Exhibit 10.03

 

SECOND AMENDED AND RESTATED

 

SERVICES AGREEMENT

 

AMONG

 

DIAMOND SHAMROCK REFINING AND MARKETING COMPANY

 

VALERO CORPORATE SERVICES COMPANY

 

VALERO L.P.

 

VALERO LOGISTICS OPERATIONS, L.P.

 

RIVERWALK LOGISTICS, L.P.

 

AND

 

VALERO GP, L.L.C.

 

DATED AS OF JULY 1, 2005

 

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SECOND AMENDED AND RESTATED SERVICES AGREEMENT

 

This SECOND AMENDED AND RESTATED SERVICES AGREEMENT (this “Agreement”) is
entered into effective as of July 1, 2005 (the “Effective Date”) by and among
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY, a Delaware corporation
(“DSRMC”) and VALERO CORPORATE SERVICES COMPANY, a Delaware corporation, both
indirect wholly owned subsidiaries of Valero Energy Corporation (“Valero
Energy”), VALERO L.P., a publicly traded Delaware limited partnership (the
“Partnership”), VALERO LOGISTICS OPERATIONS, L.P. (the “Operating Partnership”),
a Delaware limited partnership and an indirect wholly owned subsidiary of the
Partnership, RIVERWALK LOGISTICS, L.P., the general partner (the “General
Partner”) of the Partnership, and its general partner, VALERO GP, LLC (“Valero
GP”).

 

RECITALS

 

WHEREAS, Valero GP, an indirect wholly owned subsidiary of Valero Energy, is the
general partner of the General Partner; and

 

WHEREAS, the General Partner is the general partner of the Partnership; and

 

WHEREAS, all management powers over the business and affairs of the Partnership
are exclusively vested in the General Partner and the General Partner is
required to conduct, direct and exercise full control over all activities of the
Partnership, including, among other things, providing various general and
administrative resources and services; and

 

WHEREAS, certain parties hereto entered into a Services Agreement effective
July 1, 2000 pursuant to which DSRMC agreed to provide (i) specified corporate,
general and administrative services to the General Partner for an annual
administrative fee of $5.2 million, subject to adjustment as provided in the
Services Agreement and (ii) other specified services necessary to operate and
maintain the assets and operations of the Partnership, with such other services
being reimbursable to DSRMC; and

 

WHEREAS, the Services Agreement was amended and restated (the “Amended and
Restated Services Agreement”) effective April 1, 2004 to reflect the significant
changes that occurred in the business and operations of the Partnership between
July 1, 2000, the effective date of the Services Agreement, and April 1, 2004;
and

 

WHEREAS, the Amended and Restated Services Agreement provides that the General
Partner, with the approval and consent of the conflicts committee (the
“Conflicts Committee”) of Valero GP, may (i) agree on behalf of the Partnership
to increases in the Administrative Services Fee (as such term is defined in the
Amended and Restated Services Agreement) in connection with expansions of the
Partnership’s operations through acquisition or construction of new assets or
businesses, and (ii) amend or modify the Services Agreement; and

 

WHEREAS, on July 1, 2005, the Partnership completed its acquisition of Kaneb
Services, LLC and Kaneb Pipe Line Partners, L.P., effectively doubling the
Partnership’s operations; and

 

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WHEREAS, on July 21, 2005, the Conflicts Committee approved a new Administrative
Services Fee and the terms of this Agreement; and

 

WHEREAS, the parties desire to amend and restate the Services Agreement as set
forth herein to reflect the significant changes that have occurred in the
business and operations of the Partnership since the effective date of the
Amended and Restated Services Agreement and to substitute VCSC as a party for
DSRMC in all instances; and

 

WHEREAS, VCSC, for itself and its Affiliates, has agreed to provide certain
administrative services under this Agreement to Valero GP, the General Partner,
the Partnership and the Operating Partnership (individually, a “Partnership
Party,” and collectively, the “Partnership Parties”); and

 

WHEREAS, the Partnership Parties have agreed to provide certain operational
services under this Agreement to VCSC and its Affiliates;

 

NOW, THEREFORE, for and in consideration of the mutual covenants contained in
this Agreement, the parties hereto hereby agree to amend and restate the Amended
and Restated Services Agreement as follows:

 

ARTICLE I
PROVISION OF SERVICES

 

SECTION 1.1            PROVISION OF ADMINISTRATIVE SERVICES BY VCSC AND
AFFILIATES.

