AMENDED AND RESTATED

                    VALERO ENERGY CORPORATION

              SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

       (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1996)

<PAGE>

                       AMENDED AND RESTATED
                    VALERO ENERGY CORPORATION
              SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                        TABLE OF CONTENTS

                                                             Page

ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .1
     1.1  Accrued Benefit. . . . . . . . . . . . . . . . . . . .1
     1.2  Actuarial Equivalent or Actuarially Equivalent Basis .1
     1.3  Board of Directors . . . . . . . . . . . . . . . . . .2
     1.4  Change of Control. . . . . . . . . . . . . . . . . . .2
     1.5  Code . . . . . . . . . . . . . . . . . . . . . . . . .3
     1.6  Company. . . . . . . . . . . . . . . . . . . . . . . .3
     1.7  Committee. . . . . . . . . . . . . . . . . . . . . . .3
     1.8  Covered Compensation . . . . . . . . . . . . . . . . .3
     1.9  Credited Service . . . . . . . . . . . . . . . . . . .3
     1.10 Eligible Earnings. . . . . . . . . . . . . . . . . . .4
     1.11 Final Average Compensation . . . . . . . . . . . . . .4
     1.12 Monthly Covered Compensation . . . . . . . . . . . . .4
     1.13 Monthly FICA Amount. . . . . . . . . . . . . . . . . .4
     1.14 Normal Retirement Date . . . . . . . . . . . . . . . .4
     1.15 Participant. . . . . . . . . . . . . . . . . . . . . .4
     1.16 Plan . . . . . . . . . . . . . . . . . . . . . . . . .5
     1.17 Plan of Deferred Compensation. . . . . . . . . . . . .5
     1.18 Plan Year. . . . . . . . . . . . . . . . . . . . . . .5
     1.19 Retirement . . . . . . . . . . . . . . . . . . . . . .5
     1.20 Rules. . . . . . . . . . . . . . . . . . . . . . . . .5
     1.21 Securities Act . . . . . . . . . . . . . . . . . . . .5
     1.22 SERP Committee . . . . . . . . . . . . . . . . . . . .5
     1.23 Subsidiary . . . . . . . . . . . . . . . . . . . . . .5
     1.24 Surviving Spouse . . . . . . . . . . . . . . . . . . .5
     1.25 Trust. . . . . . . . . . . . . . . . . . . . . . . . .6
     1.26 Trustee. . . . . . . . . . . . . . . . . . . . . . . .6
     1.27 Valero . . . . . . . . . . . . . . . . . . . . . . . .6
     1.28 Valero Pension Plan. . . . . . . . . . . . . . . . . .6
     1.29 Valero Pension Plan Benefit. . . . . . . . . . . . . .6
     1.30 Voting Securities. . . . . . . . . . . . . . . . . . .6

ARTICLE II ELIGIBILITY . . . . . . . . . . . . . . . . . . . . .7
     2.1  Initial Eligibility. . . . . . . . . . . . . . . . . .7
     2.2  Frozen Participation . . . . . . . . . . . . . . . . .7
     2.3  Renewed Eligibility. . . . . . . . . . . . . . . . . .7

ARTICLE III VESTING. . . . . . . . . . . . . . . . . . . . . . .7

ARTICLE IV RETIREMENT BENEFIT. . . . . . . . . . . . . . . . . .8
     4.1  Calculation of Retirement Benefit. . . . . . . . . . .8
     4.2  Form and Time of Payment . . . . . . . . . . . . . . .9
     4.3  Modification of Pension. . . . . . . . . . . . . . . .9

ARTICLE V PRERETIREMENT SPOUSAL DEATH BENEFIT. . . . . . . . . .9
     5.1  Death Prior to Retirement. . . . . . . . . . . . . . .9
     5.2  Death After Participant Retires. . . . . . . . . . . 10
     5.3  Beneficiary Designation Prohibited . . . . . . . . . 10

ARTICLE VI PROVISIONS RELATING TO ALL BENEFITS . . . . . . . . 10
     6.1  Effect of This Article . . . . . . . . . . . . . . . 10
     6.2  Termination of Employment. . . . . . . . . . . . . . 10
     6.3  No Duplication of Benefits . . . . . . . . . . . . . 10
     6.4  Forfeiture For Cause . . . . . . . . . . . . . . . . 10
     6.5  Forfeiture for Competition . . . . . . . . . . . . . 10
     6.6  Expenses Incurred in Enforcing the Plan. . . . . . . 11
     6.7  No Restrictions on any Portion of Total Payments
            Determined to be Excess Parachute Payments . . . . 11
     6.8  Benefits Upon Re-employment. . . . . . . . . . . . . 11

