VALERO ENERGY CORPORATION
           AMENDED AND RESTATED RESTRICTED STOCK BONUS
                     AND INCENTIVE STOCK PLAN


           Amended and restated as of November 21, 1996


<PAGE>

Note:  This Plan was amended on January 27, 1988 to eliminate all references
to the incentive stock portion of the Plan.  Accordingly, all references to
incentive stock in this Plan apply only to incentive stock awards granted
prior to January 27, 1988.

1.   Definitions.

     1.1. For purposes of this Restricted Stock Bonus and Incentive Stock Plan
(hereinafter referred to as the "Plan"), the following terms shall have the
meanings stated below unless a different meaning is plainly required by the
context.

     (a)  "Alternate External Performance Objective" means a targeted
financial goal selected by the Committee, other than an External Return on
Equity Objective, which can be used to objectively compare the performance of
the Company or a Division with the performance of a Peer Group specified in an
Incentive Stock Contract and which, if attained by the Company or the Division
during the Performance Period, will result in the Incentive Participant
earning all or a portion of the shares of Incentive Stock specified in such
Incentive Stock Contract.

     (b)  "Alternate Internal Performance Objective"means a targeted financial
goal, selected by the Committee, other than an Internal Return on Equity
Objective, which can be used to objectively measure the performance of the
Company or a Division and which, if attained by the Company or the Division
during the Performance Period, will result in the Incentive Participant
earning all or a portion of the shares of Incentive Stock specified in such
Incentive Stock Contract.

     (c)  "Board of Directors" or "Board" means the Board of Directors of
Energy.

     (d)  "Bonus Participant" - see Paragraph 3.1.

     (e)  "Bonus Stock" - see Paragraph 2.

     (f)  "Bonus Stock Agreement" - see Paragraph 2.

     (g)  A "Change of Control" shall be deemed to occur when:  (i) a third
person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of shares of capital stock
of Energy having the power to cast 20% or more of the total number of votes
that may be cast for the election of directors of Energy; (ii) as the result
of, or in connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any combination
of the foregoing events, the persons who were directors of Energy immediately
prior to such event shall cease to constitute a majority of the Board of
Directors of Energy or any successor to Energy, or (iii) the shareholders of
Energy approve any agreement or transaction pursuant to which (A) Energy will
merge or consolidate with any other Person (other than a wholly owned
subsidiary of Energy) and will not be the surviving entity (or survives only
as the subsidiary of another entity), (B) Energy will sell all or
substantially all of its assets to any other Person (other than a wholly owned
subsidiary of Energy), or (C) Energy will be liquidated or dissolved.

     (h)  "Committee" - see Paragraph 5.1.

     (i)  The term "Common Stock" means the Common Stock, $1.00 par value of
Valero; however, prior to the Distribution Date (as such term is defined in
the Rights Agreement, dated as of October 26, 1995, between Energy and Harris
Trust and Savings Bank, as Rights Agent) the terms "Common Stock," "share of
Common Stock" or any similar terms shall be construed to refer to one share of
the Common Stock together with one Preference Share Purchase Right issued
pursuant to such Rights Agreement.

     (j)  "Company" means Energy, a Delaware corporation, and any Subsidiary
of Energy which now exists or hereafter is organized or acquired by Energy,
and any successor or successors to Energy or any Subsidiary.

     (k)  "Compensation Committee" means the Compensation Committee of the
Board of Directors, as appointed from time to time by the Board of Directors.

     (l)  "Division" means a Subsidiary, a group of Subsidiaries or some other
identifiable part of the activities of the Company, as determined by the
Committee and specified in an Incentive Stock Contract.

     (m)  "Energy" shall mean Valero Energy Corporation, a Delaware
corporation, and its successors.

     (n)  "Equity" means, for the Company or the Peer Group, as the case may
be, the average unweighted common shareholders' equity (including paid-in
capital attributable to Common Stock, retained earnings and capital
attributable to treasury shares), as reported in the Company's (or in the case
of Peer Group Equity, each Peer Group member's) annual and quarterly reports
filed with the Securities and Exchange Commission, determined by adding
together the Company's (or, in the case of Peer Group Equity, the total of all
Peer Group member's) common shareholders' equity at the beginning of the
Performance Period, the end of the Performance Period and (without
duplication) at the end of each fiscal year during the Performance Period and
determining the unweighted arithmetic average thereof.

     (o)  "Executive" means a key executive employee, including executive
officers and directors, of the Company, having ultimate responsibility for
planning the Company's operations and controlling its activities and who
directly influences its growth and profits, but shall include directors only
if employed by the Company on a full-time basis.  Up to 3% of the total number
of employees of the Company, from to time, may at any one time be designated
as key executive employees for purposes of determining employees eligible to
participate in the Plan.

     (p)  "External Performance Objective" means an External Return on Equity
Objective or an Alternate External Performance Objective, as the context may
require.

     (q)  "External Return on Equity" shall mean a percentage determined using
the formula:

                    I         1
                    E    x    P    =    EROE, in which

               "I"  means Income of the Peer Group,
               "O"  means Equity of the Peer Group, and
               "P"  means the number of whole and fractional years, expressed
as a decimal, in the Performance Period (e.g., a Performance Period of 2
years, 3 months, shall be expressed as 2.25).

     (r)  "External Return on Equity Objective" means a targeted External
Return, on Equity specified in an Incentive Stock, Contract, the attainment of
which by the Company during the Performance Period will result in the
Incentive Participant earning all or a portion of the shares of Incentive
Stock specified in such Incentive Stock Contract.

