exv10w04



 






Exhibit 10.04





EXECUTION COPY




 





3-YEAR REVOLVING CREDIT AGREEMENT




dated as of July 19, 2006




among




VALERO GP HOLDINGS, LLC




The Lenders Party Hereto




and




JPMORGAN CHASE BANK, N.A.,

as Administrative Agent




and




SUNTRUST BANK,

as Syndication Agent




 






J.P. MORGAN SECURITIES INC. and SUNTRUST ROBINSON HUMPHREY, A DIVISION OF

SUNTRUST CAPITAL MARKETS, INC.,

as Co-Lead Arrangers and Joint Bookrunners




 






 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	ARTICLE I

	Definitions

	Section 1.01

	 	Defined Terms
	 	 	1	 
	Section 1.02

	 	Classification of Loans and Borrowings
	 	 	18	 
	Section 1.03

	 	Terms Generally
	 	 	18	 
	Section 1.04

	 	Accounting Terms; GAAP
	 	 	18	 
	ARTICLE II

	The Credits

	Section 2.01

	 	Commitments
	 	 	18	 
	Section 2.02

	 	Loans and Borrowings.
	 	 	19	 
	Section 2.03

	 	Requests for Borrowings
	 	 	19	 
	Section 2.04

	 	Letters of Credit.
	 	 	20	 
	Section 2.05

	 	Funding of Borrowings.
	 	 	24	 
	Section 2.06

	 	Interest Elections.
	 	 	24	 
	Section 2.07

	 	Termination and Reduction of Commitments.
	 	 	25	 
	Section 2.08

	 	Repayment of Loans; Evidence of Debt.
	 	 	26	 
	Section 2.09

	 	Prepayment of Loans.
	 	 	27	 
	Section 2.10

	 	Fees.
	 	 	27	 
	Section 2.11

	 	Interest.
	 	 	28	 
	Section 2.12

	 	Alternate Rate of Interest
	 	 	29	 
	Section 2.13

	 	Increased Costs.
	 	 	30	 
	Section 2.14

	 	Break Funding Payments
	 	 	31	 
	Section 2.15

	 	Taxes.
	 	 	31	 
	Section 2.16

	 	Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
	 	 	32	 
	Section 2.17

	 	Mitigation Obligations; Replacement of Lenders.
	 	 	34	 
	ARTICLE III

	Representations and Warranties

	Section 3.01

	 	Organization; Powers
	 	 	34	 
	Section 3.02

	 	Authorization; Enforceability
	 	 	35	 
	Section 3.03

	 	Governmental Approvals; No Conflicts
	 	 	35	 
	Section 3.04

	 	Financial Condition; No Material Adverse Change.
	 	 	35	 
	Section 3.05

	 	Properties.
	 	 	35	 
	Section 3.06

	 	Litigation and Environmental Matters.
	 	 	36	 
	Section 3.07

	 	Compliance with Laws and Agreements
	 	 	36	 
	Section 3.08

	 	Investment Company Status
	 	 	36	 
	Section 3.09

	 	Taxes
	 	 	36	 
	Section 3.10

	 	ERISA
	 	 	37	 
	Section 3.11

	 	Disclosure
	 	 	37	 
	Section 3.12

	 	Investments and Guarantees
	 	 	37	 
	Section 3.13

	 	Casualties; Taking of Property
	 	 	37	 






 i 




 









 





	 	 	 	 	 	 	 
	ARTICLE IV

	Conditions

	Section 4.01

	 	Effective Date
	 	 	37	 
	Section 4.02

	 	Each Credit Event
	 	 	39	 
	ARTICLE V

	Affirmative Covenants

	Section 5.01

	 	Financial Statements and Other Information
	 	 	40	 
	Section 5.02

	 	Notices of Material Events
	 	 	41	 
	Section 5.03

	 	Existence; Conduct of Business
	 	 	42	 
	Section 5.04

	 	Payment of Obligations
	 	 	42	 
	Section 5.05

	 	Maintenance of Properties; Insurance
	 	 	43	 
	Section 5.06

	 	Books and Records; Inspection Rights
	 	 	43	 
	Section 5.07

	 	Compliance with Laws
	 	 	43	 
	Section 5.08

	 	Use of Proceeds and Letters of Credit
	 	 	43	 
	Section 5.09

	 	Environmental Laws
	 	 	43	 
	ARTICLE VI

	Negative Covenants

	Section 6.01

	 	Indebtedness
	 	 	44	 
	Section 6.02

	 	Liens
	 	 	44	 
	Section 6.03

	 	Fundamental Changes.
	 	 	44	 
	Section 6.04

	 	Investments, Loans, Advances, Guarantees and Acquisitions
	 	 	44	 
	Section 6.05

