VALERO ENERGY CORPORATION 2003 EMPLOYEE STOCK INCENTIVE PLAN AMENDED AND RESTATED

Employee Bonus Plan Agreement

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Title: VALERO ENERGY CORPORATION 2003 EMPLOYEE STOCK INCENTIVE PLAN AMENDED AND RESTATED
Governing Law: Texas Date: 3/14/2005
Industry: Oil and Gas Operations Sector: Energy

VALERO ENERGY CORPORATION

2003 EMPLOYEE STOCK INCENTIVE PLAN

AMENDED AND RESTATED, Parties: valero energy corp/tx

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Exhibit 10.10

VALERO ENERGY CORPORATION

2003 EMPLOYEE STOCK INCENTIVE PLAN

AMENDED AND RESTATED AS OF DECEMBER 31, 2004

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TABLE OF CONTENTS

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SECTION 1. Purpose........................................................................................ 1

SECTION 2. Definitions.................................................................................... 1

(a) "Affiliate..................................................................................... 1

(b) Award.......................................................................................... 1

(d) Board.......................................................................................... 1

(e) Cause.......................................................................................... 1

(f) Change of Control.............................................................................. 1

(g) Code........................................................................................... 1

(h) Committee...................................................................................... 1

(i) Company........................................................................................ 1

(j) Employee....................................................................................... 2

(k) Exchange Act................................................................................... 2

(l) Exercisable Award.............................................................................. 2

(m) Exercise Notice................................................................................ 2

(n) Fair Market Value.............................................................................. 2

(o) Notice Date.................................................................................... 2

(p) Option......................................................................................... 2

(q) Other Stock-Based Award........................................................................ 2

(r) Participant.................................................................................... 2

(s) Performance Award.............................................................................. 2

(t) Person......................................................................................... 2

(u) Preference Share Purchase Right................................................................ 2

(v) Reorganization Event........................................................................... 2

(w) Restricted Stock............................................................................... 2

(x) Rights Agreement............................................................................... 2

(y) SAR or stock appreciation right................................................................ 3

(z) SEC............................................................................................ 3

(aa) Settlement Date................................................................................ 3

(bb) Share" or "Shares.............................................................................. 3

(cc) Stock Compensation............................................................................. 3

(dd) Tax Payment.................................................................................... 3

SECTION 3. Administration................................................................................. 3

SECTION 4. Shares and Other Property Available For Awards................................................. 4

(a) Shares Available............................................................................... 4

(b) Sources of Shares Deliverable Under Awards..................................................... 4

(d) Share Counting................................................................................. 6

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SECTION 5. Eligibility.................................................................................... 6

SECTION 6. Awards......................................................................................... 6

(a) Options........................................................................................ 6

(b) Stock Appreciation Rights...................................................................... 6

(d) Performance Awards............................................................................. 7

(e) Stock Compensation............................................................................. 8

(f) Other Stock-Based Awards....................................................................... 8

(g) Exercise of Option or SAR Awards............................................................... 8

(h) General........................................................................................ 9

SECTION 7. Amendment and Termination...................................................................... 12

(a) Amendments to the Plan......................................................................... 12

(b) Amendments to Awards........................................................................... 12

SECTION 8. Change Of Control.............................................................................. 12

(a) Effect......................................................................................... 12

(b) Defined........................................................................................ 12

SECTION 9. General Provisions............................................................................. 14

(a) No Rights to Awards............................................................................ 14

(b) Delegation..................................................................................... 14

(d) No Limit on Other Compensation Arrangements.................................................... 15

(e) No Right to Employment......................................................................... 15

(f) Governing Law.................................................................................. 15

(g) Severability................................................................................... 15

(h) NYSE Listing and Other Laws and Regulations.................................................... 15

(i) No Trust or Fund Created....................................................................... 15

(j) No Fractional Shares........................................................................... 16

(k) Headings....................................................................................... 16

(l) Construction................................................................................... 16

SECTION 10. Effective Date of the Plan..................................................................... 16

SECTION 11. Term of the Plan............................................................................... 16

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2003 EMPLOYEE STOCK INCENTIVE PLAN

SECTION 1. PURPOSE.

The purpose of this 2003 Employee Stock Incentive Plan (the "Plan") is to

promote the interests of the Company and its stockholders by (i) attracting and

retaining employees of the Company and its affiliates; (ii) motivating these

employees by using performance-related incentives to achieve longer range

performance goals; and (iii) enabling these employees to participate in the

long-term growth and financial success of the Company.

SECTION 2. DEFINITIONS.

As used in the Plan, the following terms shall have the meanings set forth

below:

(a) "Affiliate" shall mean (i) any entity that, directly or through

one or more intermediaries, is controlled by the Company and (ii) any

entity in which the Company has a significant equity interest, as

determined by the Committee.

(b) "Award" shall mean any Option, Stock Appreciation Right,

Restricted Stock, Performance Award, Stock Compensation Award or Other

Stock-Based Award.

other instrument or document evidencing any Award, which may, but need

not, be executed or acknowledged by a Participant.