ARTICLE VII ADMINISTRATION . . . . . . . . . . . . . . . . . . 11
     7.1  Committee Appointment. . . . . . . . . . . . . . . . 11
     7.2  Committee Organization and Voting. . . . . . . . . . 11
     7.3  Powers of the Committee. . . . . . . . . . . . . . . 12
     7.4  Committee Discretion . . . . . . . . . . . . . . . . 12
     7.5  Reliance Upon Information. . . . . . . . . . . . . . 12
     7.6  Approval of Benefit Modifications. . . . . . . . . . 13

ARTICLE VIII ADOPTION BY SUBSIDIARIES. . . . . . . . . . . . . 13
     8.1  Procedure for and Status After Adoption. . . . . . . 13
     8.2  Termination of Participation By Adopting Subsidiary. 13

ARTICLE IX AMENDMENT AND/OR TERMINATION. . . . . . . . . . . . 14
     9.1  Amendment or Termination of the Plan . . . . . . . . 14
     9.2  No Retroactive Effect on Annual Benefits . . . . . . 14
     9.3  Effect of Termination. . . . . . . . . . . . . . . . 14
     9.4  Effect of Change of Control. . . . . . . . . . . . . 14

ARTICLE X FUNDING. . . . . . . . . . . . . . . . . . . . . . . 15
     10.1 Payments from Trust. . . . . . . . . . . . . . . . . 15
     10.2 Plan May Be Funded Through Life Insurance. . . . . . 15
     10.3 Required Funding of Rabbi Trust. . . . . . . . . . . 15
     10.4 Ownership of Assets; Release . . . . . . . . . . . . 16
     10.5 Reversion of Excess Assets . . . . . . . . . . . . . 17
     10.6 Repurchase of Valero Stock . . . . . . . . . . . . . 17
     10.7 Participants Must Rely Only on General Credit of
            the Companies. . . . . . . . . . . . . . . . . . . 17

ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 18
     11.1 Responsibility for Distributions and Withholding
            of Taxes . . . . . . . . . . . . . . . . . . . . . 18
     11.2 Limitation of Rights . . . . . . . . . . . . . . . . 18
     11.3 Arbitration of Disputes. . . . . . . . . . . . . . . 18
     11.4 Distributions to Incompetents. . . . . . . . . . . . 20
     11.5 Nonalienation of Benefits. . . . . . . . . . . . . . 20
     11.6 Severability . . . . . . . . . . . . . . . . . . . . 21
     11.7 Notice . . . . . . . . . . . . . . . . . . . . . . . 21
     11.8 Gender and Number. . . . . . . . . . . . . . . . . . 21
     11.9 Governing Law. . . . . . . . . . . . . . . . . . . . 21
     11.10 Effective Date. . . . . . . . . . . . . . . . . . . 21

                       AMENDED AND RESTATED
                    VALERO ENERGY CORPORATION
              SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


     WHEREAS, Valero Energy Corporation and several of its subsidiaries have
established the Valero Energy Corporation Supplemental Executive Retirement
Plan originally effective January 1, 1983 which provides for certain highly
compensated management personnel a supplement to their Retirement pay so as to
retain their loyalty and to offer a further incentive to them to maintain and
increase their standard of performance; and

     WHEREAS, Valero Energy Corporation retained the right of the Board of
Directors to amend the Plan at any time by an instrument in writing; and

     WHEREAS, the Board of Directors has determined that the Plan should be
amended and restated to further protect the Participants' benefits in the
event of a Change of Control and to clarify its intent concerning amendments
pertaining to the payment of severance benefits;

     NOW, THEREFORE, Valero Energy Corporation amends and restates the Valero
Energy Corporation Supplemental Executive Retirement Plan as follows:

                            ARTICLE I

                           DEFINITIONS

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

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

     1.2  Actuarial Equivalent or Actuarially Equivalent Basis.  "Actuarial
Equivalent" or "Actuarially Equivalent Basis" means an equality in value of
the aggregate amounts expected to be received under different forms of payment
based on the same mortality and interest rate assumptions.  For this purpose,
the mortality and interest rate assumptions used in computing benefits under
the Valero Pension Plan will be used.  If there is no Valero Pension Plan or
successor qualified defined benefit plan, then the actuarial assumptions to be
used will be those actuarial assumptions deemed appropriate by the actuarial
firm, which last served as independent actuary for the Valero Pension Plan
prior to its termination or merger had the Valero Pension Plan remained in
existence with its last participant census.  For purposes of calculating any
amount payable under Section 9.3(iii) to any person who has not Retired or has
otherwise not commenced receiving monthly pension benefits under the Plan, the
assumption to be used will be that such person elects to have his monthly
pension benefit under the Plan commence on the earliest date on which the
person would otherwise be entitled to commence receiving monthly pension
benefits hereunder, notwithstanding that such benefits may be reduced by
application of the early retirement reduction factor pursuant to Section 4.1.

