Exhibit 10.05

ADMINISTRATION AGREEMENT

BETWEEN

VALERO GP HOLDINGS, LLC

AND

VALERO GP, LLC

DATED AS OF July 19, 2006

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ADMINISTRATION AGREEMENT

This ADMINISTRATION AGREEMENT (this “Agreement”) is entered into as of July 19,
2006 and effective as of Effective Date, as defined below, between VALERO GP
HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), and VALERO GP,
LLC, a Delaware limited liability company (“Valero GP”).

RECITALS

WHEREAS, management of Holdings has determined that certain executive
management, accounting, legal, cash management, corporate finance and other
administrative services required by Holdings should be performed by Valero GP in
exchange for an administrative services fee;

WHEREAS, on March 10, 2006, upon recommendation by management of Valero GP and
the Conflicts Committee of the Board of Directors of Valero GP (the “Conflicts
Committee”), the Board of Directors of Valero GP approved the terms of this
Agreement;

WHEREAS, Valero GP has agreed to provide certain administrative services under
this Agreement to Holdings; and

NOW, THEREFORE, for and in consideration of the mutual covenants contained in
this Agreement, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. The following definitions shall be for all purposes,
unless otherwise clearly indicated to the contrary, applied to the terms used in
this Agreement.

(a) “Affiliates” means entities that directly or indirectly through one or more
intermediaries control, or are controlled by, or are under common control with,
such party, and the term “control” shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies of an entity, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that with respect to Valero GP, the
term “Affiliate” shall exclude Holdings.

(b) “Associate” means, when used to indicate a relationship with any Person,
(a) any corporation or organization which such Person is a director, officer or
partner or is, directly or indirectly, the owner of 20% or more of any class of
voting stock or other voting interest; (b) any trust or other estate in which
such Person has at least a 20% beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity; and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same
principal residence as such Person.

(c) “Effective Date” means the closing date of the initial public offering of
Holdings.

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(d) “force majeure” means any one or more of: (a) an act of God, (b) a strike,
lockout, labor difficulty or other industrial disturbance, (c) an act of a
public enemy, war, blockade, insurrection or public riot, (d) lightning, fire,
storm, flood or explosion, (e) governmental action, delay, restraint or
inaction, (f) judicial order or injunction, (g) material shortage or
unavailability of equipment, or (h) any other cause or event, whether of the
kind specifically enumerated above or otherwise, which is not reasonably within
the control of the party claiming suspension..

(e) “Group” means a Person that with or through any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation made
to ten or more Persons), exercising investment power or disposing of any
membership interests in Holdings with any other Person that beneficially owns,
or whose Affiliates or Associates beneficially own, directly or indirectly,
membership interests in Holdings.

(f) “Person” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization or other
enterprise (including an employee benefit plan), association, government agency
or political subdivision thereof or other entity.

(g) “Valero Energy Affiliates” shall mean any and all Affiliates of Valero
Energy Corporation.

ARTICLE II

PROVISION OF SERVICES

Section 2.1 Provision of Administrative Services by Valero GP.

(a) Administrative Services. Valero GP or any Affiliate or designee of Valero GP
shall provide to Holdings non-exclusive executive management, accounting, legal,
cash management, corporate finance and other administrative services, and such
other services as Valero GP and Holdings may from time to time agree (the
“Administrative Services”).

(b) Additional Services. Valero GP or any Affiliate or designee of Valero GP
shall provide Holdings with such other services as Holdings may request from
time to time during the term of this Agreement and for such additional
compensation as the parties may agree.

(c) Direct Charges. Notwithstanding Section 1.1 (a) above, the following items
will be directly charged to Holdings (“Direct Charges”):

all third party expenses directly related to Holdings, including, but not
limited to, public company costs, outside legal fees, outside accounting fees,
fees and expenses of directors, external advisors and consultants, and insurance
costs, including but not limited to, directors and officers.

 

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(d) Nature and Quality of Services. The quality of the Administrative Services
shall be substantially identical to those provided to subsidiaries and
Affiliates of Valero GP.

Section 2.2 Fees for Administrative Services.

(a) Commencing on the Effective Date of this Agreement, and for each contract
year thereafter, Holdings shall pay to Valero GP an annual fee (the
“Administrative Services Fee”). The Administrative Services Fee shall be
$500,000 per year, subject to adjustment as provided in Section 2.2(b).