 

(A)           GENERAL AND ADMINISTRATIVE SERVICES.  VCSC OR ANY AFFILIATE OR
DESIGNEE OF VCSC SHALL PROVIDE NON-EXCLUSIVE MANAGEMENT, EMPLOYEE-RELATED AND
OTHER RELATED SERVICES TO THE PARTNERSHIP PARTIES THROUGH VALERO GP OR ANY
AFFILIATE, WHICH SHALL INCLUDE, BUT SHALL NOT BE LIMITED TO, SERVICES RELATED TO
ACQUISITIONS TO BE MADE BY THE PARTNERSHIP PARTIES, CASH MANAGEMENT, REVIEW OF
SIGNIFICANT FINANCIAL OPPORTUNITIES AND OPERATING, ACCOUNTING, LEGAL,
ENGINEERING, COMMERCIAL, HUMAN RESOURCES, INFORMATION TECHNOLOGY AND SUCH OTHER
MANAGEMENT, EMPLOYEE-RELATED AND OTHER GENERAL AND ADMINISTRATIVE SERVICES AS
SET FORTH ON EXHIBIT A HERETO AND AS VCSC AND VALERO GP MAY FROM TIME TO TIME
AGREE (THE “ADMINISTRATIVE SERVICES”).

 

For purposes of this Agreement, “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 VCSC, the term “Affiliate” shall exclude Valero GP, the General
Partner, the Partnership and the Operating Partnership.

 

(B)           ADDITIONAL SERVICES.  VCSC OR ANY AFFILIATE SHALL PROVIDE THE
PARTNERSHIP PARTIES WITH SUCH OTHER SERVICES AS VALERO GP 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 the Partnership (“Direct Charges”):

 

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ALL THIRD PARTY EXPENSES DIRECTLY RELATED TO THE PARTNERSHIP PARTIES, INCLUDING,
BUT NOT LIMITED TO, PUBLIC COMPANY COSTS, OUTSIDE LEGAL FEES, OUTSIDE ACCOUNTING
FEES, FEES AND EXPENSES OF EXTERNAL ADVISORS AND CONSULTANTS, AND INSURANCE
COSTS, INCLUDING BUT NOT LIMITED TO, GENERAL LIABILITY, AUTOMOBILE LIABILITY,
COMPREHENSIVE LIABILITY, EXCESS LIABILITY, PROPERTY AND DIRECTORS AND OFFICERS.

 

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

 

SECTION 1.2            FEES FOR ADMINISTRATIVE SERVICES.

 

(A)           COMMENCING ON THE EFFECTIVE DATE OF THIS AGREEMENT, AND FOR EACH
CONTRACT YEAR THEREAFTER, THE PARTNERSHIP SHALL PAY TO VCSC AN ANNUAL FEE (THE
“ADMINISTRATIVE SERVICES FEE”).  THE ADMINISTRATIVE SERVICES FEE FOR THE
CONTRACT YEAR ENDED JUNE 30, 2006 SHALL BE $13.8 MILLION, FOR THE CONTRACT YEAR
ENDED JUNE 30, 2007 SHALL BE $14.8 MILLION, AND THEREAFTER SUCH FEE SHALL BE
$15.8 MILLION FOR THE CONTRACT YEAR ENDED JUNE 30, 2008 AND THE YEARS FOLLOWING,
SUBJECT TO ADJUSTMENT AS PROVIDED IN PARAGRAPH (B) BELOW.

 

(B)           ON THE LAST DAY OF EACH CONTRACT YEAR STARTING WITH THE CONTRACT
YEAR ENDING JUNE 30, 2006, AND PRIOR TO THE BEGINNING OF THE NEXT CONTRACT YEAR,
THE ADMINISTRATIVE SERVICES FEE SHALL BE INCREASED BY AN AMOUNT EQUAL TO VALERO
ENERGY’S GENERAL ANNUAL MERIT INCREASE PERCENTAGE FOR THE JUST COMPLETED
CONTRACT YEAR.

