VALERO ENERGY CORP/TX
SEPARATION AGREEMENT AND RELEASE - GREGORY C. KING
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<TYPE>EX-10.28
<SEQUENCE>6
<FILENAME>d54294exv10w28.htm
<DESCRIPTION>SEPARATION AGREEMENT AND RELEASE - GREGORY C. KING
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Exhibit&nbsp;10.28</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>SEPARATION AGREEMENT AND RELEASE</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Separation Agreement and Release (the &#147;Agreement&#148;) is made and entered into between Gregory C.
King (referred to as &#147;Mr.&nbsp;King&#148;), a resident of Bexar County, Texas, and Valero Energy Corporation,
a Delaware corporation (&#147;Valero&#148;), as of the 11<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day of December, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WHEREAS, Mr.&nbsp;King has elected to retire and to resign from any and all positions as an employee,
officer and director with Valero and its subsidiaries and affiliates, and Valero and Mr.&nbsp;King wish
to confirm through this Agreement the payments and benefits that will be provided to Mr.&nbsp;King in
full settlement of all matters relating to his employment relationship with Valero and any of its
subsidiaries and affiliates and his termination therefrom.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NOW THEREFORE, in consideration of the foregoing and the material covenants and agreements
contained herein, the parties agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">1. <U><B>Resignation and Termination of Employment</B></U>. As of December&nbsp;11, 2007, Mr.&nbsp;King has
resigned, or with the execution of this Agreement will resign, any and all positions as an officer
or director with Valero and any and all subsidiaries or affiliates, all as set forth in the
resignation notice attached as <B>Exhibit&nbsp;A</B>. Effective as of December&nbsp;31, 2007 (the &#147;Termination
Date&#148;), it is agreed that Mr.&nbsp;King&#146;s employment with Valero and any and all subsidiaries or
affidavits will terminate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2. <U><B>Consideration</B></U>. Upon the Effective Date of this Agreement, as defined in Section&nbsp;20
below, Mr.&nbsp;King will be paid or provided the following as the sole consideration for Mr.&nbsp;King&#146;s
separation from Valero and his release and other promises and covenants under this Agreement:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(a)&nbsp;Valero will pay Mr.&nbsp;King an amount equal to the full amount of the 2007 annual bonus
that Mr.&nbsp;King would have been awarded under the terms of the &#147;Executive Bonus Plan&#148; had he
remained employed. Mr.&nbsp;King&#146;s target percent for purposes of determining his bonus for 2007
is 120% of his base salary of $905,000. The amount of Mr.&nbsp;King&#146;s bonus award for 2007 will
be based upon the total percent of target award as approved by Valero&#146;s Compensation
Committee. For example, if Valero&#146;s Compensation Committee approves bonuses to be paid at
200% of target, then Mr.&nbsp;King&#146;s bonus award would be $2,172,000 ($905,000 base x 120% target
x 2.0 = $2,172,000), less applicable deductions. The 2007 bonus shall be paid on the date
that executive employees receive the bonus.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(b) (i)&nbsp;Valero shall accelerate the vesting of any and all shares of restricted Valero
common stock awarded to Mr.&nbsp;King such that any and all of such shares of restricted stock,
to the extent not already fully vested, shall become fully vested as of the Effective Date.
All of such previously unvested shares of restricted stock are described with particularity
on the attached <B>Exhibit&nbsp;B</B>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;All options to purchase shares of Valero common stock, as identified on the
attached <B>Exhibit&nbsp;B</B>, shall remain outstanding and shall remain subject to vesting and
exercise per the terms of the agreements applicable to such options. Mr.&nbsp;King shall be
entitled to exercise said options in accordance with the time limit set forth under the
applicable agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;Performance Shares that are scheduled to vest on the Normal Vesting Date in
January&nbsp;2008 pursuant to the terms of the Performance Award Agreements between Valero and
Mr.&nbsp;King (capitalized terms herein have the meanings assigned to such terms in the
respective Performance Award Agreements) shall vest on such Normal Vesting Date in January
2008 in accordance with the Performance Award Agreements, even though Mr.&nbsp;King will not be
an employee of Valero on such date, such vesting being subject to verification by the
Compensation Committee of attainment of the Performance Objectives. Any and all other
Performance Shares, including those that are scheduled to vest on the Normal Vesting Date in
January&nbsp;2009, 2010 and 2011, respectively, shall be forfeited as of the Termination Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;The shares of Common Stock distributable pursuant to the terms of the Performance
Award Agreements between Valero and Mr.&nbsp;King, as amended by Paragraph&nbsp;2(b)(iii) of this
Separation Agreement, in connection with the vesting of Performance Shares on the
Termination Date and in January&nbsp;2008, shall be distributed on July&nbsp;2, 2008. This delay in
payment is in compliance with the 6-month delay in payment to certain employees upon a
separation from service as required by Section&nbsp;409A of the Internal Revenue Code of 1986, as
amended and regulations relating thereto (&#147;IRC 409A&#148;).