     1.3  Board of Directors.  "Board of Directors" means the Board of
Directors of Valero.

     1.4  Change of Control.  "Change of Control" means the occurrence of one
or more of the following events:

          (a)  any person (excluding any employee benefit plan of Valero, any
trustee, administrator or other entity administering any such plan, and Valero
or any Subsidiary) or any partnership, limited partnership, syndicate or other
group formed for the purpose of acquiring, holding or disposing of Voting
Securities within the meaning of Rule 13(d) under the Securities Act (a
"Group") shall acquire (whether in one or more transactions) Voting Securities
of Valero that result in such person or Group directly or indirectly
beneficially owning 50% or more of the Voting Securities of Valero; or

          (b)  the stockholders of Valero shall approve an agreement providing
for any merger, consolidation, combination or other transaction in which,
immediately following such transaction and after giving effect thereto, either
(i) less than 50% in the aggregate of the outstanding Voting Securities of the
surviving or resulting entity are then beneficially owned by (x) the
stockholders of Valero immediately prior to such transaction, or (y) if a
record date has been set to determine the stockholders of Valero entitled to
vote on such transaction, then the stockholders of Valero as of such record
date, or (ii) a majority of the board of directors or other governing body of
the surviving or resulting entity are not persons specified in clause (c)(i)
and (ii) below; or

          (c)  if at any time the following do not constitute a majority or
the Board of Directors of Valero or any successor entity referred to in clause
(b) above

               (i)  persons who are directors of Valero on January 1, 1996;
and

               (ii) persons who, prior to election as a director, were
nominated, recommended or endorsed by the vote at a meeting or the written
consent of the Board of Directors of Valero (or, following the completion of a
consolidation, merger, combination or other similar transaction which does not
result in a Change of Control as defined herein, the board of directors or
governing body of the surviving or resulting entity); or

          (d)  the Distribution Date, as such term is defined in the Rights
Agreement, dated as of October 26, 1995, between Valero and Harris Trust and
Savings Bank, as Rights Agent, shall have occurred, and the Rights distributed
thereunder shall have become exercisable, pursuant to Section 11(a)(ii) or
Section 13 of such Rights Agreement, to purchase either shares of Valero
Common Stock or common shares of another Person (as such term is defined in
such Rights Agreement); or

          (e)  the stockholders of Valero shall approve an agreement providing
either for the liquidation of Valero or for the sale or transfer of assets or
earning power of Valero or one or more of its Subsidiaries, in one or more
transactions, aggregating more than 50% of the assets or earning power of
Valero and its Subsidiaries, taken as a whole, to any other Person (other than
to Valero or one or more Subsidiaries and/or to one or more Persons which will
be Subsidiary after giving effect to such transaction).

     In the event the Company employing a Participant ceases to be a
Subsidiary of Valero, or otherwise terminates participation in the Plan, and
such Participant's participation in the Plan is not thereupon promptly
continued through employment by another Company, a "Change of Control" shall
be deemed to have occurred with respect to such Participant (but not with
respect to other Participants not similarly situated) and such Participant
shall be entitled to the rights and benefits under the Plan accruing upon a
Change of Control.  The provisions of this paragraph shall not apply to a
Participant who is Retired or otherwise not employed by such Company at such
date of termination.

     By resolution of the Committee, the figure "50%" appearing in clauses
(a), (b), and (e) may be changed to not less than "30%".

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

     1.6  Company.  "Company" means Valero and any Subsidiary adopting the
Plan.

     1.7  Committee.  "Committee" means the committee administering this Plan
as determined pursuant to Section 7.1.

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

     1.9  Credited Service.  "Credited Service" means a Participant's
continuing period of employment with a Company (whether or not contiguous),
commencing on the first day for which such Participant is paid, or entitled to
payment, for the performance of duties with a Company and terminating with the
Participant's final cessation of participation in the Plan.  With respect to
any full calendar year in which a Participant receives Eligible Earnings in
each payroll period as an active employee, he shall be credited with one year
of Credited Service.  With respect to any partial calendar year in which a
Participant receives Eligible Earnings as an active employee (such as the
calendar year in which employment commences or participation ceases) he shall
be credited with a fraction of a year of Credited Service in proportion to the
number of payroll periods during such calendar year that he received Eligible
Earnings as an active employee bears to the total number of payroll periods
during such year.  All partial years of Credited Service shall be aggregated
so that a Participant receives credit for all periods of employment regardless
of whether the Credited Service is interrupted.  Credited Service shall also
include, and a Participant shall be credited with, such additional periods of
time, if any, as may have been agreed upon by the Participant and a Company in
connection with the Participant's employment, termination or otherwise.

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

     1.11 Final Average Compensation.  "Final Average Compensation" means a
Participant's average monthly Eligible Earnings from any Company for the
thirty-six consecutive calendar months that give the highest average monthly
rate of Eligible Earnings for the Participant out of all calendar months next
preceding the earliest of: (a) the date upon which a Participant becomes
ineligible for participation in this Plan pursuant to Section 2.2, (b) the
latest of (i) the Participant's termination for total disability or (ii) his
Retirement, (c) the termination of the Plan or (d) in the case of a
Participant who is not a Continuing Participant pursuant to Section 9.4, a
Change of Control.