     (s)  "Factor" - see Paragraph 4.5.

     (t)  "Gross Incentive Shares" - see Paragraph 4.5.

     (u)  "Incentive Participant" - see Paragraph 3.1.

     (v)  "Incentive Stock" - see Paragraph 2.

     (w)  "Incentive Stock Contract" - see Paragraph 3.4.

     (x)  "Income" means, for the Company or the Peer Group, as the case may
be, the aggregate cumulative net income (or loss) attributable to common stock
during the Performance Period, as reported in the Company's (or, in the case
of Peer Group Income, each Peer Group member's) annual and quarterly reports
filed with the Securities and Exchange Commission.

     (y)  "Internal Performance Objective" means an Internal Return on Equity
Objective or an Alternate Internal Performance Objective, as the context may
require.

     (z)  "Internal Return on Equity" or "IROE" means a percentage determined
using the formula: 

               I         1
               E    x    P    =    IROE, in which

               "I"  means Income of the Company
               "E"  means Equity of the Company, and
               "P"  means the number of whole and fractional years, expressed
as a decimal, in the Performance Period.

     (aa) "Internal Return on Equity Objective" means a targeted Internal
Return on Equity specified in an Incentive Stock Contract, the attainment of
which by the Company during the Performance Period will result in the
Incentive Participant earning all or a portion of the shares of Incentive
Stock specified in such Incentive Stock Contract.

     (bb) "Net Incentive Shares" - see Paragraph 4.5.

     (cc) "Participant" means a Bonus Participant or an Incentive Participant,
as the context may require.

     (dd) "Peer Group" means a group of corporations (which may include the
Company) determined by the Committee and specified in an Incentive Stock
Contract whose common capital stock is publicly held.  A corporation
designated as a Peer Group member which ceases to be publicly held during the
Performance Period shall be deemed to be a member of the Peer Group for each
quarterly period during which the corporation was at all times publicly held
but shall be deleted from the Peer Group as of the last day of the final such
quarterly period.  If a corporation is deleted from a Peer Group as a result
of the preceding sentence, the Committee may (but shall not be required to)
designate within six months thereafter another publicly held corporation to
become a substitute Peer Group member effective as of the date on which its
predecessor was deleted from the Peer Group, and such successor corporation,
if so designated, shall become a member of said Peer Group for all purposes of
the Plan and any Incentive Stock Contract entered into thereunder in which
said Peer Group is specified.  In the event that a Peer Group member shall
have a fiscal year other than a calendar year, then for purposes of
determining External Return on Equity or the Peer Group's performance with
respect to any External Performance Objective the results of such Peer Group
member for those quarterly fiscal periods of such Peer Group member ending
during the Performance Period (or shortened Performance Period, as provided in
Paragraph 4.5 of the Plan) shall be included in their entirety and such
results for quarterly fiscal periods of such Peer Group member ending after
the Performance Period (or shortened Period) shall be excluded in their
entirety.

     (ee) "Performance Evaluation" - see Paragraph 3.8.

     (ff) "Performance Objective" or "Objective" means an Internal Return on
Equity Objective, an External Return on Equity Objective, an Alternate
Internal Performance Objective, an Alternate External Performance Objective or
any objective subject to determination through a Performance Evaluation, as
the context may require.

     (gg) "Performance Period" - see Paragraph 3.5.

     (hh) "Subsidiary" means a corporation at least 50% of the outstanding
common stock of which is owned directly or indirectly by Energy.

2.   Introduction and Statement of Purpose.

     This Plan is established for the purpose of creating additional
incentives for key executive employees of Energy and those of its Subsidiaries
adopting the Plan.  The Plan is designed to provide such incentives by
providing an opportunity for meaningful capital accumulation.  It is desired
that the benefits available under this Plan, when added to other benefits
payable to key executives, will furnish total compensation to key executives
which is competitive within the Company's industry.

     The Plan provides for two types of awards, Bonus Stock grants and
Incentive Stock Contracts.  Bonus Stock grants involve the grant of a
specified number of shares of Common Stock ("Bonus Stock"), subject to certain
restrictions specified in the Plan and in a written agreement between Energy
and the Executive ("Bonus Stock Agreement").  Subject to such restrictions,
the recipient of Bonus Stock is treated as the beneficial owner of such stock
for all purposes.  Incentive Stock Contracts involve the conditional award of
a specified number of shares of Common Stock ("Incentive Stock"), which will
be issued at the end of a specified period if certain Performance Objectives
set forth in a written agreement between Energy and the Executive ("Incentive
Stock Contracts) are met.  With certain limited exceptions, no Incentive Stock
is issued, and the recipient of an Incentive Stock Contract is not treated as
the beneficial owner of the actual Incentive Stock, unless and until the
specified period has elapsed and such goals have been met.

3.   Operation of the Plan.

     3.1. The Committee may cause Energy to issue, from time to time (subject
to the restrictions provided in Paragraph 4.1), shares of Bonus Stock to and
enter into Bonus Stock Agreements with such Executives as the Committee, in
its sole discretion, may determine and designate ("Bonus Participants), and
may cause Energy to enter into Incentive Stock Contracts with such Executives
as the Committee, in its sole discretion, may determine and designate
("Incentive Participants).  Subject to the final authority of the Committee,
the selection of Bonus Participants and Incentive Participants may be based on
the recommendations of Energy's Chief Executive Officer.