(d) "Board" shall mean the Board of Directors of the Company.

(e) "Cause" shall mean the (i) conviction of the Participant by a

state or federal court of a felony involving moral turpitude, (ii)

conviction of the Participant by a state or federal court of embezzlement

or misappropriation of funds of the Company, (iii) negligence or

misconduct of the Participant which causes material loss, damage or injury

to the Company, any of its Affiliates or their respective employees, or

(iv) Participant's failure to satisfactorily perform the material stated

duties of Participant's position with the Company or any of its

Affiliates.

(f) "Change of Control" is defined in Section 8(b) of the Plan.

(g) "Code" shall mean the Internal Revenue Code of 1986, as amended

from time to time.

(h) "Committee" shall mean the Committee appointed to administer the

Plan, as further described in Section 3 of the Plan.

(i) "Company" shall mean Valero Energy Corporation, a Delaware

corporation, formerly known as "Valero Refining and Marketing Company".

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(j) "Employee" shall mean any employee of the Company or of any

Affiliate other than officers and directors within the meaning of Rule

16(a)-1(f) of the Exchange Act.

(k) "Exchange Act" shall mean the Securities Exchange Act of 1934,

as amended.

(l) "Exercisable Award" is defined in Section 6(h)(vii)(A).

(m) "Exercise Notice" is defined in Section 6(g)(i) of the Plan.

(n) "Fair Market Value" shall mean the average of the "high" and

"low" reported sales price per Share (as reported in the NYSE - Composite

Transactions listing) as of the relevant measuring date, or if there are

no sales on the NYSE on that measuring date, then as of the next day on

which there were sales.

(o) "Notice Date" is defined in Section 6(g)(i) of the Plan.

(p) "Option" shall mean an option granted under Section 6(a) of the

Plan that is not intended to be an Incentive Stock Option, within the

meaning of Section 422 of the Code or any successor provision thereto.

(q) "Other Stock-Based Award" shall mean any right granted under

Section 6(f) of the Plan.

(r) "Participant" shall mean any Employee granted an Award under the

Plan.

(s) "Performance Award" shall mean any right granted under Section

6(d) of the Plan.

(t) "Person" shall mean any individual, corporation, partnership,

association, joint-stock company, trust, unincorporated organization,

government or political subdivision thereof or other entity.

(u) "Preference Share Purchase Right" shall mean one of the rights

distributed pursuant to the Rights Agreement to purchase 1/100 share of

the Junior Participating Preferred Stock, Series I, of Valero.

(v) "Reorganization Event" is defined in Section 4(c) of the Plan.

(w) "Restricted Stock" shall mean any Share, prior to the lapse of

restrictions thereon, granted under Section 6(c) of the Plan.

(x) "Rights Agreement" shall mean the Rights Agreement, dated as of

June 18, 1997, between the Company and Computershare Investor Services,

L.L.C., as Rights Agent (successor Rights Agent to Harris Trust and

Savings Bank), as amended.

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(y) "SAR" or "stock appreciation right" is further described in

Section 6(b) of the Plan and shall mean the right, subject to the

provisions of this Plan, to receive a payment in cash equal to the

difference between the specified exercise price of the SAR and the Fair

Market Value of one Share.

(z) "SEC" shall mean the Securities and Exchange Commission.

(aa) "Settlement Date" is defined in Section 6(g)(i) of the Plan.

(bb) "Share" or "Shares" shall mean the common stock of the Company,

$0.01 par value, and other securities or property that may become the

subject of Awards or become subject to Awards pursuant to an adjustment

made under Section 4(c) of the Plan.

(cc) "Stock Compensation" shall mean any right granted under Section

6(e) of the Plan.

(dd) "Tax Payment" is defined in Section 6(g)(ii) of the Plan.

SECTION 3. ADMINISTRATION.

The Plan shall be administered by a committee of the Board appointed by

the Board to act for purposes of administering this Plan. Subject to the terms

of the Plan and applicable law, and in addition to other express powers and

authorizations conferred on the Committee by the Plan, the Committee shall have

authority to:

(a) designate Participants;

(b) determine the type or types of Awards to be granted to an

Employee;

to which payments, rights, or other matters are to be calculated in

connection with, Awards;

(d) determine the terms and conditions of any Award and any

subsequent amendments thereto;

(e) determine to what extent and under what circumstances Awards may

be settled or exercised in cash, Shares, other securities, other Awards or

other property, or canceled, forfeited, or suspended, and the method or

methods by which Awards may be settled, exercised, canceled, forfeited, or

suspended;

(f) provide for the acceleration of any time period relating to the

vesting, exercise or realization of any Award so that the Award may be

exercised or realized in full on or before a date fixed by the Committee;

the Committee may, in its discretion, include other provisions and

limitations in any Award Agreement as the Committee may deem equitable and

in the best interests of the Company;

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(g) interpret and administer the Plan and any instrument or

agreement relating to the Plan, including Award Agreements;

(h) establish, amend, suspend, or waive any rules or regulations

regarding the Plan, and appoint any agent the Committee shall deem

appropriate for the proper administration of the Plan; and

(i) make any other determination and take any other action that the

Committee deems necessary or desirable for the administration of the Plan.