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

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

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

     1.15 Participant.  "Participant" means either (a) an employee of a
Company who is eligible for and is participating in the Plan or (b) a former
employee of a Company who is receiving, or is eligible to receive benefits
under the Plan.

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

     1.17 Plan of Deferred Compensation.  "Plan of Deferred Compensation"
means the Valero Energy Corporation Executive Deferred Compensation Plan, the
Valero Energy Corporation Key Employee Deferred Compensation Plan, and any
contributions made under a salary reduction agreement to a Code Section 125
cafeteria plan or Code Section 401(k) cash or deferral arrangement maintained
by the Company.

     1.18 Plan Year.  "Plan Year" means the calendar year.

     1.19 Retirement.  "Retirement", "Retirees, "Retire" or "Retired" means
the Retirement of a Participant from any Company either (a) early, as of the
first day of any month coincident with or next following: (i) with respect to
a Participant in the active employment of the Company who has attained the age
of 55 years and completed five (5) years of Credited Service, the date such
Participant retires from the service of the Company prior to his attainment of
age 65; or (ii) subject to the provisions of Article III, with respect to a
Participant whose service is terminated prior to his attainment of age 55 and
who has completed five (5) years of Credited Service, the date on which such
Participant elects to commence receipt of his Valero Pension Plan Benefit on
or after his attainment of age 55 and prior to his attainment of age 65; or
(b) upon his Normal Retirement Date.

     1.20 Rules.  "Rules" means the Commercial Arbitration Rules of the
American Arbitration Association in effect at the date of commencement of any
arbitration hereunder.

     1.21 Securities Act.  "Securities Act" means the Securities Exchange Act
of 1934, as amended from time to time.

     1.22 SERP Committee.  "SERP Committee" means a committee of officers or
employees to which the Committee may delegate authority to perform specified
administrative functions in accordance with paragraph 7.3(e).

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

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

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

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

     1.27 Valero.  "Valero" means the Valero Energy Corporation, the sponsor
of this Plan, and its successors.

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

     1.29 Valero Pension Plan Benefit.  "Valero Pension Plan Benefit" means
the amount of monthly benefit payable from the Valero Pension Plan which (i)
in the case of an unmarried Participant, is based upon a lifetime annuity
payable to such Participant pursuant to the provisions of Article 4 of the
Valero Pension Plan as executed on December 30, 1994, or any successor
provision; or, (ii) in the case of a married Participant, is based upon a
joint and survivor pension of Actuarially Equivalent Value to the pension
otherwise payable to such Participant for life pursuant to the provisions of
Article 4 of the Valero Pension Plan as executed on December 30, 1994, or any
successor provision.

     1.30 Voting Securities.  "Voting Securities" means with respect to any
corporation or other entity, the common stock or any other security of such
person ordinarily entitled to vote for directors (or other governing body) of
such corporation or entity, and any debt or equity security convertible into
or exchangeable or exercisable for a security so entitled to vote.  In
calculating the percentage of Voting Securities owned by a person or Group,
securities that are immediately convertible, or by their terms upon the
occurrence of any event or the lapse of time, or both, will become convertible
into or exchangeable or exercisable for securities so entitled to vote shall
be deemed to represent the number of shares of common stock or other voting
securities into which such securities are then or will become ultimately
convertible or for which they are or will ultimately become exchangeable or
exercisable, and the total number of issued and outstanding shares of common
stock (or other voting securities) shall be determined on a pro forma basis
after giving effect to such conversion, exchange or exercise.  The percentage
of Voting Securities held by a person or Group shall be deemed to be equal to
the percentage of the number of votes that could be cast for the election of
directors (or other governing body) that such person or Group would be
entitled to so cast after giving effect to the provisions of the preceding
sentence.  As used in this Plan, the term "person" shall include any
individual, corporation, partnership, firm or other entity. 

                            ARTICLE II

                           ELIGIBILITY

     2.1  Initial Eligibility.  An employee shall become a Participant in the
Plan as of the date he is selected and named in the minutes of the Committee
for inclusion as a Participant in the Plan.

     2.2  Frozen Participation.  If an employee who is a Participant later
becomes ineligible to continue to participate but still is employed by an
adopting Company, his Accrued Benefit will be frozen as of the last day of the
Plan Year prior to the Plan Year during which he initially became ineligible
to participate.  He will later be entitled to that frozen Accrued Benefit,
upon Change of Control, Plan termination, Retirement or his earlier
termination of employment with all Companies with a vested interest, subject
to the requirements of Articles III and IV.  The frozen Accrued Benefit will
be payable at the time and in the form set out in Article IV.  The Surviving
Spouse of a Participant whose Accrued Benefit is frozen at the time of the
Participant's death shall not be entitled to any death benefit under this
Plan.  A Participant whose Accrued Benefit is frozen at the time of incurring
a disability shall not accrue any further Credited Service either for accrual
or vesting purposes after the disability occurs so long as the Participant's
Accrued Benefit in this Plan is frozen.  If the frozen Accrued Benefit is less
than the benefit which could otherwise be provided without this limitation,
then the benefit will not exceed the Participant's frozen Accrued Benefit. 
Additionally, if any of the events described in Article VI should occur, the
Participant whose Accrued Benefit is frozen shall be subject to having his
frozen Accrued Benefit either restricted in amount or forfeited in accordance
with Article VI.