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(c) (i)&nbsp;Mr.&nbsp;King shall be entitled at his Termination Date to an additional eight (8)
points, to be added to either age or service, to provide enhanced benefits for Mr.&nbsp;King
under the Valero Supplemental Executive Retirement Plan (&#147;SERP&#148;). The amount of Mr.&nbsp;King&#146;s
2007 annual bonus referenced in Section 2(a) shall be considered for purposes of calculating
Mr.&nbsp;King&#146;s compensation that is utilized to determine the amounts payable under the SERP.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;The commencement of benefits payable under the SERP as contemplated by Paragraph
2(c) of this Separation Agreement shall not begin until July&nbsp;2, 2008, consistent with the
6-month delay rule under IRC 409A. A one-time lump sum payment representing the
accumulation of payments that would otherwise have been made during the first six months
following the separation from service on the Termination Date shall be made on July&nbsp;2, 2008.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(d)&nbsp;Mr.&nbsp;King shall be entitled at his Termination Date to full participation under the
Valero Retiree Medical Plan on the same terms and conditions as similarly situated employees
are eligible for upon early retirement, as such benefits may be amended from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(e)&nbsp;At Mr.&nbsp;King&#146;s election prior to the Termination Date, Valero shall either provide Mr.
King with tax preparation services for 2007 consistent with the offer of such services to
similarly situated Valero employees, or, in the alternative, make a lump sum payment to Mr.
King in an amount of $8,000 (plus an amount for applicable tax based on a rate of 36.45%)
for tax preparation services as soon as reasonably practicable following the Termination
Date, but in any event no later than March&nbsp;15, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(f)&nbsp;Valero shall make available to Mr.&nbsp;King outplacement services through a provider of Mr.
King&#146;s choice as may be reasonably required by Mr.&nbsp;King up to a maximum aggregate cost to
Valero of $25,000.00. The outplacement services made available pursuant to Paragraph 2(f)
of this Separation Agreement shall be fully utilized by Mr.&nbsp;King and the maximum cost
incurred by Valero no later than December&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(g)&nbsp;Valero will continue to provide at its expense through December&nbsp;31, 2008 security
monitoring at Mr.&nbsp;King&#146;s personal residence at 512 Elizabeth Road, San Antonio Texas 78209.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(h)&nbsp;Mr.&nbsp;King will be allowed to permanently retain the personal computer previously set up
at his residence by Valero. Further, Valero&#146;s Information Services department will, with
assistance from Mr.&nbsp;King, identify personal applications/programs that are now on Mr.&nbsp;King&#146;s
work computer and will then transfer/install same on Mr.&nbsp;King&#146;s home computer without charge
to Mr.&nbsp;King.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;King acknowledges and agrees that the foregoing payments do not constitute monies, benefits or
rights to which Mr.&nbsp;King would otherwise be entitled as a result of his prior employment with
Valero, and these monies, benefits and rights constitute fair and adequate consideration and
compensation for the promises and covenants of Mr.&nbsp;King set forth in this Agreement. Mr.&nbsp;King
further acknowledges that
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Valero shall be entitled to withhold from the payments and benefits described herein all income and
employment taxes required to be withheld by applicable law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">3. <U><B>Release of Claims</B></U>. In consideration of the payments and benefits provided or to be
provided by or through Valero, described above in Section&nbsp;2, the receipt and sufficiency of which
are hereby acknowledged and confessed:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(a)&nbsp;Mr.&nbsp;King releases Valero, any subsidiary or other affiliated companies, successors and
assigns, and all of their past, present and future officers, directors, agents,
administrators, trustees, insurers, successors, employees, principals, shareholders, and
attorneys. Collectively, these persons and organizations are referred to in this Agreement
as &#147;Valero&#148; or &#147;Released Parties.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(b)&nbsp;Mr.&nbsp;King releases Valero from all existing, past and present, known and unknown claims,
demands, and causes of action of any nature for all existing, past and present, known and
unknown damages and remedies of any nature, which have accrued or, which may ever accrue, to
Mr.&nbsp;King or to his heirs, executors, administrators, legal representatives, successors or
assigns, resulting from or relating to any act or omission of any kind occurring on or