     3.2. No person shall have the right to require the Committee to make him
or her, or any other person, a Participant under the Plan.  Decisions by the
Committee as to participation in the Plan shall be final.

     3.3. If the Committee shall determine to issue Bonus Stock to a Bonus
Participant, the Committee shall designate (i) the number of shares of Common
Stock to be issued as Bonus Stock to such Bonus Participant, (ii) the time or
times at which the restrictions specified in Paragraph 4.1 hereof shall be
removed, and (iii) whether the Participant shall be entitled to satisfy any
tax obligation either by the withholding of shares of Common Stock from the
issue of Bonus Stock or by the tender of other shares already owned by the
Participant.  These terms shall be set forth in a Bonus Stock Agreement
containing such other terms and provisions, not inconsistent with the Plan, as
the Committee deems appropriate.  The execution and delivery of a Bonus Stock
Agreement by both Energy and the designated Bonus Participant shall be a
condition precedent to the issuance of Bonus Stock to such Bonus Participant.

     3.4. If the Committee determines to enter into an Incentive Stock
Contract with an Incentive Participant, the Committee shall designate a
maximum number of shares of Common Stock to be issued as Incentive Stock
thereunder, a Performance Period and one or more Performance Objectives.  The
amount of Incentive Stock, Performance Period and Performance Objectives shall
be set forth in an Incentive Stock Contract containing such other terms and
conditions, not inconsistent with the Plan, as the Committee deems
appropriate.

     3.5. Each Incentive Stock Contract shall designate a period ("Performance
Period") at the end of which all or some portion of the shares of Incentive
Stock specified in the Incentive Stock Contract may be earned.  The
commencement date and the length of each Performance Period shall be
determined by the Committee.  Except as provided in Paragraph 4.5 hereof, no
Performance Period shall be less than three nor more than five years.  No
Performance Period shall commence more than six months prior to or six months
after the date on which the Incentive Stock Contract is executed by the
Company and the Incentive Participant.

     3.6. Each Incentive Stock Contract shall specify one or more Internal
Return on Equity Objectives and/or one or more Alternate Internal Performance
Objectives.  The most difficult such Objective so specified shall be the
Internal Performance Objective required to be achieved by the Company (or a
Division thereof, as the case may be) during the Performance Period in order
to entitle the Incentive Participant to receive the full number of shares of
Incentive Stock specified in the Incentive Stock Contract which may be earned
through the achievement of an Internal Performance Objective.  The remaining
such Objectives (if any) shall be less difficult Internal Performance
Objective targets or ranges which, if achieved by the Company (or the
Division, as the case may be) during the Performance Period, will entitle the
Incentive Participant to receive some specified portion of the full number of
shares of Incentive Stock which may be earned under the Incentive Stock
Contract through the achievement of an Internal Performance Objective.  Of the
maximum number of shares of Incentive Stock which may be earned under any
Incentive Stock Contract, not less than 50% of such maximum number of shares
shall be earned, if at all, solely through achievement of an Internal
Performance Objective.

     3.7. Each Incentive Stock Contract may specify one or more External
Return on Equity Objectives and/or one or more Alternate External Performance
Objectives for the Performance Period.  If an External Performance Objective
is specified, then up to (but not greater than) 25% of the total number of
shares of Incentive Stock which may be earned under the Incentive Stock
Contract may be designated to be earned by the Incentive Participant through
achievement of such Objective.  The most difficult such External Performance
Objective so specified shall be the External Performance Objective required to
be achieved by the Company (or a Division thereof, as the case may be) during
the Performance Period in order to entitle the Incentive Participant to
receive the full number of shares of Incentive Stock specified in the
Incentive Stock Contract which may be earned through the achievement on an
External Performance Objective.  The remaining such Objectives (if any) shall
be less difficult External Performance Objective targets or ranges which, if
achieved by the Company (or a Division, as the case may be) during the
Performance Period, will entitle the Incentive Participant to receive some
specified portion of the full number of shares of Incentive Stock which may be
earned under the Incentive Stock Contract through the achievement of an
External Performance Objective.  If an Incentive Stock Contract specifies an
External Performance Objective, such Objective may be either the exclusive
means or an alternate means for determining whether the shares of Incentive
Stock which may be earned through the achievement of such Objective have been
earned.  If an External Performance Objective is specified in an Incentive
Stock Contract, the Incentive Stock Contract shall specify the members of the
Peer Group from which the External Performance Objective shall be measured.

     3.8. Each Incentive Stock Contract may specify that up to 25% of the
total number of shares of Incentive Stock specified therein may be awarded to
the Incentive Participant on the basis of an evaluation of the Incentive
Participant's performance during the Performance Period (a "Performance
Evaluation").  Such Performance Evaluation and the award of any shares of
Incentive Stock as the result thereof shall be made by the Committee and shall
be based on such objective or subjective criteria as it, in its sole
discretion, determines to be appropriate.  Subject to the final authority of
the Committee, such Performance Evaluation and the award of any shares of
Incentive Stock as the result thereof may be based on the recommendation of
the Incentive Participant's immediate supervisor or another person designated
by the Committee.  Performance Evaluations made by the Committee shall be
final, and no Incentive Participant or other person claiming by, through or
under an Incentive Participant shall have the right to require that any
Incentive Shares actually be issued at the end of the Performance Period as
the result of a Performance Evaluation, it being intended that the issuance of
any shares of Incentive Stock as the result thereof be completely at the
discretion of the Committee, which shall not be required to explain or justify
its basis for issuing or determining not to issue any such Incentive Stock.