 

(C)           THE GENERAL PARTNER, WITH THE APPROVAL AND CONSENT OF THE
CONFLICTS COMMITTEE, MAY AGREE ON BEHALF OF THE PARTNERSHIP TO FURTHER
MODIFICATIONS IN THE ADMINISTRATIVE SERVICES FEE IN CONNECTION WITH CHANGED
LEVELS OF ADMINISTRATIVE SERVICES PROVIDED TO THE PARTNERSHIP PARTIES DUE TO
EXPANSIONS OF THE PARTNERSHIP’S OPERATIONS THROUGH ACQUISITION OR CONSTRUCTION
OF NEW ASSETS OR BUSINESSES.

 

(D)           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 VCSC OR THE PARTNERSHIP PARTIES, 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 JULY 31 OF THE IMMEDIATELY FOLLOWING CONTRACT YEAR, WITH
ANY MODIFICATION OF THE ADMINISTRATIVE SERVICES FEE OTHER THAN AS PROVIDED IN
PARAGRAPH (A) ABOVE 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 SERVICES WERE PROVIDED BASED ON THE ACTUAL
NUMBER OF DAYS ELAPSED AND A YEAR OF 365 DAYS.

 

Section 1.3            Provision of Operational Services by the Partnership
Parties.

 

(a)           Operational Services.  During the term of this Agreement, the
Partnership Parties shall provide certain operational services, including
control room oversight, terminal operations oversight, external reporting,
system measurement, GIS/mapping support, integrity management program planning
and support and other general and operational services substantially to the

 

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same extent such services are provided by the Partnership Parties to VCSC and
its Affiliates on the Effective Date hereof (the “Operational Services”).  The
quality of the Operational Services shall be substantially identical to those
provided to other Partnership Parties.

 

(b)           Additional Operational Services.  The Partnership Parties shall
provide VCSC or any Affiliate with such other services as VCSC may request from
time to time during the term of this Agreement and for such additional
compensation as the parties may agree.

 

(c)           Fees for Operational Services.  Commencing on the Effective Date
of this Agreement and ending on June 30, 2010, and for each contract year
thereafter, VCSC shall pay to the Partnership an annual fee (the “Operational
Services Fee”).  The Operational Services Fee for the contract year ended
June 30, 2006 shall be $1.22 million and thereafter such fee shall be subject to
adjustment as provided in paragraph (d) below.  Notwithstanding anything to the
contrary contained in this Agreement, the costs of all third parties (if any)
utilized by the Partnership to provide Operational Services (in whole or in
part) (“Third Party Charges”) will be directly charged to VCSC to the extent
reasonably practicable.

 

(D)           ANNUAL ADJUSTMENT.  ON THE LAST DAY OF EACH CONTRACT YEAR STARTING
WITH THE CONTRACT YEAR ENDING JUNE 30, 2006, AND PRIOR TO THE BEGINNING OF THE
NEXT CONTRACT YEAR, THE OPERATIONAL SERVICES FEE SHALL BE INCREASED BY AN AMOUNT
EQUAL TO THE PARTNERSHIP’S GENERAL ANNUAL MERIT INCREASE PERCENTAGE FOR THE JUST
COMPLETED CONTRACT YEAR.

 

(e)           At the end of each contract year, the scope of the Operational
Services and the related Operational Services Fee are subject to review either
at the request of VCSC or the Partnership Parties, 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 July 31 of the immediately following contract year.

 

(f)            The General Partner, with the approval and consent of the
Conflicts Committee, may agree on behalf of the Partnership to further
modifications in the Operational Services Fee in connection with changed levels
of Operational Services provided by the Partnership Parties due to expansions of
VCSC’s or its affiliates’ operations through acquisition or construction of new
assets or businesses.

 

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

 

SECTION 1.4            PAYMENT OF FEES.

 

(A)           THE FEES TO BE PAID PURSUANT TO SECTION 1.2 SHALL BE PAID BY THE
PARTNERSHIP IN EQUAL MONTHLY INSTALLMENTS IN ARREARS WITHIN 30 DAYS OF THE END
OF THE MONTH.

 

(b)           The fees to be paid pursuant to Section 1.3 shall be paid by VCSC
in equal monthly installments in arrears within 30 days of the end of the
month.  The fees payable to the Partnership pursuant to Section 1.3 may be
offset against any fees payable by the Partnership pursuant to Section 1.2.