Unless otherwise expressly provided in the Plan, all designations,

determinations, interpretations, and other decisions with respect to the

Plan or any Award shall be within the sole discretion of the Committee,

may be made at any time, and shall be final, conclusive, and binding upon

all Persons, including the Company, any Affiliate, any Participant, any

holder or beneficiary of any Award, any stockholder of the Company and any

Employee.

SECTION 4. SHARES AND OTHER PROPERTY AVAILABLE FOR AWARDS.

(a) Shares Available. Subject to adjustment as provided in Section 4(c),

the number of Shares with respect to which Awards may be granted under the Plan

shall be 5,000,000.

(b) Sources of Shares Deliverable Under Awards. Any Shares delivered

pursuant to an Award may consist, in whole or in part, of authorized and

unissued Shares, Shares held by the Company in its treasury or Shares purchased

by the Company on the open market or otherwise.

(i) If all or any portion of an Award vests or is exercised

subsequent to any stock dividend, rights distribution, split-up,

recapitalization, combination or exchange of shares, merger,

consolidation, acquisition of property or stock, spin-off or separation,

reorganization, liquidation or other similar event (any one of which being

hereafter referred to as a "Reorganization Event"), as a result of which

shares or other securities of any class or rights shall be issued in

respect of outstanding Shares, or Shares shall be changed into the same or

a different number of shares of the same or another class or classes or

other securities, the person exercising or otherwise entitled to such

Award shall receive, except as may be otherwise determined by the

Committee:

(A) for the aggregate price payable upon such exercise of an

Option, or upon vesting of an Award (other than an Option)

denominated in Shares (1) the aggregate number and class of shares,

rights or other securities for which a recognized market exists, and

(2) a cash amount equal to the fair market value (as reasonably

determined by the Committee) on such exercise or vesting date of any

other property (other than regular cash dividend payments) and of

any shares, rights or other securities for which no recognized

market exists, which, if Shares (as authorized at the date of the

granting of such Award) had been

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acquired at the date of granting of the Award for the same aggregate

price (on the basis of the price per share, if any, provided in the

Award) and had not been disposed of, such person or persons would be

holding at the time of such exercise or vesting as a result of such

acquisition and any such Reorganization Event, and

(B) a cash amount upon the exercise of any SARs equal to the

difference between the aggregate grant price of such SARs and the

aggregate of (1) the fair market value on the exercise date of any

whole shares, rights or other securities for which a recognized

market exists, and (2) the fair market value (as reasonably

determined by the Committee) on such date of any other property

(other than regular cash dividend payments) which the holder of a

number of Shares equal to the number of such SARs, if such Shares

had been purchased at the date of granting of such SARs and not

otherwise disposed of, would be holding at the time of exercise of

such SARs as a result of such purchase and any such Reorganization

Event;

provided, however, that no fractional Share, fractional right or other

fractional security shall be issued upon any such exercise or vesting, and the

aggregate price paid shall be appropriately reduced to reflect any fractional

Share, fractional right or other fractional security not issued; and provided

further, however, that if the exercise or vesting of any Award subsequent to any

Reorganization Event would, pursuant to clause (A) of this Section 4(c)(i),

require the delivery of shares, rights or other securities that the Company is

not then authorized to issue or that in the sole judgment of the Committee

cannot be issued without undue effort or expense, the person exercising or

vesting in such Award shall receive, in lieu of such shares, rights or other

securities, a cash payment equal to the Fair Market Value on the exercise or

vesting date, as the case may be, as reasonably determined by the Committee, of

such shares, rights or other securities. For purposes of applying the provisions

of this Plan, the Preference Share Purchase Rights distributed to stockholders

of the Company pursuant to the Rights Agreement shall be deemed not to have been

distributed until the Distribution Date (as defined in the Rights Agreement).

(ii) In the event of any change in the number of Shares outstanding

resulting from a Reorganization Event, the aggregate number and class of

Shares remaining available to be awarded under this Plan shall be that

number and class which a person, to whom an Award had been granted for all

of the available Shares under this Plan on the date preceding such change,

would be entitled to receive as provided in Section 4(c)(i).

(iii) Upon the occurrence of any Reorganization Event, the Committee

shall be entitled (but shall not be required) to determine that new Award

Agreements shall be entered into with Participants reflecting such event.

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(d) Share Counting. For purposes of determining at any time the number of

Shares that remain available for grant under this Plan, the number of Shares

then authorized pursuant to Section 4 of the Plan shall be (i) decreased by the

"gross" number of Shares issued pursuant to exercised Awards, (ii) decreased by

the "gross" number

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