Exhibit 10.28
SEPARATION AGREEMENT AND RELEASE
This
Separation Agreement and Release (the “Agreement”) is
made and entered into between Gregory C. King (referred to as
“Mr. King”), a resident of Bexar County, Texas,
and Valero Energy Corporation, a Delaware corporation
(“Valero”), as of the 11 th day of
December, 2007.
WHEREAS,
Mr. 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. King wish to
confirm through this Agreement the payments and benefits that will
be provided to Mr. 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.
NOW
THEREFORE, in consideration of the foregoing and the material
covenants and agreements contained herein, the parties agree as
follows:
1.
Resignation and Termination of Employment . As of
December 11, 2007, Mr. 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
Exhibit A . Effective as of December 31, 2007 (the
“Termination Date”), it is agreed that
Mr. King’s employment with Valero and any and all
subsidiaries or affidavits will terminate.
2.
Consideration . Upon the Effective Date of this
Agreement, as defined in Section 20 below, Mr. King will
be paid or provided the following as the sole consideration for
Mr. King’s separation from Valero and his release and
other promises and covenants under this Agreement:
(a) Valero
will pay Mr. King an amount equal to the full amount of the
2007 annual bonus that Mr. King would have been awarded under
the terms of the “Executive Bonus Plan” had he remained
employed. Mr. King’s target percent for purposes of
determining his bonus for 2007 is 120% of his base salary of
$905,000. The amount of Mr. King’s bonus award for 2007
will be based upon the total percent of target award as approved by
Valero’s Compensation Committee. For example, if
Valero’s Compensation Committee approves bonuses to be paid
at 200% of target, then Mr. King’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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(b)
(i) Valero shall accelerate the vesting of any and all shares
of restricted Valero common stock awarded to Mr. 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
Exhibit B .
(ii) All options to purchase
shares of Valero common stock, as identified on the attached
Exhibit B , shall remain outstanding and shall remain
subject to vesting and exercise per the terms of the agreements
applicable to such options. Mr. King shall be entitled to
exercise said options in accordance with the time limit set forth
under the applicable agreements.
(iii) Performance Shares that
are scheduled to vest on the Normal Vesting Date in
January 2008 pursuant to the terms of the Performance Award
Agreements between Valero and Mr. 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. 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 2009, 2010 and 2011, respectively, shall be forfeited
as of the Termination Date.
(iv) The shares of Common Stock
distributable pursuant to the terms of the Performance Award
Agreements between Valero and Mr. King, as amended by
Paragraph 2(b)(iii) of this Separation Agreement, in
connection with the vesting of Performance Shares on the
Termination Date and in January 2008, shall be distributed on
July 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 409A of the Internal
Revenue Code of 1986, as amended and regulations relating thereto
(“IRC 409A”).
(c)
(i) Mr. 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. King under the
Valero Supplemental Executive Retirement Plan (“SERP”).
The amount of Mr. King’s 2007 annual bonus referenced in
Section 2(a) shall be considered for purposes of calculating
Mr. King’s compensation that is utilized to determine
the amounts payable under the SERP.
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(ii) The commencement of
benefits payable under the SERP as contemplated by Paragraph 2(c)
of this Separation Agreement shall not begin until July 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 2, 2008.
(d) Mr. 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.
(e) At
Mr. King’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 15,
2008.
(f) Valero
shall make available to Mr. King outplacement services through
a provider of Mr. King’s choice as may be reasonably required
by Mr. 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. King and the maximum cost incurred by Valero no later
than December 31, 2009.
(g) Valero
will continue to provide at its expense through December 31,
2008 security monitoring at Mr. King’s personal
residence at 512 Elizabeth Road, San Antonio Texas 78209.
(h) Mr. King will be allowed to permanently retain the
personal computer previously set up at his residence by Valero.
Further, Valero’s Information Services department will, with
assistance from Mr. King, identify personal
applications/programs that are now on Mr. King’s work
computer and will then transfer/install same on
Mr. King’s home computer without charge to
Mr. King.
Mr. King acknowledges and agrees that the foregoing payments
do not constitute monies, benefits or rights to which Mr. 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. King set forth in this Agreement.
Mr. King further acknowledges that
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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.
3.
Release of Claims . In consideration of the payments
and benefits provided or to be provided by or through Valero,
described above in Section 2, the receipt and sufficiency of
which are hereby acknowledged and confessed:
(a) Mr. 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
“Valero” or “Released Parties.”
(b) Mr. 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. 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.
(c) 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
(“ADEA”); the Older Worker Benefits Protection Act; the
Employee Retirement Income Security Act, as amended; the
retaliation provisions of the Texas Workers’ Compensation
Act; the Family and Medical Leave Act; and the Texas Commission on
Human Rights Act.
(d) 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’ fees. It includes but is not
limited to all claims Mr. King could assert concerning the
terms and conditions of his employment, concerning anything that
happened to Mr. King while he was an employee, or concerning
the separation of
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