(b) On the last day of each contract year starting with the contract year ending
December 31, 2006, and prior to the beginning of the next contract year, the
Administrative Services Fee shall be increased by an amount equal to Valero GP’s
general annual merit increase percentage for the just completed contract year.

(c) Valero GP, with the approval and consent of the Conflicts Committee, may
agree to further modifications in the Administrative Services Fee in connection
with changed levels of Administrative Services provided to Holdings due to
modifications of Holdings’ operations through acquisitions or otherwise.

(d) The parties hereto acknowledge that the Administrative Services Fee is
intended to reflect Valero GP’s actual costs to provide the Administrative
Services. At the end of each contract year, the scope of the Administrative
Services and the related Administrative Services Fee are subject to review
either at the request of Valero GP or Holdings, in either case by providing 10
days written notice to the other party but in no event later than 60 days before
the end of the applicable contract year, with such review to be completed no
later than March 31 of the immediately following contract year, with any
modification of the Administrative Services Fee, other than as provided in
Sections 2.2 (b) and 2.4, subject to the consent and approval of the Conflicts
Committee.

(e) Any fees payable hereunder for periods less than a full contract year shall
be prorated for the period for which services were provided based on the actual
number of days elapsed and a year of 365 days.

Section 2.3 Payment of Fees.

(a) The fees to be paid pursuant to this Agreement shall be paid by Holdings in
equal monthly installments in arrears within 30 days of the end of the month.

(b) To the extent reasonably practicable, all third party invoices for Direct
Charges shall be submitted to Holdings for payment. For Direct Charges not paid
directly by Holdings, if any, Valero GP shall present Holdings with an invoice
within 10 days after the end of each calendar month that reflects an amount
equal to all Direct Charges reimbursable to Valero GP. Holdings shall pay such
sum within 30 days of the end of the applicable calendar month.

Section 2.4 Cancellation or Reduction of Services. Holdings may terminate or
reduce the level of any Administrative Service on 60 days’ prior written notice
to Valero GP. Upon such termination or reduction, the Administrative Services
Fee shall be reduced accordingly, whether on a temporary or a permanent basis,
for such time as such service is reduced or terminated.

 

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Section 2.5 Term. The provisions of this Article II will apply until this
Agreement is terminated or amended in accordance with Section 3.1 or
Section 3.12, respectively.

ARTICLE III

MISCELLANEOUS

Section 3.1 Termination/Change of Control.

(a) This Agreement shall terminate on December 31, 2011 (the “Initial Term”);
provided that this Agreement shall automatically continue for successive
two-year terms after the Initial Term unless or until six months’ advance notice
is given by Valero GP to terminate this Agreement, in which case this Agreement
shall terminate six months after such notice is delivered. Notwithstanding the
foregoing, Holdings (i) may terminate the provision of one or more
Administrative Services or reduce the level of one or more Administrative
Services, in each case in accordance with the provisions of Section 2.4 hereof
and (ii) shall have the right at any time to terminate this Agreement by giving
written notice to Valero GP, and in such event this Agreement shall terminate
six months from the date on which such notice is given.

(b) Notwithstanding Section 3.1(a), if a Change of Control of Holdings or Valero
GP occurs, this Agreement shall terminate. The following shall constitute a
Change of Control:

(i) Holdings shall cease to own, directly or indirectly, 100% of each of Valero
GP and Riverwalk Logistics, L.P., a Delaware limited partnership (“Riverwalk”);

(ii) both (A) the Valero Energy Affiliates shall be in the aggregate the legal
or beneficial owners (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of less than a majority of the combined voting
power of the then total membership interests (including all securities which are
convertible into membership interests) of Holdings, and (B) any Person or Group
of Persons acting in concert as a partnership or other Group (a “Group of
Persons”), other than one or more of the Valero Energy Affiliates, shall be the
legal or beneficial owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of more than 20% of the combined voting power
of the then total membership interests (including all securities which are
convertible into membership interests) of Holdings, provided, that a “Group of
Persons” shall not include the underwriter in any firm underwriting undertaken
in connection with the initial public offering or any subsequent public offering
of Holdings; or

(iii) occupation of a majority of the seats (other than vacant seats) on the
Board of Directors (or Board of Managers) of Holdings by Persons who were
neither (A) nominated by the board of directors of Holdings nor (B) appointed by
directors, a majority of whom were so nominated.