     3.9. An aggregate maximum of 750,000 shares of Common Stock may be issued
as Bonus Stock under the Plan or granted and subsequently issued as Incentive
Stock under the Plan.  Within such aggregate maximum number of 750,000 shares,
there is no maximum number of such shares which may be issued as Bonus Stock
or which may be reserved and subsequently issued as Incentive Stock.

     3.10.     Upon the allocation of Bonus Stock hereunder, the aggregate
number of additional shares of Bonus Stock and Incentive Stock which may be
granted or issued hereunder shall be reduced by the number of shares of Bonus
Stock so allocated, and upon the forfeiture of any Bonus Stock pursuant to the
provisions hereof, or upon the cancellation or surrender to Energy for
whatever reason of any shares of Bonus Stock issued hereunder (including,
without implied limitation, 24,000 shares of Bonus Stock issued on February
22, 1983 and March 15, 1983 and surrendered and canceled as of March 30,
1983), the aggregate number of additional shares of Bonus Stock and Incentive
Stock which may be granted or issued hereunder shall be increased by such
number of shares, and said shares may again be the subject of allocations
hereunder.

     Upon the execution of an Incentive Stock Contract, the aggregate number
of additional shares of Bonus Stock and Incentive Stock which may be granted
or issued hereunder shall be reduced by the number of shares of Incentive
Stock specified in such Incentive Stock Contract, and upon the forfeiture of
an Incentive Participant's right to receive Incentive Stock under an Incentive
Stock Contract pursuant to the provisions hereof or of such Incentive Stock
Contract (including, without implied limitation, any forfeiture resulting from
failure of the Company, a Division or the Participant to attain any
Performance Objective during the Performance Period or from a Participant's
death, total and permanent disability, commencement of leave of absence or
retirement or other termination of employment or a Change of Control of the
Company), or upon the cancellation or surrender to Energy for any reason of a
Participant's rights with respect to Incentive Stock under such Incentive
Stock Contract, the aggregate number of additional shares of Bonus Stock and
Incentive Stock which may be granted or issued hereunder shall be increased by
such number of shares, and said shares may again be subject of allocations
hereunder.

     3.11.     In the event that the issued and outstanding shares of Common
Stock of Energy should, as a result of any stock dividend, stock split or
spin-off, recapitalization, combination or exchange of shares, merger,
consolidation, acquisition of property or stock, separation, reclassification,
reorganization, liquidation, or other similar event, be increased or decreased
or changed into or exchanged for a different number or kind of shares of stock
or other securities of Energy or of another corporation, the number and class
of additional shares or other securities which may be issued under the Plan
shall be appropriately adjusted to reflect such action.  If any such
adjustment shall result in a fractional share of Common Stock or other
security being issuable under the Plan, such fractions shall be disregarded.

     3.12.     If pursuant to applicable provisions of an Incentive Stock
Contract or this Plan, all or any portion of the Incentive Stock which an
Incentive Participant is entitled (but for this Paragraph 3.12) to receive,
would be received by the Incentive Participant subsequent to any stock
dividend, stock split or spin-off, recapitalization, combination or exchange
of shares, merger, consolidation, acquisition of property or stock,
separation, reclassification, reorganization, liquidation or other similar
event as a result of which shares or other securities of any class shall be
issued in respect of outstanding shares of Common Stock or shares of Common
Stock shall be changed into the same or a different number of shares or other
securities of the same or another class or classes, then, in lieu of the
number of shares of Common Stock determined pursuant to the Incentive Stock
Contract, the Incentive Participant shall receive, at the time specified in
the Plan and the applicable Incentive Stock Contract, the aggregate number and
class of shares or other securities which, if the number of shares of Common
Stock (as authorized at the date of execution of the Incentive Stock Contract)
otherwise determined to have been earned by the Incentive Participant pursuant
to applicable provisions of the Plan and the Participant's Incentive Stock
Contract had been issued to the Incentive Participant at the date of execution
of the Incentive Stock Contract and had not been disposed of, such Participant
would, as a result of any such stock dividend, stock split or spin-off,
recapitalization, combination or exchange of shares, merger, consolidation,
acquisition of property or stock, separation, reclassification,
reorganization, liquidation or other similar event, be holding at the time
when Incentive Stock is required to be issued pursuant to terms of the
Incentive Stock Contract, provided, however, that no fractional share of
Common Stock or any other security shall be issued under the Plan, and a cash
payment shall be made to the Participant to reflect the value of any
fractional share of Common Stock or other security not issued.

     3.13.     The Committee may make Bonus Stock grants and Incentive Stock
awards to any prospective employee of the Company who, upon commencing
employment, would be an Executive of the Company.  In any such case, if the
prospective employee for any reason whatsoever, including (without implied
limitation) death, disability, or the termination by the Company of the
employment arrangement with such person, does not actually commence employment
with the Company then, the provisions of Paragraphs 4.4 and 4.5 hereof
notwithstanding, any Bonus Stock granted to such prospective employee, and
such prospective employee's rights under any Incentive Stock Contract or Bonus
Stock Agreement and with respect to any Incentive Stock Contract or Bonus
Stock issuable thereunder, shall be automatically forfeited and surrendered to
Energy, and neither such prospective employee nor any person claiming by,
through or under such prospective employee shall have any right to receive any
such Bonus Stock or Incentive Stock or any damages or other compensation as
the result of such forfeiture.  At such time as any such prospective employee
commences actual employment with the Company, he or she shall then be deemed a
Participant for all purposes of the Plan.