before the Effective Date of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(c)&nbsp;This release includes but is not limited to all claims under any federal, state, or
local employment law or regulation, including without limitation Title VII of the Civil
Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Americans with
Disabilities Act; the Rehabilitation Act of 1973; the Fair Labor Standards Act; the Age
Discrimination in Employment Act, as amended (&#147;ADEA&#148;); the Older Worker Benefits Protection
Act; the Employee Retirement Income Security Act, as amended; the retaliation provisions of
the Texas Workers&#146; Compensation Act; the Family and Medical Leave Act; and the Texas
Commission on Human Rights Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(d)&nbsp;This release also includes but is not limited to all claims under any other state,
federal, or local law or regulation and all claims as common law, including without
limitation negligence, contract, or tort claims, and all claims for backpay, front pay,
damages, liquidated damages, exemplary and punitive damages, injunctive relief, costs, or
attorneys&#146; fees. It includes but is not limited to all claims Mr.&nbsp;King could assert
concerning the terms and conditions of his employment, concerning anything that happened to
Mr.&nbsp;King while he was an employee, or concerning the separation of Mr.&nbsp;King&#146;s employment.
However, this release is not intended to waive rights or claims, if any, that arise after
the Effective Date of this Agreement, including any claims made by Mr.&nbsp;King to enforce the
terms of this Agreement. Moreover, nothing in this
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Agreement shall be construed to waive or release any vested rights of Mr.&nbsp;King under any
retirement, pension, 401(k) or other employee benefit plans. Mr.&nbsp;King shall be entitled to
rights or distributions, if any, from those plans in accordance with their respective terms
and provisions.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">4. <U><B>No Assignment</B></U>. Mr.&nbsp;King represents and warrants that he has not previously filed or
joined in any claims against Valero or any of the Released Parties, and that he has not given,
assigned or sold any portion of any claims released herein to anyone else.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5. <U><B>Effect of Agreement</B></U>. Mr.&nbsp;King acknowledges and agrees that he is entering into this
Agreement and releasing, waiving and discharging rights or claims only in exchange for
consideration that he is not already entitled to receive. Mr.&nbsp;King acknowledges and agrees that he
has read this release in its entirety and that this release is a full and final release of all
known and unknown claims, including rights and claims arising under the ADEA, that Mr.&nbsp;King may
have against Valero or any of the Released Parties. Mr.&nbsp;King acknowledges that, by Mr.&nbsp;King&#146;s free
and voluntary act of signing below, Mr.&nbsp;King agrees to all of the terms of this Agreement and
intends to be legally bound thereby. Mr.&nbsp;King acknowledges and agrees that if he should hereafter
make any claim or demand or commence or threaten to commence any action, claim or proceeding
against Valero or any of the Released Parties with respect to any cause, matter or thing which is
the subject of this release, this release may be raised as a complete bar to any such action, claim
or proceeding, and Valero or the applicable Released Parties may recover from Mr.&nbsp;King all costs
incurred in connection with such action, claim or proceeding, including attorneys&#146; fees; provided,
however, that nothing herein is intended to restrict Mr.&nbsp;King&#146;s rights to enforce the terms of this
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6. <U><B>No Admission of Liability</B></U>. This Agreement and the payments or provision of benefits
hereunder do not constitute an admission of liability or wrongdoing of any kind by Valero.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7. <U><B>Indemnification</B></U>. In consideration of the foregoing, Mr.&nbsp;King for himself, his heirs,
executors, administrators, legal representatives and assigns, independently covenants to, and does
hereby, indemnify and hold harmless Valero from any and all claims, demands, and causes of actions
listed or otherwise referred to in Section&nbsp;3 of this Agreement, including without limitation any
and all causes of action arising out of or relating to Mr.&nbsp;King&#146;s employment with Valero or his
termination or resignation from Valero, arising at any time on or before the Effective Date of this
Agreement, which may hereafter be asserted by any person, firm, government agency, or corporation
whomsoever claiming by, through, or under Mr.&nbsp;King, individually or collectively, for back wages,
damages (punitive, exemplary, or compensatory), or other relief claimed to be due to Mr.&nbsp;King.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement does not supersede, amend, modify, terminate or have any other effect
whatsoever upon that certain Indemnity Agreement between Valero and Mr.&nbsp;King, dated effective as of