 

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Section 3.2 No Third Party Beneficiary. The provisions of this Agreement are
enforceable solely by the parties to the Agreement and no limited partner,
assignee, member or other person shall have the right, separate and apart from
the parties hereto, to enforce any provisions of this Agreement or to compel an
party to this Agreement to comply with the terms of this Agreement.

Section 3.3 No Fiduciary Duties. Neither party hereto shall have any fiduciary
obligations or duties to the other party by reason of this Agreement. Subject to
the (i) Omnibus Agreement among Valero Energy Corporation (as successor to
Ultramar Diamond Shamrock Corporation), Valero GP, Riverwalk, Valero L.P. and
Valero Logistics Operations, L.P., dated as of April 16, 2001, as such agreement
may be amended from time to time, and (ii) Non-Compete Agreement among Holdings,
Valero GP, Riverwalk and Valero L.P., dated as of [            ], 2006, as such
agreement may be amended from time to time, any party hereto may conduct any
activity or business for its own profit whether or not such activity or business
is in competition with any activity or business of the other party.

Section 3.4 Limited Warranty; Limitation of Liability

Valero GP represents that it will provide or cause the services to be provided
to Holdings with reasonable care and in accordance with all applicable laws,
rules, and regulations, including without limitation those of the Federal Energy
Regulatory Commission. EXCEPT AS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE
AND IN SECTION 2.1 (d), ALL PRODUCTS OBTAINED FOR HOLDINGS ARE AS IS, WHERE IS,
WITH ALL FAULTS AND VALERO GP MAKES NO (AND HEREBY DISCLAIMS AND NEGATES ANY AND
ALL) REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE SERVICES RENDERED OR PRODUCTS OBTAINED FOR HOLDINGS. FURTHERMORE,
HOLDINGS MAY NOT RELY UPON ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
MADE TO VALERO GP BY ANY PARTY (INCLUDING, AN AFFILIATE OR DESIGNEE OF VALERO
GP) PERFORMING SERVICES ON BEHALF OF VALERO GP HEREUNDER, UNLESS SUCH PARTY
MAKES AN EXPRESS WARRANTY TO HOLDINGS. HOWEVER, IN THE CASE OF SERVICES PROVIDED
BY A THIRD PARTY FOR HOLDINGS, IF THE THIRD PARTY PROVIDER OF SUCH SERVICES
MAKES AN EXPRESS WARRANTY TO HOLDINGS, HOLDINGS IS ENTITLED TO CAUSE VALERO GP
TO RELY ON AND TO ENFORCE SUCH WARRANTY.

IT IS EXPRESSLY UNDERSTOOD BY HOLDINGS THAT VALERO GP AND ITS AFFILIATES AND
DESIGNEES SHALL HAVE NO LIABILITY FOR THE FAILURE OF THIRD PARTY PROVIDERS TO
PERFORM ANY SERVICES HEREUNDER AND FURTHER THAT VALERO GP AND ITS AFFILIATES AND
DESIGNEES SHALL HAVE NO LIABILITY WHATSOEVER FOR THE SERVICES PROVIDED BY ANY
SUCH THIRD PARTY UNLESS IN EITHER EVENT SUCH SERVICES ARE PROVIDED IN A MANNER
WHICH WOULD EVIDENCE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT ON THE PART OF
VALERO GP OR ITS AFFILIATES OR DESIGNEES BUT VALERO GP SHALL, ON BEHALF OF
HOLDINGS, PURSUE ALL RIGHTS AND REMEDIES UNDER

 

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ANY SUCH THIRD PARTY CONTRACT. HOLDINGS AGREES THAT THE REMUNERATION PAID TO
VALERO GP HEREUNDER FOR THE SERVICES TO BE PERFORMED REFLECT THIS LIMITATION OF
LIABILITY AND DISCLAIMER OF WARRANTIES. IN NO EVENT SHALL VALERO GP BE LIABLE TO
HOLDINGS OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES
RESULTING FROM ANY ERROR IN THE PERFORMANCE OF SERVICES OR FROM THE BREACH OF
THIS AGREEMENT, REGARDLESS OF THE FAULT OF VALERO GP, ANY VALERO GP AFFILIATE OR
DESIGNEE, OR ANY THIRD PARTY PROVIDER OR WHETHER VALERO GP, ANY VALERO GP
AFFILIATE OR DESIGNEE, OR THE THIRD PARTY PROVIDER ARE WHOLLY, CONCURRENTLY,
PARTIALLY, OR SOLELY NEGLIGENT. TO THE EXTENT ANY THIRD PARTY PROVIDER HAS
LIMITED ITS LIABILITY TO VALERO GP OR ITS AFFILIATE OR DESIGNEE FOR SERVICES
UNDER AN OUTSOURCING OR OTHER AGREEMENT, HOLDINGS AGREES TO BE BOUND BY SUCH
LIMITATION OF LIABILITY FOR ANY PRODUCT OR SERVICE PROVIDED TO HOLDINGS BY SUCH
THIRD PARTY PROVIDER UNDER VALERO GP’S OR SUCH AFFILIATE’S OR DESIGNEE’S
AGREEMENT.