     3.14.     Distributions of Bonus Stock and Incentive Stock may, as the
Committee shall in its sole discretion determine, be made from authorized but
unissued shares or from treasury or reacquired shares of Common Stock;
provided however, that shares of Bonus Stock or Incentive Stock granted
pursuant to Paragraph 3.13 shall be treasury or reaquired shares.  In the
absence of specific action by the Committee to the contrary, each grant of
Bonus Stock or Incentive Stock (excluding grants pursuant to Paragraph 3.13)
shall be in consideration of past services of the Participant and each such
grant shall be deemed to constitute a conclusive finding by the Committee that
such services have a value equal to or in excess of the value of such Bonus
Stock or Incentive Stock, as the case may be, and constitute payment in full
therefor.  All authorized and unissued shares issued as Bonus Stock or
Incentive Stock in accordance with the Plan shall be fully paid and
nonassessable shares and free from preemptive rights.  No Bonus Stock or
Incentive Stock shall be issued for consideration having a value less than the
par value of the Common Stock.

4.   Restrictions on Bonus Stock and Incentive Stock Issued Under the Plan.

     4.1. Neither any shares of Bonus Stock issued under the Plan nor any
right or interest of any Bonus Participant under any Bonus Stock Agreement may
be sold, exchanged, pledged, hypothecated, transferred, assigned, garnished or
otherwise disposed of or alienated for a period of five years from the date of
issuance of such Bonus Stock; provided, the Committee may determine that some
or all of such restrictions may terminate earlier, at one time or on more than
one occasion, with respect to all or any portion of such Bonus Stock. 
However, nothing in this Plan shall be construed to preclude the transfer of
Bonus Stock, upon the death of the Bonus Participant, to his or her legal
representatives or his or her estate or preclude such representatives from
transferring such shares, or any of them, to the person or persons entitled
thereto by will or by the laws of descent and distribution.

     4.2. Neither any shares of Incentive Stock granted under the Plan nor any
right or interest of any Incentive Participant under any Incentive Stock
Contract may be sold, exchanged, pledged, hypothecated, transferred, assigned,
garnished or otherwise disposed of or alienated prior to the time that shares
of Incentive Stock are actually issued to the Incentive Participant pursuant
to the Plan and the applicable Incentive Stock Contract.

     4.3. If a Participant's employment with the Company is voluntarily
terminated by the Participant (other than through retirement) or is terminated
by the Company for cause, or the Participant commences a leave of absence from
his or her employment with the Company, then (a) all shares of Bonus Stock
previously issued to a Bonus Participant hereunder which are still subject to
the restrictions set forth in Paragraph 4.1 hereof shall thereupon be
automatically forfeited by the Bonus Participant and surrendered to Energy,
and (b) except as set forth in Paragraph 4.5 hereof, an Incentive
Participant's right to receive any and all Incentive Stock granted to such
Incentive Participant pursuant to an Incentive Stock Contract shall thereupon
be automatically forfeited by the Incentive Participant; provided, that in the
case of an Incentive Participant, if the Participant's voluntary termination,
termination for cause or commencement of leave of absence shall occur after
the end of the Performance Period specified in the applicable Incentive Stock
Contract but prior to the actual issuance of Incentive Stock thereunder, such
Incentive Participant shall nonetheless receive any Incentive Stock which he
or she would have been entitled to receive under the applicable Incentive
Stock Contract if such termination or leave of absence had not occurred; and
provided further, that in each instance wherein a Participant terminates
employment, is terminated for cause or commences a leave of absence, the
Committee (or, in the case of a Participant who at the date such approval is
not subject to the provisions of Section 16 under the Securities Exchange Act
of 1934, the Chief Executive Officer of Energy) shall be entitled (but is not
required) (x) in the case of a Bonus Participant, to permit the Participant to
receive all or part of the Participant's Bonus Stock which, at the date of
termination of employment, would otherwise have remained subject to
restrictions, and (y) in the case of an Incentive Participant, to permit the
Participant to receive (i) the number of shares of Incentive Stock, if any,
which he or she would have been entitled to receive pursuant to Paragraph 4.5
hereof had the Participant terminated employment as a result of one of the
events specified in the first sentence of Paragraph 4.5 hereof, or (ii) such
additional or different shares of stock or other securities as may in the
interim period have been issued in respect of the shares of Incentive Stock
specified in clause (i) above as the result of any stock dividend, stock split
or spin-off, recapitalization, combination or exchange of shares, merger or
consolidation, acquisition of stock or property, separation, reclassification,
reorganization, liquidation or other similar event affecting such shares.  Any
action specified in clause (x) or (y) above shall be taken by the Committee or
the Chief Executive Officer, if at all, not later than six months following
the Participant's date of termination or commencement of such leave of
absence.

     4.4. If a Bonus Participant's employment is terminated by retirement,
death or total and permanent disability (with the determination of disability
to be made within the sole discretion of the Committee), or by the Company
without cause, then any shares of Bonus Stock previously issued to the
Participant shall remain outstanding without forfeiture and any restrictions
remaining on such shares shall continue to lapse in accordance with the terms
of the original award to the Participant unless the Committee or the Chief
Executive Officer of the Company prescribes new or additional terms for the
vesting, exercise or realization of such Bonus Stock shares (provided that
only the Committee may prescribe new or additional terms with respect to Bonus
Stock shares previously issued to any person subject to Section 16 of the
Exchange Act).  If a Change of Control occurs with respect to the Company, all
restrictions to which such Participant's Bonus Stock remained subject at such
time pursuant to Paragraph 4.1 shall thereupon automatically terminate and the
certificates for such Bonus Stock shall be promptly delivered to the Bonus
Participant or his or her representative.

