities Act, the Exchange Act or otherwise, insofar as
         such losses, claims, damages, liabilities or actions arise out of or
         are based upon any untrue statement or alleged untrue statement of a
         material fact contained or incorporated by reference in the Shelf
         Registration Statement or the related prospectus or in any amendment or
         supplement thereto or in any preliminary prospectus relating to the
         Shelf Registration, or arise out of, or are based upon, the omission or
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the statements therein not misleading, and
         shall reimburse, as incurred, the Indemnified Parties for any legal or
         other expenses reasonably incurred by them in connection with
         investigating or defending any such loss, claim, damage, liability or
         action in respect thereof; provided, however, that (i) the Company
         shall not be liable in any such case to the extent that such loss,
         claim, damage or liability arises out of or is based upon any untrue
         statement or alleged untrue statement or omission or alleged omission
         made in the Shelf Registration

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         Statement or prospectus or in any amendment or supplement thereto or in
         any preliminary prospectus relating to a Shelf Registration in reliance
         upon and in conformity with written information pertaining to such
         Holder and furnished to the Company by or on behalf of such Holder
         specifically for inclusion therein and (ii) with respect to any untrue
         statement or omission or alleged untrue statement or omission made in
         any prospectus relating to a Shelf Registration Statement, the
         indemnity agreement contained in this subsection (a) shall not inure to
         the benefit of any Holder from whom the person asserting any such
         losses, claims, damages or liabilities purchased the Securities
         concerned, to the extent that a prospectus relating to such Securities
         was required to be delivered by such Holder under the Securities Act in
         connection with such purchase and any such loss, claim, damage or
         liability of such Holder results from the fact that there was not sent
         or given to such person, at or prior to the written confirmation of the
         sale of such Securities to such person, a copy of the final prospectus
         if the Company had previously furnished copies thereof to such Holder;
         provided further, however, that this indemnity agreement will be in
         addition to any liability which the Company may otherwise have to such
         Indemnified Party. The Company shall also indemnify underwriters, their
         officers and directors and each person who controls such underwriters
         within the meaning of the Securities Act or the Exchange Act to the
         same extent as provided above with respect to the indemnification of
         the Holders of the Securities if requested by such Holders.

                  (b)      Each Holder of the Securities, severally and not
         jointly, will indemnify and hold harmless the Company, each director or
         officer of the Company and each person, if any, who controls the
         Company within the meaning of the Securities Act or the Exchange Act
         from and against any losses, claims, damages or liabilities or any
         actions in respect thereof, to which the Company or any such
         controlling person may become subject under the Securities Act, the
         Exchange Act or otherwise, insofar as such losses, claims, damages,
         liabilities or actions arise out of or are based upon any untrue
         statement or alleged untrue statement of a material fact contained in a
         Shelf Registration Statement or prospectus or in any amendment or
         supplement thereto or in any preliminary prospectus relating to a Shelf
         Registration, or arise out of or are based upon the omission or alleged
         omission to state therein a material fact necessary to make the
         statements therein not misleading, but in each case only to the extent
         that the untrue statement or omission or alleged untrue statement or
         omission was made in reliance upon and in conformity with written
         information pertaining to such Holder and furnished to the Company by
         or on behalf of such Holder specifically for inclusion therein; and,
         subject to the limitation set forth immediately preceding this clause,
         shall reimburse, as incurred, the Company for any legal or other
         expenses reasonably incurred by the Company or any such controlling
         person in connection with investigating or defending any loss, claim,
         damage, liability or action in respect thereof; provided, however, that
         no such Holder shall be liable for any claims hereunder in excess of
         the amount of net proceeds received by such Holder from the sale of
         Securities pursuant to such Shelf Registration Statement. This
         indemnity agreement will be in addition to any liability which such
         Holder may otherwise have to the Company or any of its controlling
         persons.

                  (c)      Promptly after receipt by an indemnified party under
         this Section 4 of notice of the commencement of any action or
         proceeding (including a governmental investigation), such indemnified
         party will, if a claim in respect thereof is to be made against the

