EXHIBIT 10.26
OPTION AGREEMENT
VALERO ENERGY CORPORATION NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
This Option Agreement ("Agreement") is entered into between Valero
Energy Corporation, a Delaware corporation ("Valero"), and a Non-Employee
Director of the Board of Directors of Valero pursuant to the terms of the Valero
Energy Corporation Non-Employee Director Stock Option Plan (as may be amended,
the "Director Plan"). As used herein, Director shall mean RUBEN M. ESCOBEDO.
Capitalized terms used in this Agreement but not otherwise defined in this
Agreement have the meanings set forth in the Director Plan.
1. GRANT OF OPTION. Valero grants to Director the right, privilege and
option ("Option") to purchase up to 2,000 shares of Common Stock of Valero, $.01
par value per share ("Shares"), in accordance with the terms of this Agreement
and the Director Plan. The Shares, when issued to Director upon the exercise of
the Option, shall be fully paid and non-assessable.
2. PURCHASE PRICE. The purchase price of the Shares shall be $37.845000
per Share.
3. EXERCISE OF OPTION. The period during which the Option is in effect
("Option Period") shall commence on April 24, 2003. The Option Period shall
terminate on APRIL 24, 2013, subject to the provisions of the Director Plan
relating to suspension or termination from the Director Plan, 100% of the shares
subject to the Option will be available for exercise beginning OCTOBER 24, 2003.
If the Director desires to exercise the Option, Director must deliver
written notice to Stock Plan Administration of Valero substantially in the form
of the attached FORM A ("Exercise Notice"). The Option must be exercised in
accordance with one of the methods of exercise set forth in the attached form of
Exercise Notice. The date on which the Exercise Notice is received by Valero
will be the "Exercise Date." The completed Exercise Notice must include the
number of Shares with respect to which the Option is being exercised. 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 shall be extended for the period
necessary to take such action. In the event of any failure by Director 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 shall be treated as if it had never been
made.
4. DIRECTOR PLAN INCORPORATED BY REFERENCE. The Director Plan is
incorporated herein, and by this reference, is made a part hereof for all
purposes. The Director Plan contains detailed provisions relating to, among
other things, forfeiture of this Option under certain circumstances, adjustment
of Shares in the event of certain changes in capitalization, and other matters
of importance to Director. Director warrants and agrees that he or she has
received and
read a copy of the Director Plan or a Director Plan Summary relating thereto,
and that all rights granted hereunder are subject to the more detailed
provisions of the Director Plan.
5. LIMITATION OF RIGHTS OF DIRECTOR. Director shall have no rights with
respect to any Shares not expressly conferred by the Director Plan or this
Agreement.
6. NO ASSIGNMENT. This Agreement and the Option granted hereunder are
of a personal nature and, without prior written approval from the Compensation
Committee of the Board of Directors, the option shall not be transferable by
Director except by will or under the laws of descent and distribution, and shall
be exercisable, during the Director's lifetime, only by Director.
7. SUCCESSORS. This Agreement shall be binding upon any successors of
Valero and the heirs, successors and legal representatives of Director.
NOTICE OF GRANT OF STOCK OPTION
AND OPTION AGREEMENT
Valero Energy Corporation
ID: 74-1828067
P.O. Box 500
San Antonio, Texas 78292-0500
RUBEN M. ESCOBEDO Option Number: 00000069
Plan: RMSO
ID: 461600670
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Effective APRIL 24, 2003, you have been granted a NON-QUALIFIED STOCK OPTION to
buy 2,000 shares of the common stock of Valero Energy Corporation (the
"Company") at $37.845000 per share.
The total option price of the shares granted is $75,690.00.
Your options to purchase shares will vest on the dates shown below.
<Table>
<Caption>
SHARES GRANT DATE VEST TYPE FULL VEST EXPIRATION
------ ---------- ------------ --------- ----------
2,000 4/24/2003 ON VEST DATE 10/24/2003 4/24/2013
</Table>
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 Non-Employee Director Stock Option Plan, as amended,
and the Option Agreement attached hereto, all of which are made a part of this
agreement.
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VALERO ENERGY CORPORATION
By:
--------------------------------- -----------------------------------
Mike Crownover Date
Director - Human Resources
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RUBEN M. ESCOBEDO Date
Outside Director