August&nbsp;1, 1997, a true and correct copy of which is attached as <B>Exhibit&nbsp;C</B>.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">8. <U><B>Non-Disparagement</B></U>. Mr.&nbsp;King agrees not to, directly or indirectly, engage in
communications (oral or written) or conduct that would denigrate or disparage Valero or make any
negative statements to anyone about the business, finances, products, or employment, compensation
and benefit practices of Valero. Valero officers shall not, directly or indirectly, engage in
communications (oral or written) or conduct that would denigrate or disparage Mr.&nbsp;King to any third
party, or make any negative statements to any third party, about the performance or conduct of Mr.
King in connection with his employment with Valero.
</DIV>


<DIV style="margin-top: 6pt">
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Confidentiality and Other Restrictions</B></U>.</TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(a)
<U>Confidentiality of Agreement</U>. Mr.&nbsp;King understands that this Agreement is
confidential and agrees that he has not, may not, and will not disclose the existence or
terms of this Agreement (including any amounts paid in consideration of this Agreement) to
any third party, including but not limited to former or current employees of Valero unless
they already have knowledge of the terms of this agreement. Mr.&nbsp;King understands that he
may disclose the terms of this Agreement to his spouse, attorney, accountant, or tax
advisor, provided he instructs each such person that the information is confidential and not
to be disclosed unless and to the extent required by law or court order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(b)
<U>Proprietary Information and Trade Secrets</U>. Mr.&nbsp;King agrees that as an officer
of Valero, he had access to and became informed of confidential, proprietary, and/or trade
secret information of Valero (including, without limitation proprietary and not publicly
available information concerning processes, methods, trade secrets, research, secret data,
costs, names of users or purchasers of its products or services, business methods, operating
procedures or programs or methods of promotion and sale) which Mr.&nbsp;King obtained during his
employment with Valero (&#147;Confidential Information&#148;). Mr.&nbsp;King agrees that he will hold in a
fiduciary capacity for the benefit of Valero and will not directly or indirectly disclose or
use any Confidential Information, unless required by law or court order. For the purposes
of this Section&nbsp;9(b), information will not be deemed to be publicly available merely because
it is embraced by general disclosures or because individual features or combinations thereof
are publicly available.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(c)
<U>Claims by Others</U>. Mr.&nbsp;King agrees not to help, encourage, or voluntarily
participate in the asserting or filing of any claim or suit by any third party against
Valero or the Released Parties, except as required by law.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(d)
<U>Remedies for Breach</U>. Mr.&nbsp;King agrees and consents that if he commits any breach
of a covenant under Sections&nbsp;8 or 9 of this Agreement, or threatens to commit any such
breach, Valero will have the right (in addition to and not in lieu of any other right or
remedy that may be available) to temporary and permanent injunctive relief from a court of
competent jurisdiction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10. <U><B>Return of Valero Property</B></U>. Mr.&nbsp;King acknowledges that all records, files, documents
and equipment, and all information relating to Valero, its customers and suppliers, any other
materials that in any way relate to the business of Valero that Mr.&nbsp;King has accumulated during his
employment with Valero, are the property of Valero and that all such property shall be returned to
the sole possession of Valero, to the extent not already so returned, promptly after the date
hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">11. <U><B>Cooperation with Valero</B></U>. Mr.&nbsp;King agrees to reasonably cooperate with Valero and its
representatives, as reasonably requested by Valero, by responding to questions, attending meetings,
depositions, administrative proceedings and court hearings, executing documents and cooperating
with Valero and its legal counsel with respect to business issues and/or claims and litigation of
which he has personal or corporate knowledge as long as such cooperation does not unreasonably
interfere with his responsibility with or to a subsequent employer. Mr.&nbsp;King further agrees to
maintain in strict confidence any information or knowledge he has regarding current and/or future
claims against or litigation or administrative hearings involving Valero. Mr.&nbsp;King agrees to
communicate with any party adverse to Valero, or with a representative, agent or legal counsel for
any such party, concerning any such pending or future claims or litigation or administrative
