Exhibit 10.03


 


	
  Notice
  of Grant of Stock Option

  	
   

  	
  Valero Energy
  Corporation

  
	
  and
  Option Agreement

  	
   

  	
  ID: 74-1828067

  
	
   

  	
   

  	
  P. O. Box 696000

  
	
   

  	
   

  	
  San Antonio, TX
  78269-6000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Employee

  	
   

  	
  Option Number:

  
	
   

  	
   

  	
  Plan:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ID:

  



 


Effective               ,
20      , you have been granted an option to buy                   
shares of the common stock of Valero Energy Corporation (the “Company”) at $            
per share.


 


The total Option price of
the shares granted is $                  .


 


Your Options will vest on the dates shown below. 


 




	
  Shares

  	
   

  	
  Grant Date

  	
   

  	
  Vest Type

  	
   

  	
  Full Vest

  	
   

  	
  Expiration

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  






 


By your signature and the Company’s
signature below, you and the Company agree that the Option referenced above is
granted under and governed by the terms and conditions of the Company’s 2005 Omnibus Stock Incentive Plan and the Option
Agreement attached hereto, all of which are made a part of this agreement.


 


 


	
  VALERO ENERGY
  CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Roy M. (Mike) Crownover, Sr.

  	
   

  	
  Date

  	
   

  
	
   

  	
  Vice President - Human Resources

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Employee

  	
   

  	
  Date

  	
   

  
						



 





















 


OPTION AGREEMENT


Valero Energy Corporation 2005 Omnibus  Stock Incentive Plan


 


This
Option Agreement (“Agreement”) is entered into between Valero Energy
Corporation, a Delaware corporation (“Valero”), and Employee pursuant to the
terms of the Valero Energy Corporation 2005 Omnibus Stock
Incentive Plan (“Plan”).  As
used herein, Employee means                                   .  Capitalized terms used in this Agreement but
not otherwise defined in this Agreement have the meanings set forth in the
Plan.


 


1.                                      Grant
of Option.  Valero grants to Employee
the option (“Option”) to purchase up to               
shares of Common Stock of Valero, $.01 par value per share (“Shares”), in
accordance with the terms of this Agreement and the Plan.  The Shares, when issued to Employee upon the
exercise of the Option, will be fully paid and non-assessable.


 


2.                                      Purchase
Price.  The purchase price of the
Shares will be $          
per Share.


 


3.                                      Exercise
of Option.  The period during which
the Option is in effect (“Option Period”) will commence on               ,
20      .  The Option Period will terminate on               ,
20        .  No portion of the Option may be exercised
prior to                 ,
20      . 
Subject to the provisions of the Plan relating to suspension or
termination from the Plan, the Option will be available for exercise in the
following increments:                   
shares on                   ,
20      ;                   
shares on                 ,
20          ;                 
shares on                   ,
20        ;                 
shares on                   ,
20      ; and                 
shares on                   ,
20        .


 


The
Option must be exercised in accordance with procedures established by Valero
and pursuant to one of the methods for exercise set forth in the attached Form A
(“Exercise Notice”).  Payment for the
Shares will be made at Valero’s San Antonio offices.  If any law or regulation requires Valero to take
any action with respect to the Shares specified in the Exercise Notice, then
the date of delivery of the Shares against payment will be extended for the
period necessary to take such action.  In
the event of any failure by Employee to pay for the number of Shares specified
in the Exercise Notice on the Settlement Date, as the same may be extended as
provided above, the exercise of the Option with respect to such number of
Shares will be treated as if it had never been made.


 


4.                                      Plan
Incorporated by Reference.  The Plan
is incorporated herein, and by this reference, is made a part hereof for all
purposes.


 


5.                                      Limitation
of Rights of Employee.  Employee will
have no rights with respect to any Shares not expressly conferred by the Plan
or this Agreement.


 


6.                                      No
Assignment.         This
Agreement and the Option granted hereunder are of a personal nature and
Employee’s rights with respect hereto and thereto may not be sold, mortgaged,
pledged, assigned, transferred, conveyed or disposed of in any manner by
Employee, and may not be exercised by any person, other than Employee, except
as expressly permitted under the Plan. 
Any such attempted sale, mortgage, pledge, assignment, transfer,
conveyance, disposition or exercise will be void, and Valero will not be bound
thereby.


 


7.                                      Successors.  This Agreement is binding upon any
successors of Valero and the heirs, successors and legal representatives of
Employee.