     4.5. If an Incentive Participant's employment is terminated by
retirement, death or total and permanent disability, or by the Company without
cause, or if a Change of Control should occur with respect to the Company,
then, notwithstanding that a longer Performance Period is specified in the
Participant's Incentive Stock Contract, such Performance Period shall be
deemed to have ended on the last day of the quarter preceding the date of such
termination or Change of Control (or, if such event occurs on the last day of
a quarter, on the last day of the preceding quarter), the Performance
Objectives specified in the Incentive Stock Contract shall be deemed to apply
to such shortened Performance Period, the calculation set forth in clauses
(1)-(3) below shall be made to determine the number of shares of Incentive
Stock which the Incentive Participant shall be deemed to have earned under his
or her Incentive Stock Contract and such shares of Incentive Stock shall be
promptly issued to the Participant.  

          (1) A determination shall be made as to the gross number of shares
of Incentive Stock ("Gross Incentive Shares) the Incentive Participant would
be entitled to receive on the basis of attainment of Performance Objectives
during such shortened Performance Period.  If the Incentive Participant's
Incentive Stock Contract specified, pursuant to Paragraph 3.8 of the Plan,
that a portion of the total number of shares of Incentive Stock specified
therein could be awarded to the Participant on the basis of a Performance
Evaluation, the maximum number of shares which could have been awarded on the
basis of such a Performance Evaluation shall be added (without duplication) to
the number of shares determined to have been earned on the basis of attaining
other Performance Objectives during the shortened Performance Period in order
to determine the Participant's Gross Incentive Shares.  

          (2) The Participant's shortened Performance Period, determined as
provided above, shall be compared with the original Performance Period
specified in his or her Incentive Stock Contract, and the relationship that
the shortened Performance Period bears to the original Performance Period,
expressed as a percentage, shall be determined.  

          (3) The appropriate factor ("Factor") shall be selected from the
table below and multiplied by the Participant's Gross Incentive Shares to
determine the net number of Incentive Shares ("Net Incentive Shares") which
the Participant shall be deemed to have earned under the Incentive Stock
Contract.

If the shortened                                  or the original
Performance                                       Performance Period,
Period is at least       but less than            the Factor shall be
75%                      100%                     1.00
50                       75                       .75
25                       50                       .50
12.5                     25                       .25
0                        12.5                     0.00

Certificates for the number of shares of Common Stock constituting the
Participant's Net Incentive Shares shall be promptly delivered to the
Incentive Participant or his or her representative.  Any shares of Incentive
Stock granted to the Incentive Participant under the Incentive Stock Contract
which are in excess of the Participant's Net Incentive Shares, determined as
set forth above, shall be deemed automatically forfeited by the Participant.

     4.6. The Treasurer, Corporate Secretary, Stock Plan Administrator or
Transfer Agent of Energy, on behalf of the Committee, shall retain all stock
certificates representing Bonus Stock issued to any Bonus Participant under
the Plan, together with stock powers executed by the Participant pertaining to
the Bonus Stock, until the restrictions on such Bonus Stock described in
Paragraph 4.1 shall lapse.  Should shares of Bonus Stock be forfeited by a
Bonus Participant pursuant to Paragraph 4.3, the Committee shall cause the
custodian of such shares to transfer the forfeited shares to Energy. 
Certificates representing Bonus Stock still subject to restriction pursuant to
Paragraph 4.1 shall be imprinted with a legend to the effect that the shares
represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated, assigned, garnished or otherwise disposed of except in
accordance with the terms of this Plan, and each transfer agent for the Common
Stock shall be instructed to such effect in respect of such shares.  In the
event that, as the result of any stock dividend, stock split or spin-split,
recapitalization, combination or exchange of shares, merger, consolidation,
acquisition of stock or property, separation, reclassification,
reorganization, liquidation, or other similar event, the Bonus Participant
shalt as the beneficial owner of Bonus Stock subject to restrictions
hereunder, be entitled to receive new or additional or different shares of
stock or other securities, the certificate or certificates for, or other
evidences of, such new or additional or different shares or other securities,
together with a stock power or other instrument of transfer appropriately
endorsed, shall also be imprinted with a legend and deposited with the
Treasurer, Corporate Secretary, Stock Plan Administrator or Transfer Agent of
Energy as provided above, and all provisions of the Plan relating to
restrictions and lapse of restrictions herein set forth shall thereupon be
applicable to such new or additional or different shares or other securities
to the extent applicable to the shares with respect to which they were
distributed; provided, however, that if rights, warrants or fractional
interests shall be issued in respect of any Bonus Stock, such rights or
warrants may be held, exercised, sold or otherwise disposed of, and such
fractional interests may be settled, by the Participant free and clear of the
restrictions herein set forth.  Unless and until such Bonus Stock shall be
forfeited, a Bonus Participant in whose name shares of Bonus Stock are
registered shall be entitled to receive any cash dividends declared with
respect to such shares and exercise voting rights with respect to such shares.