 

(C)           TO THE EXTENT REASONABLY PRACTICABLE, ALL THIRD PARTY INVOICES FOR
DIRECT CHARGES SHALL BE SUBMITTED TO THE PARTNERSHIP PARTIES, FOR PAYMENT.  FOR
DIRECT CHARGES NOT PAID DIRECTLY BY THE PARTNERSHIP PARTIES, IF ANY, VCSC SHALL
PRESENT VALERO GP WITH AN INVOICE WITHIN 10 DAYS AFTER THE END OF EACH CALENDAR
MONTH WHICH REFLECTS AN AMOUNT EQUAL TO ALL DIRECT CHARGES REIMBURSABLE TO
VCSC.  THE PARTNERSHIP SHALL PAY SUCH SUM WITHIN 30 DAYS OF THE END OF THE
APPLICABLE CALENDAR MONTH.

 

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(D)           FOR THIRD PARTY CHARGES NOT PAID DIRECTLY BY VCSC, IF ANY, THE
PARTNERSHIP SHALL PRESENT VCSC WITH AN INVOICE WITHIN 10 DAYS AFTER THE END OF
EACH CALENDAR MONTH WHICH REFLECTS AN AMOUNT EQUAL TO ALL DIRECT CHARGES
REIMBURSABLE TO THE PARTNERSHIP.  VCSC SHALL PAY SUCH SUM WITHIN 30 DAYS OF THE
END OF THE APPLICABLE CALENDAR MONTH.

 

Section 1.5            Cancellation or Reduction of Services.  The Partnership
Parties may terminate or reduce the level of any Administrative Service on 60
days’ prior written notice to VCSC.  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 Administrative Service is reduced or
terminated.  VCSC may terminate or reduce the level of any Operational Service
on 60 days’ prior written notice to the Partnership Parties.  Upon such
termination or reduction, the Operational Services Fee shall be reduced
accordingly, whether on a temporary or a permanent basis, for such time as such
Operational Service is reduced or terminated.

 

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SECTION 1.6.           TERM.  THE PROVISIONS OF THIS ARTICLE I WILL APPLY IN
RESPECT OF ADMINISTRATIVE SERVICES AND OPERATIONAL SERVICES UNTIL THIS AGREEMENT
IS TERMINATED OR AMENDED IN ACCORDANCE WITH SECTION 2.1 OR SECTION 2.13,
RESPECTIVELY.

 

ARTICLE II
MISCELLANEOUS

 

SECTION 2.1            TERMINATION.  THIS AGREEMENT SHALL TERMINATE ON JUNE 30,
2010 (THE “INITIAL TERM”); PROVIDED THAT THIS AGREEMENT SHALL AUTOMATICALLY
CONTINUE FOR SUCCESSIVE TWO YEAR TERMS AFTER THE INITIAL TERM UNLESS OR UNTIL
ONE YEAR’S ADVANCE NOTICE IS GIVEN BY VCSC TO TERMINATE THIS AGREEMENT, IN WHICH
CASE THIS AGREEMENT SHALL TERMINATE ONE YEAR AFTER SUCH NOTICE IS DELIVERED. 
NOTWITHSTANDING THE FOREGOING, (1) ANY PARTNERSHIP PARTY (A) MAY TERMINATE THE
PROVISION OF ONE OR MORE ADMINISTRATIVE SERVICES OR REDUCE THE LEVEL OF ONE OR
MORE ADMINISTRATIVE SERVICES IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1.5
HEREOF, AND (B) SHALL HAVE THE RIGHT AT ANY TIME TO TERMINATE THIS AGREEMENT BY
GIVING WRITTEN NOTICE TO VCSC, AND IN SUCH EVENT THIS AGREEMENT SHALL TERMINATE
ONE HUNDRED AND EIGHTY (180) DAYS FROM THE DATE ON WHICH SUCH NOTICE IS GIVEN;
AND (2) VCSC MAY TERMINATE THE PROVISION OF ONE OR MORE OPERATIONAL SERVICES OR
REDUCE THE LEVEL OF ONE OR MORE OPERATIONAL SERVICES IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 1.5 HEREOF.