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<PAGE>

         indemnifying party under this Section 4, notify the indemnifying party
         of the commencement thereof; but the omission so to notify the
         indemnifying party will not, in any event, relieve the indemnifying
         party from any obligations to any indemnified party except to the
         extent that the indemnifying party has been materially prejudiced by
         such omission. In case any such action is brought against any
         indemnified party, and it notifies the indemnifying party of the
         commencement thereof, the indemnifying party will be entitled to
         participate therein and, to the extent that it may wish, jointly with
         any other indemnifying party similarly notified, to assume the defense
         thereof, with one counsel reasonably satisfactory to such indemnified
         parties (who shall not, except with the consent of the indemnified
         party, be counsel to the indemnifying party), and after notice from the
         indemnifying party to such indemnified party of its election so to
         assume the defense thereof the indemnifying party will not be liable to
         such indemnified party under this Section 4 for any legal or other
         expenses, other than reasonable costs of investigation, subsequently
         incurred by such indemnified party in connection with the defense
         thereof. In the event the indemnifying party assumes defense of such
         proceeding, any indemnified party shall have the right to participate
         in such proceeding and retain its own counsel, but the fees and
         expenses of such counsel shall be at the expense of such indemnified
         party unless the named parties to any such proceeding include both the
         indemnifying party and the indemnified party and representation of both
         parties by the same counsel would be inappropriate due to actual or
         potential differing interests between them, in which case the
         indemnifying party shall be responsible for the reasonable expenses of
         a single additional counsel mutually selected by the indemnifying and
         the indemnified parties to represent the indemnified parties. If the
         indemnifying party declines or fails to assume the defense of the
         action or to employ counsel reasonably satisfactory to the indemnified
         party, in either case within a 30-day period following notice from the
         indemnified party, or if a court of competent jurisdiction determines
         that the indemnifying party is not vigorously defending such action,
         then such indemnified party may employ counsel to represent or defend
         it in any such action and the indemnifying party shall pay the
         reasonable fees and disbursements of such counsel or other
         representative as incurred. No indemnifying party shall, without the
         prior written consent of the indemnified party, effect any settlement
         of any pending or threatened action in respect of which any indemnified
         party is or could have been a party and indemnity could have been
         sought hereunder by such indemnified party unless such settlement (i)
         includes an unconditional release of such indemnified party from all
         liability on any claims that are the subject matter of such action,
         (ii) does not include a statement as to or an admission of fault,
         culpability or a failure to act by or on behalf of any indemnified
         party and (iii) such settlement involves only the payment of money.

                  (d)      If the indemnification provided for in this Section 4
         is unavailable or insufficient to hold harmless an indemnified party
         under subsections (a) or (b) above, then each indemnifying party shall
         contribute to the amount paid or payable by such indemnified party as a
         result of the losses, claims, damages or liabilities (or actions in
         respect thereof) referred to in subsection (a) or (b) above in such
         proportion as is appropriate to reflect the relative fault of the
         indemnifying party or parties on the one hand and the indemnified party
         on the other in connection with the statements or omissions that
         resulted in such losses, claims, damages or liabilities (or actions in
         respect thereof) as well as any other relevant equitable
         considerations. The relative fault of the parties shall be determined
         by reference to, among other things, whether the untrue or alleged
         untrue statement of a material fact or

                                       11

<PAGE>

         the omission or alleged omission to state a material fact relates to
         information supplied by the Company on the one hand or such Holder or
         such other indemnified party, as the case may be, on the other, and the
         parties' relative intent, knowledge, access to information and
         opportunity to correct or prevent such statement or omission. The
         amount paid by an indemnified party as a result of the losses, claims,
         damages or liabilities referred to in the first sentence of this
         subsection (d) shall be deemed to include any legal or other expenses
         reasonably incurred by one counsel on behalf of such indemnified party
         in connection with investigating or defending any action or claim which
         is the subject of this subsection (d). Notwithstanding any other
         provision of this Section 4(d), the Holders shall not be required to
         contribute any amount in excess of the amount by which the net proceeds
         received by such Holders from the sale of the Securities pursuant to
         the Shelf Registration Statement exceeds the amount of damages which
         such Holders have otherwise been required to pay by reason of such
         untrue or alleged untrue statement or omission or alleged omission. The
         parties hereto agree that it would not be just and equitable if
         contribution pursuant to this Section 4(d) were determined by pro rata
         allocation or by any other method of allocation that does not take
         account of the equitable considerations referred to in this Section
         4(d). No person guilty of fraudulent misrepresentation (within the
         meaning of Section 11(f) of the Securities Act) shall be entitled to
         contribution from any person who was not guilty of such fraudulent
         misrepresentation. For purposes of this paragraph (d), each person, if
         any, who controls such indemnified party within the meaning of the
         Securities Act or the Exchange Act shall have the same rights to
         contribution as such indemnified party and each person, if any, who
         controls the Company within the meaning of the Securities Act or the
         Exchange Act shall have the same rights to contribution as the Company.

                  (e)      The agreements contained in this Section 4 shall
         survive the sale of the Securities pursuant to the Shelf Registration
         Statement and shall remain in full force and effect, regardless of any
         termination or cancellation of this Agreement or any investigation made
         by or on behalf of any indemnified party.