     4.7. For purposes of the Plan, the Committee shall determine, in the
exercise of its discretion, whether or not a Participant is totally and
permanently disabled for purposes of the Plan and the date such. disability
(if any) commenced.  Any such determinations by the Committee shall be
conclusive and binding on the Participant and any person claiming by, through
or under the Participant.  Any determination of total and permanent disability
and of the commencement date thereof will be made on the basis of medical
reports and other evidence satisfactory to the Committee and in accordance
with a uniform, non-discriminatory policy applied by the Committee.  However,
such determinations will not be binding on the Company or any participant with
respect to any other employee benefit or other plan or insurance policy
wherein such determinations may be relevant, and need not be consistent with
any determinations made under any such other plan or insurance policy.

     A Participant is deemed to have retired for purposes of the Plan when the
Participant retires under the Pension Plan for Employees of Valero Energy
Corporation or another, similar pension plan of the Company providing benefits
to the Participant.

5.   Administration by the Committee.

     5.1. The Plan shall be administered by the Compensation Committee of
Energy's Board of Directors, as the same shall be appointed and constituted
from time to time by such Board of Directors so long as the Compensation
Committee shall be composed solely of two or more  Non-Employee Directors" (as
defined in Rule 16b-3 under the Securities Exchange Act of 1934).  If the
Compensation Committee does not meet the foregoing criteria, then the Board of
Directors of Energy shall appoint one or more persons to serve as an
administrator for the Plan so that the Plan shall be administered solely by
two or more  Non-Employee Directors."

     5.2. The Committee is empowered to:

     (a)  Make all determinations and computations concerning the issuance of
Bonus Stock and the reservation and issuance of Incentive Stock under the Plan
and the number of shares to be reserved for and/or issued to each Participant;

     (b)  Cause Energy to enter into Bonus Stock Agreements and Incentive
Stock Contracts with Participants for the issuance of Bonus Stock and the
reservation and issuance of Incentive Stock hereunder;

     (c)  Make rules and regulations for the administration of the Plan which
are not inconsistent with the terms and provisions hereof,

     (d)  Construe and administer all terms, provisions, conditions and
limitations of the Plan in good faith;

     (e)  Make equitable adjustments for any mistakes or errors in the
administration of the Plan or deemed by the Committee to be necessary as the
result of any unusual situation or any ambiguity in the Plan,

     (f)  Select, employ and compensate, from time to time, such consultants,
accountants, attorneys and other agents and employees as the Committee may
deem necessary or advisable for the proper and efficient administration of the
Plan.

     5.3. The foregoing list of express powers is not intended to be either
complete or exclusive, but the Committee shall, in addition, have such powers,
whether or not expressly authorized, which it may deem necessary, desirable,
advisable or proper for the supervision and administration of the Plan. Except
as otherwise specifically provided herein, the decision or judgment of the
Committee on any question arising hereunder in connection with the exercise of
any of its powers shall be final, binding and conclusive upon all parties
concerned (including the Participant and any person claiming by, through or
under a Participant) and shall not be subject to review. 

6.   Miscellaneous Provisions.

     6.1. As a condition to the issuance of Bonus Stock or Incentive Stock,
Energy may require the Participant receiving such stock to represent and
warrant at the time of issuance that the shares are being acquired only for
investment and without any present intention to sell or distribute such shares
it in the opinion of counsel for Energy, such representation is required under
the Securities Act of 1933 or any other applicable law, regulation or rule of
any governmental authority.

     6.2. During the term of the Plan, Energy will at all times reserve and
keep available, or have authorized but unissued, such number of shares of
Common Stock as shall be sufficient to satisfy the requirements of the Plan. 
The inability of Energy to obtain from any regulatory body having jurisdiction
authority deemed by Energy's counsel to be necessary to the lawful issuance of
any of its Common Stock or other security hereunder shall relieve the Company
of any liability in respect of the non-issuance of such Common Stock or other
security as to which such requisite authority shall not have been obtained.

     6.3. Until the issuance of the stock certificate(s) for Bonus Shares or
Incentive Shares to a Participant, (as evidenced by the appropriate entry on
the books of Energy or of a duly authorized transfer agent of Energy), no
right to vote or receive cash dividends or other distributions or any other
rights as a stockholder of Energy shall exist with respect to such Bonus
Shares or Incentive Shares, notwithstanding the grant of such Bonus Stock, the
execution of a Bonus Stock Agreement or Incentive Stock Contract, or the
occurrence of any event or the passing of any period of time giving rise to a
right in the Participant to receive Incentive Stock under an Incentive Stock
Contract.  No adjustment will be made for any cash dividend or other
distribution or other rights for which the record date is prior to the date
the stock certificates evidencing such shares of Bonus Stock or Incentive
Stock are issued, except as otherwise expressly provided under Paragraph 3.12
of this Plan.  The Company shall endeavor in good faith to issue stock
certificates for shares of Incentive Stock or Bonus Stock which are authorized
to be issued under the Plan as promptly as practicable.  However, neither the
Company, Energy, the Committee or any member thereof, any transfer agent or
any other person shall have any liability to any Participant (or to any person
claiming by, through or under any Participant) as the result of any delay in
the issuance of any such certificates, including delays resulting from the
negligence or willful conduct of any such person or entity.