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

                           ARTICLE III

                             VESTING

     Except as otherwise set forth herein, a Participant's Accrued Benefit
attributable to Credited Service prior to January 1, 1996 shall vest pursuant
to the following vesting schedule:


           Participant's Years                      Vested Percentage
           of Credited Service

       Less than 5 . . . . . . . . . . . . . . . .  0%
       5 or more . . . . . . . . . . . . . . . . .  100%

     Except as otherwise set forth herein, a Participant's Accrued Benefit
attributable to Credited Service on or after January 1, 1996 shall vest only
upon the occurrence of the Participant's death, disability or Retirement, and
all benefits under this Plan shall be forfeited if the Participant terminates
employment from all Companies prior to death, disability or Retirement.

     The foregoing notwithstanding, a Participant's Accrued Benefit (whether
attributable to Credited Service occurring before, on or after January 1,
1996) shall vest upon the occurrence of a Change of Control, upon termination
of the Plan pursuant to Section 9.1 or if the adopting Subsidiary employing a
Participant terminates its participation in the Plan and such Participant's
participation in the Plan is not promptly continued through employment by
another adopting Subsidiary.

     All Credited Service, whether occurring before or after January 1, 1996,
shall be counted in determining whether an Accrued Benefit attributable to
pre-January 1, 1996 Credited Service has vested.

     In addition to the benefits payable above, other than as a result of a
Change of Control, or on account of death, disability or Retirement, the
Committee may from time to time, in its sole and absolute discretion pay a
benefit greater than the vested Accrued Benefit of a Participant, such
determination to be made on a case by case basis.

                            ARTICLE IV

                        RETIREMENT BENEFIT

     4.1  Calculation of Retirement Benefit.  Subject to the following
provisions of this Section 4.1, the provisions of Section 4.3 and Article IX,
the monthly pension payable under the Plan shall be an amount equal to the sum
of (i) plus (ii) less (iii) where (i) equals: 1.60% of the Participant's Final
Average Compensation multiplied by his number of years of Credited Service;
and (ii) equals .35% multiplied by the product of his years of Credited
Service (not to exceed 35 years) times the excess of his Final Average
Compensation over the lesser of (a) 1.25 times his Monthly Covered
Compensation, or (b) the Monthly FICA Amount; and (iii) equals the
Participant's Valero Pension Plan Benefit.  In the case of an unmarried
Participant the benefit shall be based on a lifetime annuity.  In the case of
a married Participant the benefit shall be a fifty percent (50%) Qualified
Joint and Survivor Annuity pension of Actuarially Equivalent Value to the
pension otherwise payable for life hereunder.  The monthly pension payable
under the Plan, as determined above, shall be further reduced by the
equivalent amount the Valero Pension Plan Benefit is increased as a result of
increases in the amount of maximum benefits payable from qualified plans in
accordance with Code Section 415 or other applicable law.  A Participant who
Retires prior to this Normal Retirement Date may elect to have his monthly
pension commence on the first day of any month coincident with or following
his actual Retirement, but not later than his Normal Retirement Date.  If a
Participant elects to have his monthly pension commence prior to his Normal
Retirement Date, the monthly pension payable to such Participant shall be
determined by multiplying the monthly pension otherwise payable to him by the
applicable early retirement reduction factor contained in the schedule of such
factors set forth in Section 4.3(B)(2) (or any successor provision) of the
Valero Pension Plan.

     4.2  Form and Time of Payment.  Monthly benefits payable under the Plan
shall be made available to the Participant with the same payment elections as
are available to the Participant under the Valero Pension Plan.  In that
regard, Valero shall furnish each Participant, on or about 180 days prior to
the date on which he will have both attained age 55 and completed five years
of Credited Service, or, if earlier, the date he will have attained age 65, a
written explanation of (a) the terms and conditions of payment provided under
the form of payments as described in the Valero Pension Plan and the optional
forms of payment which may be elected in lieu thereof; (b) the terms and
conditions of payment provided under the automatic pension as described in the
Valero Pension Plan; and (c) the relative financial effect on a Participant's
total pension of an election not to take the standard and automatic pension. 
In addition, Valero shall also furnish each married Participant at least 120
days prior to his Normal Retirement Date or as soon as practicable after the
Participant makes application for the earlier commencement of his benefit
under the Plan, a written statement of the amount of pension which would be
payable on his behalf under the standard and automatic Qualified Joint and
Survivor Annuity pension as is described in the Valero Pension Plan; and the
amount of pension otherwise payable under the available optional forms of
benefit.

