STOCK UNIT AWARD AGREEMENT
(with one year holding period)
This Stock Unit Award Agreement (Agreement), dated as of April 30, 2020 (the Grant Date), is between Valero Energy Corporation, a Delaware corporation (Valero), and , a Non-Employee Director of the Board of Directors of Valero (Director), who agree as follows:
1. Grant of Stock Units. Pursuant to the Valero Energy Corporation 2020 Omnibus Stock Incentive Plan (as may be amended, the Plan), Valero has granted pursuant to Section 6.8 of the Plan [ ] Stock Units to the Director. The parties enter into this Agreement to evidence the terms, conditions, and restrictions applicable to the Stock Unit Award.
2. The Plan. The Plan is incorporated herein by reference for all purposes. All capitalized terms contained in this Agreement shall have the definitions set forth in the Plan unless otherwise defined herein. The Director shall have no rights with respect to the Awards granted hereunder or any shares of Valeros common stock, $.01 par value (Common Stock), that may be issued with respect to such Awards that are not expressly conferred by the Plan or this Agreement. By way of clarification and not limitation, the Director will not have any voting rights with respect to the Stock Units or the Dividend Equivalent Award.
3. Vesting and Hold Period.
(a) Subject to Article 8 of the Plan, the Stock Units will vest (become nonforfeitable) in full on the date of the annual meeting of stockholders of Valero for the election of directors occurring in 2021 (the Vesting Date).
(b) The Director agrees to hold the Stock Units for a period of at least one-year following the Vesting Date (the Hold Period). The Director agrees that the Stock Units may not be sold, exchanged, pledged, hypothecated, transferred, garnished, or otherwise disposed of or alienated, or converted into shares of Common Stock, prior to the expiration of the Hold Period. The Director and Valero hereby waive any provision of the Plan that may allow for an acceleration of the Vesting Date or early termination of the Hold Period, including but not limited to Sections 8.4 and 10.2 of the Plan, and agree that the terms of this Agreement shall prevail over any conflicting terms in the Plan or other agreement or action by the Committee.
(c) Upon the expiration of the Hold Period (the Hold Period Expiration Date), the Director shall be entitled to the issuance of one share of Common Stock for each Stock Unit held by the Director. Upon the issuance of shares of Common Stock on the Hold Period Expiration Date, the Stock Units will expire and have no further value or effect. The Director agrees that in lieu of certificates, the shares of Common Stock issuable hereunder will be issued in uncertificated form pursuant to the Direct Registration System of Valeros stock transfer agent.
4. Dividend Equivalent Award. Subject to Article 8 of the Plan, the Director is hereby granted a Dividend Equivalent Award in addition to the Stock Unit Award. The Dividend Equivalent Award is payable in cash on the Hold Period Expiration Date as provided herein. The period from the Grant Date to the Hold Period Expiration Date is hereafter referred to as the Accumulation Period. On the Hold Period Expiration Date, the Director shall be paid in cash an amount equal to the cumulative amount of dividends paid to holders of Common Stock during the Accumulation Period calculated as if each Stock Unit held by the Director was an outstanding share of Common Stock during the Accumulation Period. Payment of the Dividend Equivalent Award is subject to the vesting of the Stock Units on the Vesting Date; no payment will be made to the Director with respect to the Dividend Equivalent Award if the Stock Units are forfeited prior to the Vesting Date. The Dividend Equivalent Award may not be sold, exchanged, pledged, hypothecated, transferred, garnished, or otherwise disposed of or alienated prior to the Hold Period Expiration Date.