         5.       Rules 144 and 144A. The Company shall use its best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time during the Shelf
Registration Period the Company is not required to file such reports, it will,
upon the request of any Holder of Transfer Restricted Securities, make publicly
available other information so long as necessary to permit sales of their
securities pursuant to Rules 144 and 144A. The Company covenants that it will
take such further action as any Holder of Transfer Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Transfer Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including the requirements of Rule 144A(d)(4)) or any other exemption from
the registration requirements of the Securities Act. The Company will provide a
copy of this Agreement to prospective purchasers of the Preferred Stock
identified to the Company by a Holder upon request. Notwithstanding the
foregoing, nothing in this Section 5 shall be deemed to require the Company to
register any of the Preferred Stock pursuant to the Exchange Act.

         "Transfer Restricted Securities" means each Security until (i) the date
on which such Security has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement; provided
that, for the avoidance of any doubt, unless Orion

                                       12

<PAGE>

agrees otherwise in writing, any Transfer (including from an Orion Trust) of
Securities to any equity holder, debt holder or other creditor of Orion or any
affiliate thereof (each an "Orion Claimant") in exchange for or satisfaction of
all or any portion of such Orion Claimant's claims against or interests in Orion
or any Orion Trust and any Transfer to any Orion Trust, shall not be deemed to
be a disposition of such Securities in accordance with the Shelf Registration
Statement or (ii) the date on which such Security is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act.

         6.       Miscellaneous.

                  (a)      Remedies. The Company acknowledges and agrees that
         any failure by the Company to comply with its obligations under Section
         1 hereof may result in material irreparable injury to Orion or the
         Holders for which there is no adequate remedy at law, that it will not
         be possible to measure damages for such injuries precisely and that, in
         the event of any such failure, Orion or any Holder may obtain such
         relief as may be required to specifically enforce the Company's
         obligations under Section 1 hereof. The Company further agrees to waive
         the defense in any action for specific performance that a remedy at law
         would be adequate.

                  (b)      No Inconsistent Agreements. The Company will not on
         or after the date of this Agreement enter into any agreement with
         respect to its securities that is inconsistent with the rights granted
         to the Holders in this Agreement or otherwise conflicts with the
         provisions hereof. The Company hereby represents and warrants that the
         rights granted to the Holders hereunder do not in any way conflict with
         and are not inconsistent with the rights granted to the holders of the
         Company's securities under any agreement in effect on the date hereof.

                  (c)      Amendments and Waivers. The provisions of this
         Agreement may not be amended, modified or supplemented, and waivers or
         consents to departures from the provisions hereof may not be given,
         except by the Company and the written consent of the Holders of a
         majority in number of shares of Transfer Restricted Securities
         (provided that Holders of Common stock issued upon conversion of
         Preferred Stock shall be deemed to be Holders of the aggregate number
         of shares of Preferred stock from which such Common Stock was
         converted) affected by such amendment, modification, supplement, waiver
         or consents. Notwithstanding the foregoing, the provisions of this
         Agreement may not be amended, modified or supplemented in any manner
         that would uniquely and adversely affect a Holder or group of Holders
         without such amendment, modification or supplement being approved by
         written consent of the affected Holder or Holders, as the case may be.

                  (d)      Notices. All notices and other communications
         provided for or permitted hereunder shall be made in writing by hand
         delivery, first-class mail, facsimile transmission, or air courier
         which guarantees overnight delivery:

                           (i)      if to the Holders, at the most current
                  address shown for the Holders in the records of the Transfer
                  Agent, with a copy in like manner as follows:

                           (ii)     if to Orion:

                                       13

<PAGE>

                                    Orion Refining Corporation
                                    16701 Greenspoint Park Drive
                                    Suite 145
                                    Houston, Texas 77060
                                    Attention:  Ms. Roberta Rossi
                                    Telephone:  (832) 601-1022
                                    Facsimile:  (832) 601-1021

                  with a copy to:

                                    Vinson & Elkins L.L.P.
                                    2300 First City Tower
                                    Suite 2300
                                    Houston, Texas 77002-6760
                                    Attention:  Mr. Bruce R. Bilger
                                    Telephone:  (713) 758-2614
                                    Facsimile:  (713) 615-5429

                  So long as Orion is subject to the jurisdiction of a
                  bankruptcy court. with an additional copy to:

                                    Morris, Nichols, Arsht & Tunnell
                                    1201 North Market Street, P.O. Box 1347
                                    Wilmington, Delaware 19899-1347
                                    Attention:  Mr. Robert Dehney
                                    Telephone:  (302) 575-7353
                                    Facsimile:  (302) 425-4673

                           (iii)    if to the Company, at its address as
                  follows:

                                    Valero Energy Corporation
                                    One Valero Place
                                    San Antonio, Texas 78212
                                    Attention:  Kim Bowers
                                    Telephone:  (210) 370-2246
                                    Facsimile:  (210) 370-5889

                  All such notices and communications shall be deemed to have
         been duly given: at the time delivered by hand, if personally
         delivered; three business days after being deposited in the mail,
         postage prepaid, if mailed; when receipt is acknowledged by recipient's
         facsimile machine operator, if sent by facsimile transmission; and on
         the day delivered, if sent by overnight air courier guaranteeing next
         day delivery.