     4.3  Modification of Pension.  The Committee shall have the right to
modify the calculation of the benefit payable as to any Participant as it may
desire from time to time; provided, however, that any such modification shall
not result in a reduction of the benefit payable below the amount set forth
above in Section 4.1.  In addition, except as expressly provided for herein,
benefits payable under this Plan to any Participant shall not affect any other
right or entitlement a Participant may have by contract or otherwise.  In
addition, the benefits payable to a Participant under this Plan may be
modified by written agreement entered into between the Participant and a
Company and approved pursuant to Section 7.7.  If so modified, the provisions
of such written agreement shall prevail in determining such Participant's
rights and benefits under this Plan.

                            ARTICLE V

               PRERETIREMENT SPOUSAL DEATH BENEFIT

     5.1  Death Prior to Retirement.  In the event that a Participant in the
Plan who has attained age 55 and completed five years of Credited Service dies
while employed by a Company but has not Retired, the Participant's Surviving
Spouse shall receive for life a Surviving Spouse benefit under the Plan, which
shall commence on the first day of the month following the date of the
Participant's death and shall be equal to fifty percent (50%) of the amount
the Participant would have received under Section 4.1 if he had Retired early
on his date of death and elected immediate commencement of his pension on his
earliest Retirement date pursuant to Section 4.2.

     5.2  Death After Participant Retires.  Upon the death of a Participant at
or after the Participant Retires there is no death benefit and only the
remainder of any benefit payable to the Surviving Spouse, if any, under
Section 4.1 shall be payable. 

     5.3  Beneficiary Designation Prohibited.  Since the only death benefit
payable under the Plan is to a Surviving Spouse, no Participant shall have the
right to designate a beneficiary to receive death benefits hereunder.

                            ARTICLE VI

               PROVISIONS RELATING TO ALL BENEFITS

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

     6.2  Termination of Employment.  Termination of employment for any reason
prior to the Participant's vesting under Article III or Article V, if
applicable, will cause the Participant and any Surviving Spouse to forfeit all
interest in and under this Plan.

     6.3  No Duplication of Benefits.  It is not intended that there be any
duplication of benefits.  Therefore, if a Participant has met the requirements
of Article IV and has Retired, then the Participant and/or his Surviving
Spouse shall only receive a benefit under that Article.  If a Participant dies
before actual Retirement, the Participant's Surviving Spouse shall only
receive a benefit, if the Surviving Spouse qualifies for one, under Article V. 
But, in no event will a Participant and/or such Participant's Surviving Spouse
qualify for a benefit under both Articles IV and V.

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

     6.5  Forfeiture for Competition.  If at the time a distribution is being
made or is to be made to a Participant, the Committee finds after full
consideration of the facts presented on behalf of the Company and the
Participant, that the Participant at any time within two years following his
termination of employment from all Companies and without written consent of a
Company, directly or indirectly owns, operates, manages, controls or
participates in the ownership, (other than through ownership of less than 5%
of the Voting Securities of a publicly traded entity) management, operation or
control of or is employed by, or is paid as a consultant or other independent
contractor by a business which competes or at any time did compete with the
Company by which he was formerly employed in a trade area served by the
Company at the time distributions are being made or to be made and in which
the Participant had represented the Company while employed by it; and if the
Participant continues to be so engaged 60 days after written notice has been
given to him, the Committee may forfeit all benefits otherwise due the
Participant even though such benefit may have been previously vested under
Article III or V.  Notwithstanding the foregoing, no forfeiture shall be
permitted pursuant to this Section following Plan termination or a Change of
Control unless pursuant to arbitration consistent with the provisions of
Section 11.3.

     6.6  Expenses Incurred in Enforcing the Plan.  Valero will pay a
Participant for all reasonable legal fees and expenses incurred by him in
successfully contesting or disputing his termination of employment by a
Company or in successfully seeking to obtain or enforce any benefit provided
by this Plan if such termination occurs or a benefit is payable following a
Change of Control.

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

     6.8  Benefits Upon Re-employment.  If a former employee who is receiving
benefit payments under this Plan is re-employed by the Company, the payment of
the benefit will continue during his period of re-employment.  The re-employed
former employee's benefit will not be changed as a result of his
re-employment.

                           ARTICLE VII

                          ADMINISTRATION

     7.1  Committee Appointment.  The members of the Compensation Committee of
the Board of Directors shall serve as the Committee; provided, that the Board
of Directors will have the sole discretion to remove any one or more Committee
members and appoint one or more replacement or additional Committee members
from time to time.  Each Committee member will serve until his or her
resignation or removal.