Section 3.5 Force Majeure. If either party to this Agreement is rendered unable
by force majeure to carry out its obligations under this Agreement, other than a
party’s obligation to make payments as provided for herein, that party shall
give the other party prompt written notice of the force majeure with reasonably
full particulars concerning it. Thereupon, the obligations of the party giving
the notice, insofar as they are affected by the force majeure, shall be
suspended during, but no longer than the continuance of, the force majeure. The
affected party shall use all reasonable diligence to remove or remedy the force
majeure situation as quickly as practicable.

The requirement that any force majeure situation be removed or remedied with all
reasonable diligence shall not require the settlement of strikes, lockouts or
other labor difficulty by the party involved, contrary to its wishes. Rather,
all such difficulties may be handled entirely within the discretion of the party
concerned.

Section 3.6 Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments as may be
required for a party to provide the services hereunder and to perform such other
additional acts as may be necessary or appropriate to effectuate, carry out, and
perform all of the terms and provisions of this Agreement.

Section 3.7 Notices. Any notice, request, demand, direction or other
communication required or permitted to be given or made under this Agreement to
a party shall be in writing and may be given by hand delivery, postage prepaid
first-class mail delivery, delivery by a reputable international courier service
guaranteeing next business day delivery or by facsimile (if confirmed by one of
the foregoing methods) to such party at its address noted below:

 

  (a) in the case of Valero GP, to:

Valero GP, LLC

One Valero Way

San Antonio, Texas 78249

Attention: Legal Department

Telecopy: (210) 345-4861

 

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  (b) in the case of Holdings, to:

Valero GP Holdings, LLC

One Valero Way

San Antonio, Texas 78249

Attention: Legal Department

Telecopy: (210) 345-xxxx

or at such other address of which notice may have been given by such party in
accordance with the provisions of this Section.

Section 3.8 Counterparts. This Agreement may be executed in several
counterparts, no one of which needs to be executed by all of the parties. Such
counterpart, including a facsimile transmission of this Agreement, shall be
deemed to be an original and shall have the same force and effect as an
original. All counterparts together shall constitute but one and the same
instrument.

Section 3.9 Applicable Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Texas, excluding any conflicts of
law rule or principle that might refer the construction or interpretation hereof
to the laws of another jurisdiction.

Section 3.10 Binding Effect; Assignment. Except for the ability of Valero GP to
cause one or more of the Administrative Services to be performed by a third
party provider or an Affiliate of Valero GP, no party shall have the right to
assign its rights or obligations under this Agreement (by operation of law or
otherwise) without the consent of the other parties.

Section 3.11 Invalidity of Provisions. In the event that one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality or
enforceability of the remaining provisions hereof shall not be affected or
impaired thereby.

Section 3.12 Modification; Amendment. This Agreement may be amended or modified
from time to time only by a written amendment signed by both parties hereto;
provided however, that Valero GP may not, without the prior approval of the
Conflicts Committee, agree to any amendment or modification to this Agreement
that, in the reasonable discretion of Valero GP, will adversely affect the
holders of common units of the Partnership.

Section 3.13 Entire Agreement. This Agreement constitutes the whole and entire
agreement between the parties hereto and supersedes any prior agreement,
undertaking, declarations, commitments or representations, verbal or oral, in
respect of the subject matter hereof.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement with effect
as of the date first above written.

 

Valero GP, LLC By:  

/s/ Curtis V. Anastasio

Name:   Curtis V. Anastasio Title:   President and Chief Executive Officer
VALERO GP HOLDINGS, LLC By:  

/s/ Steven A. Blank

Name:   Steven A. Blank Title:   Senior Vice President, Chief Financial Officer
and Treasurer

SIGNATURE PAGE TO ADMINISTRATION AGREEMENT