                  (e)      Third Party Beneficiaries. The Holders shall be third
         party beneficiaries to the agreements made hereunder between the
         Company, on the one hand, and Orion, on the other hand, and shall have
         the right to enforce such agreements directly to the extent they

                                       14

<PAGE>

         may deem such enforcement necessary or advisable to protect their
         rights or the rights of Holders hereunder.

                  (f)      Successors and Assigns. This Agreement shall inure to
         the benefit of and be binding upon the successors and assigns of each
         of the parties, including, without the need for an express assignment
         or any consent by the Company thereto, subsequent Holders of Transfer
         Restricted Securities. The Company hereby agrees to extend the benefits
         of this Agreement to any Holder of Transfer Restricted Securities and
         any such Holder may specifically enforce the provisions of this
         Agreement as if an original party hereto.

                  (g)      Counterparts. This Agreement may be executed in any
         number of counterparts and by the parties hereto in separate
         counterparts, each of which when so executed shall be deemed to be an
         original and all of which taken together shall constitute one and the
         same agreement.

                  (h)      Headings. The headings in this Agreement are for
         convenience of reference only and shall not limit or otherwise affect
         the meaning hereof.

                  (i)      Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
         AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
         WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

                  (j)      Severability. If any one or more of the provisions
         contained herein, or the application thereof in any circumstance, is
         held invalid, illegal or unenforceable, the validity, legality and
         enforceability of any such provision in every other respect and of the
         remaining provisions contained herein shall not be affected or impaired
         thereby.

                  (k)      Securities Held by the Company. Whenever the consent
         or approval of Holders of a specified number of Transfer Restricted
         Securities is required hereunder, Securities held by the Company or its
         affiliates (other than subsequent Holders of Transfer Restricted
         Securities if such subsequent Holders are deemed to be affiliates
         solely by reason of their holdings of such Securities) shall not be
         counted in determining whether such consent or approval was given by
         the Holders of such required percentage.

                  (l)      Assignment of Rights Hereunder. In connection with
         any Transfer (as defined herein) of any Transfer Restricted Securities
         to any Transferee (as defined herein), the person or entity making such
         Transfer ("Transferor") to a Transferee shall be entitled to assign to
         such Transferee the Transferor's rights hereunder in respect of such
         Transfer Restricted Securities provided that the Transferee agrees to
         be bound by the terms of this Agreement. For purposes of this
         Agreement, "Transfer" shall mean to sell, transfer, assign or otherwise
         dispose of, either voluntarily or involuntarily, or to enter into any
         contract, option or other arrangement or understanding with respect to
         the sale, transfer, assignment or other disposition of, Transfer
         Restricted Securities owned by a person or entity and "Transferee"
         shall mean (i) any person or entity to whom Orion, a Trustee or any
         Orion Trust Transfers any Transfer Restricted Securities, (ii) any
         subsequent transferee thereof; provided that in the case of any
         subsequent transferee, such subsequent transferee must receive Transfer
         of the Transfer Restricted Securities prior to the sixth-month
         anniversary

                                       15

<PAGE>

         date of the effective date of this Agreement, (iii) any Orion Claimant
         who receives Securities in exchange for or satisfaction of all or any
         portion of such Orion Claimant's claims against or interests in Orion
         or any Orion Trust, (iv) any affiliate of Orion, any Trustee, any Orion
         Trust or any of the persons or entities described in clauses (i), (ii)
         or (iiii) above and (v) any other person or entity who receives
         Securities to which the Company agrees in writing to designate as a
         Transferee.

                                       16

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                           VALERO ENERGY CORPORATION

                                           By: /s/ Kimberly S. Bowers
                                               ---------------------------------
                                            Name: Kimberly S. Bowers
                                            Title: Vice President

Confirmed and accepted as
   of the date first above
   written:

ORION REFINING CORPORATION

By: /s/ R. M. Rossi
    ----------------------------------
    Name: Roberta M. Rossi
    Title: Senior Vice President & General Counsel

                                       17