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

     7.3  Powers of the Committee.  The Committee will have the exclusive
responsibility for the general administration of this Plan according to the
terms and provisions of this Plan and will have all powers necessary to
accomplish those purposes, including but not by way of limitation the right,
power and authority:

          (a)  to make rules and regulations for the administration of this
Plan;

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

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

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

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

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

          (e)  to delegate, without limitation, by written notice to Valero's
Chief Financial Officer, the Trustee, the SERP Committee or any other
designee, powers of investment and administration as well as those clerical
and recordation duties of the Committee, as it deems necessary or advisable
for the proper and efficient administration of this Plan.

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

     7.5  Reliance Upon Information.  The Committee will not be liable for any
decision or action taken in good faith in connection with the administration
of this Plan.  Without limiting the generality of the foregoing, any decision
or action taken by the Committee when it relies upon information supplied it
by any officer of the Company, the Company's legal counsel, the Company's
actuary, the Company's independent accountants or other advisors in connection
with the administration of this Plan will be deemed to have been taken in good
faith.

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

                           ARTICLE VIII

                     ADOPTION BY SUBSIDIARIES

     8.1  Procedure for and Status After Adoption.  Any Subsidiary of Valero
at the date of adoption of this Plan, and any entity becoming a Subsidiary of
Valero after such date of adoption, may adopt this Plan by appropriate action
of its board of directors or other governing body.  Any power reserved under
this Plan to the Company may be exercised separately by each such Subsidiary
adopting the Plan; provided, however, that (i) powers reserved under this Plan
to the Board of Directors or the Committee shall be exercised only by the
Board of Directors of Valero or Committee thereof and (ii) powers reserved
under this Plan to Valero shall be exercised only by Valero.  Each Subsidiary
adopting the Plan delegates to Valero exclusive administrative responsibility
for the Plan.  However, Valero may allocate the costs of Plan benefits among
the Companies in any reasonable manner such that each Company shall bear the
costs of participation by those Participants who are or were employees of such
Company.  Each Subsidiary, by adopting this Plan, and in consideration of the
like undertakings of the other adopting Subsidiaries, agrees that the
obligations and liabilities of the Company(ies) for the payment of benefits to
any Participants (and to any person claiming through a Participant) hereunder
shall be the joint and several obligation of each Subsidiary adopting the
Plan, not solely of the Company employing or previously employing a
Participant.  Accordingly, each such adopting Subsidiary agrees that, to the
extent permitted under Section 10.4, each Participant (and any person claiming
through a Participant) shall have recourse and a right of action to enforce
benefits payable under this Plan against any and all Companies
contemporaneously participating in the Plan during the period of such
Participant's Credited Service.

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

                            ARTICLE IX

                   AMENDMENT AND/OR TERMINATION

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

     9.2  No Retroactive Effect on Annual Benefits.  No amendment will affect
the rights of any Participant to the Retirement benefit provided in Article IV
previously accrued by the Participant or will change a Participant's rights
under any provision relating to a Change of Control after a Change of Control
has occurred without his consent.  However, the Board of Directors retains the
right at any time to change in any manner the Retirement benefit provided in
Article IV but only as to accruals after the date of the amendment.

     9.3  Effect of Termination.  If this Plan is terminated, whether as a
result of a Change of Control or otherwise, then (i) no Surviving Spouse
benefit will be provided to the Surviving Spouse of a Participant dying on or
after such date of termination, and no further Retirement benefit will accrue,
(ii) all Plan Participants in active employment of a Company (including
Participants whose Accrued Benefit is frozen pursuant to Section 2.2) as well
as Retired Participants shall become fully vested and (iii) the Accrued
Benefit payable to each affected current, frozen or Retired Participant (or
Surviving Spouse) shall be determined as of such date of termination and shall
be paid in a lump sum as soon as administratively practicable following the
Plan's termination, in an amount Actuarially Equivalent to the affected
Participant's (or Surviving Spouse's) Accrued Benefit.

     9.4  Effect of Change of Control.  Upon the occurrence of a Change of
Control, unless one or more Participants or Surviving Spouses have theretofore
elected to be a Continuing Participant, as specified below, this Plan shall
automatically terminate and the Accrued Benefit of each Participant shall be
paid out in accordance with the provisions of Section 9.3 as soon as
administratively practicable following the Change of Control.  However, any
current, frozen or Retired Participant, or any person who is receiving
benefits as a Surviving Spouse at the time of adoption of this amended and
restated Plan (collectively referred to herein as a "Continuing Participant"),
may, by filing a written election with the Committee or with Valero's Human
Resources Department in accordance with the following sentence, elect to
continue in the Plan following any Change of Control, rather than receiving
such lump-sum benefit. Such election may only be made (i) in the case of a
person who is a Participant or Surviving Spouse at the time of the adoption of
this amended and restated Plan, on or before November 29, 1996, or (ii) in the
case of a person who is later selected as a Participant, within the 30 day
period following the date on which the Committee first selects such person as
a Participant.  Any such election shall be irrevocable.  A Participant or
Surviving Spouse who does not make such election within the required period
shall be deemed for all purposes to have elected not to be a Continuing
Participant.  If, at the time a Change of Control occurs, any Participant or
Surviving Spouse has properly elected to be a Continuing Participant,  then
the Plan shall not terminate and the following provisions shall apply:

     A.   Each Participant (or Surviving Spouse) who has not theretofore
elected to be a Continuing Participant shall be treated in all respects as if
the Plan had terminated; such Participant (or Surviving Spouse) shall be
entitled to receive a lump-sum benefit payment calculated in accordance with
Section 9.3(iii), and such Participant (and any Surviving Spouse) shall
otherwise have the same rights (and only such rights) that such Participant
(or Surviving Spouse) would have had had the Plan terminated upon such Change
of Control.