 

SECTION 2.2            NO THIRD PARTY BENEFICIARY.  THE PROVISIONS OF THIS
AGREEMENT ARE ENFORCEABLE SOLELY BY THE PARTIES TO THE AGREEMENT AND NO LIMITED
PARTNER, ASSIGNEE 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 2.3            NO FIDUCIARY DUTIES.  THE PARTIES HERETO SHALL NOT HAVE
ANY FIDUCIARY OBLIGATIONS OR DUTIES TO THE OTHER PARTIES BY REASON OF THIS
AGREEMENT.  SUBJECT TO THE OMNIBUS AGREEMENT AMONG VALERO ENERGY (AS SUCCESSOR
TO ULTRAMAR DIAMOND SHAMROCK CORPORATION), VALERO GP, THE GENERAL PARTNER, THE
PARTNERSHIP AND VALERO LOGISTICS OPERATIONS, L.P., DATED AS OF APRIL 16, 2001,
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 2.4            LIMITED WARRANTY; LIMITATION OF LIABILITY

 

(a)           VCSC represents that it will provide or cause the Administrative
Services to be provided to the Partnership Parties 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 1.1 (d), ALL PRODUCTS
OBTAINED FOR THE PARTNERSHIP PARTIES ARE AS IS, WHERE IS, WITH ALL FAULTS AND
VCSC 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 THE PARTNERSHIP PARTIES.  FURTHERMORE, THE PARTNERSHIP
PARTIES MAY NOT RELY UPON

 

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ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE MADE TO VCSC BY ANY PARTY
(INCLUDING, AN AFFILIATE OF VCSC) PERFORMING SERVICES ON BEHALF OF VCSC
HEREUNDER, UNLESS SUCH PARTY MAKES AN EXPRESS WARRANTY TO VALERO GP OR THE
PARTNERSHIP PARTIES.  HOWEVER, IN THE CASE OF SERVICES PROVIDED BY A THIRD PARTY
FOR THE PARTNERSHIP PARTIES, IF THE THIRD PARTY PROVIDER OF SUCH SERVICES MAKES
AN EXPRESS WARRANTY TO ANY OF THE PARTNERSHIP PARTIES, THE PARTNERSHIP PARTIES
ARE ENTITLED TO CAUSE VCSC TO RELY ON AND TO ENFORCE SUCH WARRANTY.

 

IT IS EXPRESSLY UNDERSTOOD BY THE PARTNERSHIP PARTIES THAT VCSC AND ITS
AFFILIATES SHALL HAVE NO LIABILITY FOR THE FAILURE OF THIRD PARTY PROVIDERS TO
PERFORM ANY SERVICES HEREUNDER AND FURTHER THAT VCSC AND ITS AFFILIATES 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 VCSC OR ITS
AFFILIATES BUT VCSC SHALL, ON BEHALF OF THE PARTNERSHIP PARTIES, PURSUE ALL
RIGHTS AND REMEDIES UNDER ANY SUCH THIRD PARTY CONTRACT.  THE PARTNERSHIP
PARTIES AGREE THAT THE REMUNERATION PAID TO VCSC HEREUNDER FOR THE SERVICES TO
BE PERFORMED REFLECT THIS LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES. 
IN NO EVENT SHALL VCSC BE LIABLE TO THE PARTNERSHIP PARTIES 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 VCSC, ANY VCSC AFFILIATE, OR ANY THIRD PARTY PROVIDER OR WHETHER
VCSC, ANY VCSC AFFILIATE, OR THE THIRD PARTY PROVIDER ARE WHOLLY, CONCURRENTLY,
PARTIALLY, OR SOLELY NEGLIGENT.  TO THE EXTENT ANY THIRD PARTY PROVIDER HAS
LIMITED ITS LIABILITY TO VCSC OR ITS AFFILIATE FOR SERVICES UNDER AN OUTSOURCING
OR OTHER AGREEMENT, THE PARTNERSHIP PARTIES AGREE TO BE BOUND BY SUCH LIMITATION
OF LIABILITY FOR ANY PRODUCT OR SERVICE PROVIDED TO THE PARTNERSHIP PARTIES BY
SUCH THIRD PARTY PROVIDER UNDER VCSC’S OR SUCH AFFILIATE’S AGREEMENT.