hearing solely through legal counsel for Valero. The payments to be made to Mr.&nbsp;King under this
Agreement are in part in consideration for Mr.&nbsp;King&#146;s agreement to cooperate with Valero in
connection with the requirements set forth herein. Valero also agrees to pay all reasonable
expenses of Mr.&nbsp;King, including attorney fees, incurred while providing any such assistance to
Valero.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">12. <U><B>Legal Consultation</B></U>. Mr.&nbsp;King is not relying on any statement or representation of
any kind from Valero but is relying upon his own independent judgment and investigation, and he
fully understands that this Agreement is a FULL and FINAL SETTLEMENT and FULL and FINAL RELEASE of
any and all claims, demands and causes of action against Valero or any of the Released Parties that
have been or could have been asserted by Mr.&nbsp;King. Mr.&nbsp;King acknowledges that he has been
encouraged to consult
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">with an attorney prior to executing this Agreement and that he has had adequate time and
opportunity to review and consider this Agreement and to confer with his counsel of choice
regarding this Agreement and all related matters. The parties acknowledge and agree that all
parties shall bear their own attorneys&#146; fees and costs in connection with the review and execution
of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">13. <U><B>Voluntary Waiver of Rights</B></U>. Mr.&nbsp;King acknowledges and agrees that he is knowingly and
voluntarily entering into the Agreement after full disclosure of all the facts and circumstances
surrounding the execution of this Agreement and its legal effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">14. <U><B>Entire Understanding</B></U>. This Agreement represents and contains the entire understanding
of the parties hereto, and the terms of this Agreement are contractual and not mere recitals.
Further, this Agreement supersedes any and all prior oral and written agreements and
understandings, and no representation, warranty, condition, understanding or agreement of any kind
with respect to the subject matter hereof shall be relied upon by the undersigned unless expressly
stated herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">15. <U><B>Amendment; Waiver</B></U>. No amendment or waiver of any provision of this Agreement shall be
effective unless approved in writing by both parties. No waiver by either party at any time of any
breach by the other party of compliance with any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions
and shall not affect the right of either party thereafter to enforce each and every provision
hereof in accordance with its terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">16. <U><B>Severability</B></U>. It is agreed that if any provision or portion of a provision of this
Agreement shall be determined to be void by any court of competent jurisdiction, then such
determination shall not affect any other provision, or the remainder of the affected provision, of
this Agreement, all of which provisions shall remain in full force and effect; and it is the
intention of the parties hereto that if any provision of this Agreement is capable of two
constructions, one of which would render the provision valid, then the provision shall have the
meaning which renders it valid and consistent with the intent of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">17. <U><B>Governing Law</B></U>. It is agreed that this Agreement will be interpreted and construed in
accordance with the laws of the State of Texas, or federal law where applicable, and that venue
over any disputes arising hereunder or between Mr.&nbsp;King and Valero will lie exclusively in Bexar
County, Texas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">18. <U><B>Arbitration</B></U>. Except with respect to the covenants in Sections&nbsp;8 and 9, Mr.&nbsp;King agrees
that any dispute regarding the interpretation or enforcement of this Agreement that cannot be
resolved between the
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">parties by direct negotiations shall be resolved in accordance with Valero&#146;s Dialogue Dispute
Resolution Program, which includes binding arbitration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">19. <U><B>Acceptance of the Agreement</B></U>. Mr.&nbsp;King acknowledges that he has had twenty-one (21)
days following his receipt of this Agreement to consider it and sign it, although he may execute it
sooner if he wishes to do so. Mr.&nbsp;King further acknowledges that he understands that if he fails
to execute and deliver an executed copy of this Agreement to Valero within that twenty-one (21)&nbsp;day
period the Agreement will not be considered accepted and Mr.&nbsp;King will not be entitled to the
payments and benefits provided hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">20. <U><B>Revocation</B></U>. Mr.&nbsp;King further acknowledges that he has the right to revoke this
Agreement at any time prior to the expiration of seven (7)&nbsp;days after he has executed it, by