     B.   The Accrued Benefit of each Continuing Participant attributable to
that portion of the Continuing Participant's Credited Service occurring on or
after January 1, 1996 shall vest immediately upon the occurrence of the Change
of Control in accordance with Article III.  The Continuing Participant shall
not be entitled to receive a lump-sum benefit payment pursuant to Section
9.3(iii); instead, such Continuing Participant (other than a Surviving Spouse)
shall be entitled to receive a retirement benefit at the time and in the
amount determined in accordance with Article IV and the Continuing
Participant's Surviving Spouse, if any (as well as any Surviving Spouse making
the election permitted under Paragraph 9.4(i)), shall be entitled to receive a
Surviving Spouse benefit, in each case determined in accordance with and
subject to the remaining terms and conditions of the Plan.

                            ARTICLE X

                             FUNDING

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

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

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

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

     10.5 Reversion of Excess Assets.  Assets held pursuant to the Trust shall
not be loaned to any Company.  However, Valero may, at any time, request the
actuary who last performed the annual actuarial valuation of the Valero
Pension Plan to determine the Actuarial Equivalent of the Accrued Benefits,
assuming the Accrued Benefits to be fully vested (whether they are or not), as
of the end of the Plan Year coincident with or last preceding the request, of
all Participants and Surviving Spouses of deceased Participants for which
Valero is or will be obligated to make payments under this Plan.  If the fair
market value of the assets held in the Trust, as determined by the Trustee as
of that same date, exceeds the Actuarial Equivalent of the Accrued Benefits of
all such Participants and Surviving Spouses by not less than 25%, then Valero
may direct the Trustee to return to Valero that part of the assets which is in
excess of 125% of the Actuarial Equivalent of the Accrued Benefits.  If the
Plan has terminated, all assets held in the Trust following the distribution
required pursuant to Section 9.3(iii) shall revert to Valero.

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

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

                            ARTICLE XI

                          MISCELLANEOUS

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

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

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

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

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

          (d)  to give a Participant or any other person claiming through him
any interest or right under this Plan other than that of any unsecured general
creditor.

          11.3 Arbitration of Disputes

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

          a.   The application and interpretation of the Plan.

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

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

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

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

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

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

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

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

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

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

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

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

     11.4 Distributions to Incompetents.  Should a Participant or a Surviving
Spouse become incompetent, Valero is authorized to pay the funds due to the
guardian or conservator of the incompetent Participant or Surviving Spouse or
directly to the Participant or Surviving Spouse or to apply those funds for
the benefit of the incompetent Participant or Surviving Spouse in any manner
the Committee determines in its sole discretion.

     11.5 Nonalienation of Benefits.  No right or benefit provided in this
Plan will be transferable by the Participant except, upon his death, to a
Surviving Spouse as provided in this Plan.  No right or benefit under this
Plan will be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge the same will be void.  No right or benefit under
this Plan will in any manner be liable for or subject to any debts, contracts,
liabilities or torts of the person entitled to such benefits.  If any
Participant or any Surviving Spouse becomes bankrupt or attempts to
anticipate, alienate, sell, assign, pledge, encumber or charge any right or
benefit under this Plan, that right or benefit will, in the discretion of the
Committee, cease.  In that event, the Committee may have Valero hold or apply
the right or benefit or any part of it to the benefit of the Participant or
Surviving Spouse, his or her spouse, children or other dependents or any of
them in any manner and in any proportion the Committee believes to be proper
in its sole and absolute discretion, but is not required to do so.

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

     11.7 Notice.  Any notice or filing required or permitted to be given to a
Company, the Committee or a Participant will be sufficient if in writing and
hand delivered or sent by U.S. mail to the principal office of Valero, acting
on behalf of the Company or Committee, or to the residential mailing address
of the Participant.  Notice will be deemed to be given as of the date of hand
delivery or if delivery is by mail, as of the date shown on the postmark.

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

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

     11.10     Effective Date.  This amendment and restatement of the Plan
will be operative and effective on January 1, 1996.

     IN WITNESS WHEREOF, the Company has executed this document on this ______
day of November, 1996, amending and restating the Plan effective as of January
1, 1996.

                             VALERO ENERGY CORPORATION



                             By /s/ F. Joseph Becraft            
                                F. Joseph Becraft
                                President and Chief Executive Officer