 

(b)           The Partnership Parties represent that they will provide or cause
the Operational Services to be provided to VCSC and its Affiliates 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 1.3 (a), ALL PRODUCTS OBTAINED FOR VCSC AND ITS AFFILIATES ARE AS IS,
WHERE IS, WITH ALL FAULTS AND THE PARTNERSHIP PARTIES MAKE NO (AND HEREBY
DISCLAIM AND NEGATE 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 VCSC AND
ITS AFFILIATES.  FURTHERMORE, NEITHER

 

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VCSC NOR ITS AFFILIATES MAY RELY UPON ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE MADE TO THE PARTNERSHIP PARTIES BY ANY PARTY PERFORMING SERVICES ON
BEHALF OF THE PARTNERSHIP PARTIES HEREUNDER, UNLESS SUCH PARTY MAKES AN EXPRESS
WARRANTY TO VCSC OR ITS AFFILIATES.  HOWEVER, IN THE CASE OF SERVICES PROVIDED
BY A THIRD PARTY FORVCSC OR ITS AFFILIATES, IF THE THIRD PARTY PROVIDER OF SUCH
SERVICES MAKES AN EXPRESS WARRANTY TO ANY OF VCSC OR THE PARTNERSHIP PARTIES,
VCSC IS ENTITLED TO CAUSE THE PARTNERSHIP PARTIES TO RELY ON AND TO ENFORCE SUCH
WARRANTY.

 

IT IS EXPRESSLY UNDERSTOOD BY VCSC AND ITS AFFILIATES THAT THE PARTNERSHIP
PARTIES SHALL HAVE NO LIABILITY FOR THE FAILURE OF THIRD PARTY PROVIDERS TO
PERFORM ANY SERVICES HEREUNDER AND FURTHER THAT THE PARTNERSHIP PARTIES 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 THE
PARTNERSHIP PARTIES BUT THE PARTNERSHIP PARTIES SHALL, ON BEHALF OF VCSC, PURSUE
ALL RIGHTS AND REMEDIES UNDER ANY SUCH THIRD PARTY CONTRACT.  VCSC AGREES ON
BEHALF OF ITSELF AND ITS AFFILIATES THAT THE REMUNERATION PAID TO THE
PARTNERSHIP PARTIES HEREUNDER FOR THE SERVICES TO BE PERFORMED REFLECT THIS
LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES.  IN NO EVENT SHALL THE
PARTNERSHIP PARTIES BE LIABLE TO VCSC OR ITS AFFILIATES 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 THE PARTNERSHIP PARTIES OR ANY OF THEIR AFFILIATES, OR ANY THIRD PARTY
PROVIDER OR WHETHER THE PARTNERSHIP PARTIES OR ANY OF THEIR AFFILIATES, OR THE
THIRD PARTY PROVIDER ARE WHOLLY, CONCURRENTLY, PARTIALLY, OR SOLELY NEGLIGENT. 
TO THE EXTENT ANY THIRD PARTY PROVIDER HAS LIMITED ITS LIABILITY TO THE
PARTNERSHIP PARTIES FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT, VCSC
AND ITS AFFILIATES AGREE TO BE BOUND BY SUCH LIMITATION OF LIABILITY FOR ANY
PRODUCT OR SERVICE PROVIDED TO VCSC OR ITS AFFILIATES BY SUCH THIRD PARTY
PROVIDER UNDER THE PARTNERSHIP PARTIES’ AGREEMENT.

 

SECTION 2.5            FORCE MAJEURE.  IF ANY 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 PARTIES 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.

 

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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 labour difficulty by the party involved, contrary to its wishes. Rather,
all such difficulties may be handled entirely within the discretion of the party
concerned.

 

The term “force majeure” means any one or more of: (a) an act of God, (b) a
strike, lockout, labour 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.

 

SECTION 2.6        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 ADMINISTRATIVE SERVICES OR THE
OPERATIONAL 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 2.7        TIME OF THE ESSENCE.  TIME IS OF THE ESSENCE IN THIS
AGREEMENT.