 


8.                                      Direct
Registration.  Employee agrees that
in lieu of stock certificates, any Shares issuable in connection with the
exercise of the Options may be issued in uncertificated form pursuant to the
Direct Registration Service of Valero’s stock transfer agent.


 





















 


VALERO
ENERGY CORPORATION


 


FORM A—STOCK
OPTION EXERCISE FORM


 


If you are not using the
on-line system for stock option exercises designated by Valero, then on the day
you exercise your options, this exercise form must be faxed
to Valero’s Stock Option Administration department at (210) 345-2717
or (210) 444-8528and the original(s) mailed to P.O. Box 696000, San
Antonio, TX  78269-6000, mailstation
VHC/E1N. The Stock Option
Administration department must receive your original form(s) within three days
after exercise date.


 


ATTENTION:  Stock Option
Administration (VHC-E1N), telephone (210) 345-2072 or (210) 345-2447


fax (210) 345-2717 or (210) 444-8528.


 


The undersigned elects to
exercise an Option to purchase shares as follows:


 


Name:


(Use Complete Legal Name)


Address:


 


 


Employee
Number:                                Telephone Number:                                (Where
you can be reached at time of exercise)


Date of
Grant to Which Exercise Applies:


Option
Number to Which Exercise Applies:


Option
Price to Which Exercise Applies:


Number of
Shares to Which Exercise Applies:


 


The Settlement Date on which the shares
will be tendered may not be less than three nor more than ten business days
following this Exercise Date.


 


Federal
income tax will be withheld at 25%; if a higher amount is requested, please
specify                     
(max 35%).


 


On or before the Settlement
Date, I will pay the Option price, applicable taxes, and any transaction fees
as follows:  [Choose One]


 


	
  o

  	
  a)

  	
  CASH
  PURCHASE METHOD. I will furnish a check made payable to
  Valero Energy Corporation on the date of exercise. In
  addition to the Option price, federal income tax, social security tax,
  Medicare tax and state tax, as applicable, will be payable to Valero on the
  Exercise Date. I will be informed not later than the close of business on the
  Exercise Date of the total settlement funds required. All option shares will
  be issued to me via the Computershare Direct Registration System; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  b)

  	
  STOCK
  PURCHASE METHOD. I will submit a signed Representation
  of Ownership statement attesting as to shares of Valero Common Stock that I
  own. The number of shares of Valero Common Stock attested to on this signed
  statement must have a market value equal to or exceeding the sum of the
  Option price plus the amount of applicable tax withholding for the number of
  Option shares being exercised. The stock will be valued at the average of the
  high and low sales price per share of Valero Common Stock quoted on the New
  York Stock Exchange on the exercise date. In addition
  to the Option price, federal income tax, social security tax, Medicare tax
  and state tax, as applicable, will be deducted from the Option shares
  exercised, and a net number of shares will be issued to me via the
  Computershare Direct Registration System. Fractional shares will be settled
  in cash within one week of the exercise date; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  c)

  	
  RELOAD
  METHOD - former UDS Options only. I
  will submit documentation indicating that I currently hold, which I have held
  for a minimum of at least six months,
                  
  shares of Valero Energy Corporation common stock. I recognize that in
  addition to the option price, federal income tax (25%), social security tax,
  Medicare tax and state tax, as applicable will be deducted from the Option
  shares exercised (fractional shares will be settled in cash within one week
  of the exercise date). I will receive a new option for the number of shares
  tendered for the option price. This new option vests 100% at the end of two
  years and the expiration date is the same as the underlying option (available for eligible options granted under the former 1990 Diamond
  Shamrock, 1992 Ultramar and 1996 Ultramar Diamond Shamrock plans); or

  
	
   

  	
   

  	
   

  
	
  o

  	
  d)

  	
  SAME-DAY-SALE
  FOR CASH METHOD. I
  am making an irrevocable election for same day sale with this option
  program’s broker, electing to receive cash from the sale. Cash proceeds from
  the sale of Option shares (less Option price, applicable taxes, and
  transaction fees) will be remitted to me by the broker; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  e)

  	
  BROKER
  SALE FOR STOCK METHOD – for active employees only. I am making an irrevocable election to sell with
  this option program’s broker, electing to receive shares of Valero Common
  Stock from the exercise. The broker will sell from the Option shares a number
  of shares approximating the sum of the Option price and applicable taxes.
  This will result in a cash balance, which will be issued to me by the broker
  after processing is completed. Remaining Option shares
  will be issued to me via the Computershare Direct Registration System.

  



 


	
  Executed this

  	
   

  	
   day of

  	
   

  	
  , 20

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature