[As amended through January 1, 1996]






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

                   DATED AS OF JANUARY 24,1984

<PAGE>

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)  "Change of Control" shall occur if:  (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; or (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.

(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 November 15, 1985, between Valero and MBank Alamo, NA, as
Rights Agent) the terms "Common Stock," "share of Common Stock" or any similar
terms shall be construed to refer to one (1) share of the Common Stock together
with one (1) 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 express 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 the number of shares of Common Stock
to be issued as Bonus Stock to such Bonus Participant and the time or times at
which the restrictions specified in Paragraph 4.1 hereof shall be removed.  The
amount of such Bonus Stock and the terms governing the removal of such
restrictions 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.  All authorized and
unissued shares issued as Bonus Stock or Incentive Stock in accordance with the
Plan shall be fully paid and non-assessable shares and free from preemptive
rights.

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 an of such
restrictions may earlier terminate, 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. In the event a Participant's employment with the Company is 
voluntarily
terminated by the Participant (whether through retirement or otherwise) 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 retires or otherwise 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 Chairman
of the Board and Chief Executive Officer of Energy) shall be entitled (but may
not be 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 Chairman of 
the
Board and 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. Should a Bonus Participant's employment be terminated by 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, 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. Should an Incentive Participant's employment be terminated by 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
Performance Period                 of the orifinal Performance
is at leat               but less than  Period, 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 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 Treasurer
of Energy 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 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, provided, that if the Compensation
Committee shall at any time have as a member any person who is eligible to
participate in the Plan or who within one year prior thereto was eligible to
participate in the Plan, such person shall not serve as an administrator for the
Plan or participate in any discussion, deliberation or decision regarding this
Plan, and, if as a result thereof the Plan would have less than three
administrators, the Board of Directors of Energy shall appoint, from among the
remaining Directors of Energy, one or more persons to serve as an administrator
for the Plan so that the Plan shall at times have not less than three
administrators, none of whom are eligible, or within one year prior to serving
thereon have been eligible, to participate in the Plan.

     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 or disapproval
of the Committee, the recipient may irrevocably 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, provided further, that in the case of a recipient
subject to Section 16(b) under the Securities Exchange Act of 1934, as amended,
(a) the number of shares withheld from the shares otherwise to be delivered 
shall
not exceed the number of shares necessary to collect the amount required by
applicable provisions of law to be withheld or collected (provided that, from 
and
after the date that the Securities and Exchange Commission shall issue a
"no-action" letter or other ruling concurring with such procedure, the number of
shares to be withheld may be increased to not more than the number necessary to
be withheld in order to collect all applicable taxes required to be withheld or
expected to be incurred, with federal income taxes being calculated at the
maximum statutory tax rate certified by the recipient in  a manner satisfactory
to the Committee as being applicable to the recipient's income under then
existing laws for the year in which the tax date occurs), and (b) the 
recipients'
exercise of the election to withhold shares shall be made only during an
"election period."  As used herein, "election period" shall mean any period of
time which is (a) at least six months following the date of grant of shares of
Bonus Stock or date of award of an Incentive Stock Contract with respect to
Incentive Stock (except that in the event of the death or total and permanent
disability of the grantee, this limitation shall not apply), and (b)(i) during
a period beginning on the third business day following the date of release of
Energy's quarterly or annual summary statement of sales and earnings and ending
on the twelfth business day following such date, or (ii) at least six months
prior to the tax date with respect to the shares received.  The Committee shall
establish withholding procedures where the tax date is deferred pursuant to
Section 83(c)(3) of the Internal Revenue Code of 1986.  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 or disapproval 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.  In the case of a recipient subject to
Section 16(b), the election to deliver already owned shares shall be subject to
compliance with clauses (a) and (b) above.  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
either (a) in the case of a Participant not subject to clause (b) below, on
January 2nd of the second calendar year following the calendar year in which 
such
election is made, or (b) in the case of a Participant subject to liability under
Section 16(b) under the Securities Exchange Act of 1934, on the twelfth business
day following the date in such second calendar year on which the Company first
releases a summary statement of revenues and earnings for the preceding fiscal
quarter and/or fiscal year.  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  respect  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.