 

SECTION 2.8        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 VCSC, TO:

 

Valero Corporate Services Company

One Valero Way

San Antonio, Texas 78249

Attention:  Legal Department

Telecopy: (210) 345-5889

 

(B)           IN THE CASE OF THE GENERAL PARTNER AND VALERO GP, TO:

 

Valero GP, LLC

One Valero Way

San Antonio, Texas 78249

Attention: President

Telecopy: (210) 370-4392

 

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

 

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SECTION 2.9        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 2.10     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 2.11     BINDING EFFECT; ASSIGNMENT.  EXCEPT FOR THE ABILITY OF VCSC TO
CAUSE ONE OR MORE OF THE ADMINISTRATIVE SERVICES TO BE PERFORMED BY A THIRD
PARTY PROVIDER OR AN AFFILIATE, NO PARTY SHALL HAVE THE RIGHT TO ASSIGN ITS
RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT WITHOUT THE CONSENT OF THE OTHER
PARTIES.

 

SECTION 2.12     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 2.13     MODIFICATION; AMENDMENT.  THIS AGREEMENT MAY BE AMENDED OR
MODIFIED FROM TIME TO TIME ONLY BY A WRITTEN AMENDMENT SIGNED BY ALL PARTIES
HERETO; PROVIDED HOWEVER, THAT THE PARTNERSHIP PARTIES 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 THE GENERAL
PARTNER, WILL ADVERSELY AFFECT THE HOLDERS OF COMMON UNITS OF THE PARTNERSHIP.

 

SECTION 2.14     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.

 

10

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

 

 

DIAMOND SHAMROCK REFINING AND MARKETING
COMPANY

 

 

 

 

By:

/s/ Michael S. Ciskowski

 

 

Name: Michael S. Ciskowski

 

 

Title: Senior Vice President

 

 

 

 

VALERO CORPORATE SERVICES COMPANY

 

 

 

 

By:

/s/ Michael S. Ciskowski

 

 

Name: Michael S. Ciskowski

 

 

Title: Senior Vice President

 

 

 

 

VALERO L.P

 

 

 

 

By:

Riverwalk Logistics, L.P.

 

 

 

 

 

By:

Valero GP, LLC

 

 

 

 

 

 

By:

/s/ Curtis V. Anastasio

 

 

 

 

Name: Curtis V. Anastasio

 

 

 

 

Title: President

 

 

 

 

VALERO LOGISTICS OPERATIONS, L.P.

 

 

 

 

By:

Valero GP, Inc.

 

 

 

 

 

By:

/s/ Curtis V. Anastasio

 

 

 

Name: Curtis V. Anastasio

 

 

 

Title: President

 

 

 

 

VALERO GP, LLC

 

 

 

 

 

By:

/s/ Curtis V. Anastasio

 

 

 

Name: Curtis V. Anastasio

 

 

 

Title: President

 

 

 

 

RIVERWALK LOGISTICS, L.P.

 

 

 

 

By:

Valero GP, LLC

 

 

 

 

 

By:

/s/ Curtis V. Anastasio

 

 

 

Name: Curtis V. Anastasio

 

 

 

Title: President

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED SERVICES AGREEMENT

 

11

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EXHIBIT A

 

Administrative Services provided to the Partnership Parties:

 

Ad Valorem Tax Services (note:  ad valorem taxes are Direct Charges)

Controller

External Reporting

Corporate Tax

Accounting Governance

Non-Hydrocarbons Operations Accounting

Corporate Aviation and Travel Services

Corporate Communications and Public Relations

Corporate Development

Data Processing and Information Technology Services

Executive Oversight

Financial Accounting and Reporting

Foreign Trade Zone Reporting and Accounting

Governmental Affairs

Group Accounting

Health, Safety & Environmental Services

Human Resources Services

Benefit Accounting

Benefit Plan Administration

Retirement Plan Administration

401(k) Savings Plan Administration

Payroll Services

Training Services

Internal Audit

Legal

General Litigation Support

General Corporate

General Commercial

Labor & Employment

Tariff Maintenance

Environmental and Regulatory

Office Services

Mail Center/ Mail Services

Health Club

Office Space including building maintenance

Purchasing/Fleet Management

Records Management

Real Estate Management

Right-of-Way Services

Risk and Claims Management Services (note:  insurance premiums are Direct
Charges)

Security Services

Shareholder and Investor Relations

Treasury & Banking

Finance Services

Cash Management

Credit Services

 

In providing the foregoing services, VCSC shall be acting on behalf of and as
agent for the Partnership Parties.

 

A-1

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