providing notice of revocation to Valero (R. Michael Crownover, Senior Vice President - Human
Resources, Valero Energy Corporation, One Valero Way, San Antonio, Texas 78249). To be effective,
such notice of revocation must be received by Valero no later than the seventh (7<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) day
after the Agreement is signed. Provided it has not previously been revoked, this Agreement will
become effective, enforceable and irrevocable on the eighth (8<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) day after the date on
which it is executed by Mr.&nbsp;King (the &#147;Effective Date&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">21. <U><B>Successors</B></U>. This Agreement shall inure to the benefit of and be enforceable by Mr.
King&#146;s legal representatives. This Agreement shall inure to the benefit of and be binding upon
Valero and its successors and assigns. As used in this Agreement, the term &#147;affiliate&#148; and
&#147;affiliated company&#148; means an entity controlled by, controlling or under common control with
Valero.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">22. <U><B>Duplicate Originals</B></U>. This Agreement may be executed in duplicate counterparts, and, if
so, each counterpart shall be deemed an original for all purposes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ACCEPTED AND AGREED:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><B>GREGORY C. KING</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>VALERO ENERGY CORPORATION</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>/s/ Gregory C. King</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>/s/ R. Michael Crownover</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Date Signed: 12/11/2007</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">R. Michael Crownover,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>Date Signed: </B>12/11/2007</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="RIGHT" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 14pt; margin-top: 18pt"><B>EXHIBIT A</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">list of subsidiaries and positions held<BR>
omitted for SEC filing

</DIV>

<P align="RIGHT" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 14pt; margin-top: 18pt"><B>EXHIBIT B</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">list of restricted stock and stock options<BR>
omitted for SEC filing

</DIV>

<P align="RIGHT" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 14pt; margin-top: 18pt"><B>EXHIBIT C</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">text of Indemnity Agreement dated August&nbsp;1, 1997<BR>
omitted for SEC filing

</DIV>

<P align="RIGHT" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">December&nbsp;19, 2007
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Mike Crownover<BR>
Senior Vice President<BR>
Valero Energy Corporation<BR>
One Valero Way<BR>
San Antonio, Texas 78249

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Re: Separation Agreement and Release dated December&nbsp;11, 2007 (the &#147;Agreement&#148;)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mike:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;11, 2007, Valero and I entered into the Agreement that set forth the agreements between
us in connection with my resignation from Valero. Upon further discussion with Valero, Valero and
I agree to the following modification to the Agreement:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The last sentence of Paragraph&nbsp;1 of the Agreement is deleted hereby and replaced with the following
revised sentence:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#147;Effective as of December&nbsp;28, 2007 (the &#147;Termination Date&#148;), it is agreed that Mr.&nbsp;King&#146;s
employment with Valero and any and all subsidiaries or affiliates will terminate.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as amended hereby, all other terms and provisions of the Agreement remain in full force and
effect. I understand that this new Termination Date will not reduce the final paycheck owed to me
by Valero. Please sign in the space provided below to evidence the agreement of Valero to the
terms and provisions of this Letter Agreement.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">    /s/ Gregory C. King
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Gregory C. King&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Agreed to&nbsp;December 19, 2007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">AGREED TO THIS 20th DAY OF DECEMBER, 2007
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR>
    <TD colspan="3" align="left">VALERO ENERGY CORPORATION<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" align="left">&nbsp;</TD>
</TR><TR>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Mike Crownover
&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Mike Crownover,&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Senior Vice President&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="RIGHT" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



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