     6.4  Notwithstanding anything to the contrary contained in this Plan or
any Incentive Stock Contract entered into hereunder, except as provided in the
last sentence of this Paragraph 6.4 any Incentive Stock Contract entered into
under this Plan (as amended and restated hereby) and any Bonus Stock grant
made under this Plan shall be entered into or granted, as the case may be,
subject to the approval of this Plan by the affirmative vote of the holders of
a majority of the voting securities of Energy present or represented and
entitled to vote at a meeting duly called and held for such purpose in
accordance with applicable Delaware law.  No Incentive Stock Contract entered
into under this Plan nor any Bonus Stock grant made under this Plan shall,
except as provided in the last sentence of this Paragraph 6.4, create any
obligation in the Company or Energy prior to such approval.  In the event that
the holders of a majority of the voting securities of Energy do not so approve
this Plan, any and all Incentive Stock Contracts theretofore entered into
shall thereupon terminate and shall be void and of no force of effect and no
Incentive Stock shall be issued thereunder.  The foregoing provisions of this
Paragraph 6.4 notwithstanding, up to 491 additional shares of Bonus Stock may
be granted under this Plan from and after January 24, 1984, which grants shall
not be made subject to the approval of the Plan by the holders of a majority
of the voting securities of Energy, as set forth above.

     6.5. Upon becoming entitled to receive shares of Bonus Stock or Incentive
Stock under the Plan (or, if at the time of receipt the recipient shall not be
subject to taxation with respect to such shares, at such later date as such
recipient becomes subject to taxation with respect to such shares; whichever
such date is applicable being referred to herein as the "tax date"), the
recipient shall make a cash payment to Energy equal to the amount required by
applicable provisions of law to be withheld by Energy in connection with
federal income tax, F.I.C.A. and all other federal, state and local taxes in
respect of such shares (or such greater amount as the recipient shall elect to
have withheld in respect of such taxes; whichever such amount is applicable
being referred to herein as the "tax amount"), provided, that subject to the
prior approval of the Committee, the recipient may elect at any time prior to
the tax date that all or any portion of the tax amount be collected by
withholding from the number of shares otherwise to be delivered to the
recipient that number of shares having a fair market value equal to all or any
portion of the amount otherwise to be collected.

     Subject to any limitations prescribed by applicable law, in all cases,
only that number of whole shares the fair market value of which does not
exceed the tax amount shall be withheld or delivered and the recipient shall
make a cash payment to Energy equal to any excess amount to be withheld or
collected.  Unless the context otherwise requires, the term "fair market
value" as used herein shall mean the average of the reported "high" and "low"
sales prices of a share of the Common Stock in the NYSE-Composite Transactions
listing on the tax date.  In lieu of the foregoing withholding procedure, a
recipient, subject to the prior approval of the Committee, may satisfy the tax
withholding or collection requirement by delivering to Energy on the tax date
certificates for other shares of Common Stock already owned by the recipient,
endorsed in blank with appropriate signature guarantee, having a fair market
value (determined as set forth above) equal to the tax amount.  Any and all
taxes payable with respect to income of a Participant or other recipient
resulting from the grant or issuance of any Bonus Stock or Incentive Stock
hereunder shall be the sole responsibility of the Participant or other
recipient, not of the Company or Energy, whether or not Energy or the Company
shall have withheld or collected from the Participant any sums required to be
so withheld or collected in respect of such income, and whether or not any
sums so withheld or collected shall be sufficient to provide for any such
taxes.

     6.6. Energy shall be entitled but shall have no obligation to cause the
shares of Bonus Stock or Incentive Stock issuable hereunder to be registered
under the Securities Act of 1933.

     6.7  Not later than December 31st of each calendar year a Participant, by
filing a written request with the Committee, may elect to defer receipt of all
or any portion of the Bonus Stock or Incentive Stock which, absent such
election, the Participant would be entitled to receive during the following
calendar year.  The shares, receipt of which is so deferred, shall be
delivered to Participant on January 2nd of the second calendar year following
the calendar year in which such election is made.  Successive elections may be
made with respect to the same shares so as to defer from year to year the
receipt of such shares.  Where the foregoing election is made with respect to
Bonus Stock, such shares shall remain subject to forfeiture in accordance with
Section 4.3(a) hereof, with the same force and effect as if such deferred
vesting date were the date originally specified in the Participant's Bonus
Stock Agreement for vesting of such shares.  When the foregoing election is
made with respect to Incentive Stock, the number of shares of Incentive Stock
to be issued to the Participant shall be determined at the end of the
Performance Period in accordance with the provisions of the Plan, but such
shares shall not be issued and the Participant shall not have the right to
vote or receive dividends with respect to such shares until the deferred
delivery date.  Each Participant shall be solely responsible for determining
the effect, if any, for federal income tax purposes of making any such
election, and no representation is made by Energy or the Company that such
election shall have the effect of deferring receipt of any income attributable
to such shares for federal income tax purposes.

7.   Amendment and Termination of the Plan.

     7.1. The Board of Directors, without approval of or notice to the
Participants, may amend the Plan from time to time in such respects as it
deems advisable, provided, that without stockholder approval, no amendment may
(i) except as permitted in the case of stock splits and other
recapitalizations, as provided in Paragraph 3.11, materially increase the
number of shares which may be issued under the Plan; (ii) materially increase
the benefits accruing to Participants under the Plan, or (iii) materially
modify the requirements as to eligibility for participation in the Plan.

     7.2. The Board of Directors, without approval of or notice to the
Participants, may at any time terminate the Plan.

     7.3. Any amendment or termination of the Plan shall not affect Bonus
Stock already issued or Bonus Stock Agreements or Incentive Stock Contracts
already executed without the consent of the Participant.  In each case where
the Board of Directors determines it to be appropriate or is advised by
counsel that such approval is required, an amendment or termination of the
Plan shall be submitted to the stockholders of Energy for approval.