	 	Swap Agreements
	 	 	45	 
	Section 6.06

	 	Restricted Payments
	 	 	45	 
	Section 6.07

	 	Transactions with Affiliates
	 	 	45	 
	Section 6.08

	 	Restrictive Agreements
	 	 	45	 
	Section 6.09

	 	Limitation on Modifications of Other Agreements
	 	 	46	 
	Section 6.10

	 	Creation of Subsidiaries
	 	 	46	 
	Section 6.11

	 	Financial Condition Covenants.
	 	 	46	 
	Section 6.12

	 	Disposition of Assets
	 	 	46	 
	ARTICLE VII

	Events of Default

	 
	 	 	 	 	 	 
	ARTICLE VIII

	The Administrative Agent

	 
	 	 	 	 	 	 
	ARTICLE IX

	Miscellaneous

	 
	 	 	 	 	 	 
	Section 9.01

	 	Notices.
	 	 	51	 
	Section 9.02

	 	Waivers; Amendments.
	 	 	52	 
	Section 9.03

	 	Expenses; Indemnity; Damage Waiver.
	 	 	53	 
	Section 9.04

	 	Successors and Assigns.
	 	 	54	 
	Section 9.05

	 	Survival
	 	 	57	 
	Section 9.06

	 	Counterparts; Integration; Effectiveness
	 	 	57	 
	Section 9.07

	 	Severability
	 	 	57	 
	Section 9.08

	 	Right of Setoff
	 	 	58	 






 ii 




 









 





	 	 	 	 	 	 	 
	Section 9.09

	 	Governing Law; Jurisdiction; Consent to Service of Process.
	 	 	58	 
	Section 9.10

	 	WAIVER OF JURY TRIAL
	 	 	58	 
	Section 9.11

	 	Headings
	 	 	59	 
	Section 9.12

	 	Confidentiality
	 	 	59	 
	Section 9.13

	 	Interest Rate Limitation
	 	 	59	 
	Section 9.14

	 	USA Patriot Act
	 	 	60	 






SCHEDULES:




Schedule 2.01 —  Commitments

Schedule 3.06 —  Disclosed Matters

Schedule 6.07 —  Affiliate Agreements

Schedule 6.08 —  Existing Restrictions




EXHIBITS:




Exhibit A — Form of Assignment and Assumption

Exhibit B — Form of Opinion of the Borrower’s Counsel




iii





 










 








     3-YEAR REVOLVING CREDIT AGREEMENT dated as of July 19, 2006 among VALERO GP HOLDINGS, LLC, a
Delaware limited liability company, the LENDERS party hereto, JPMORGAN CHASE BANK, N.A., as
Administrative Agent, and SUNTRUST BANK, as Syndication Agent.



     The parties hereto agree as follows:



ARTICLE I

Definitions




     Section 1.01 Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:



     “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the Alternate Base Rate.



     “Acquisition” means the mergers of KPP and KSL into wholly owned subsidiaries of the
MLP pursuant to the terms and conditions of the Acquisition Documents.



     “Acquisition Documents” means (a) Agreement and Plan of Merger dated as of October 31,
2004 by and among Valero L.P., Riverwalk Logistics, L.P., Valero GP, LLC, VLI Sub A LLC and KSL and
(b) Agreement and Plan of Merger dated as of October 31, 2004 by and among Valero L.P., Riverwalk
Logistics, L.P., Valero GP, LLC, VLI Sub B LLC, KPP, and Kaneb Pipe Line Company LLC, in each case,
as amended, modified or supplemented.



     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.



     “Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder.



     “Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.



     “Affiliate” means, with respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.



     “Agreement” means this 3-Year Revolving Credit Agreement, as the same may be amended,
modified, supplemented or restated from time to time in accordance herewith.



     “Alternate Base Rate” means, for any day, a rate per annum equal to the higher of (a)
the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.



1









 





     “Applicable Percentage” means, with respect to any Lender, the percentage of the total
Commitments represented by such Lender’s Commitment. If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Commitments most recently in
effect, giving effect to any assignments.



     “Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar Loan,
or with respect to the facility fees payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption “ABR Spread”, “Eurodollar Spread” or “Facility Fee Rate”,
as the case may be, based upon the ratings by Moody’s and/or S&P, respectively, applicable on such
date to the Index Debt:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Index Debt Ratings:	 	ABR Spread	 	Eurodollar Spread	 	Facility Fee Rate
	Tier 1
	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than BBB or Baa2

	 	 	0.00	%	 	 	0.270	%	 	 	0.080	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tier 2
	 	 	 	 	 	 	 	 	 	 	 	 
	BBB or Baa2

	 	 	0.00	%	 	 	0.400	%	 	 	0.100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tier 3
	 	 	 	 	 	 	 	 	 	 	 	 
	BBB- or Baa3

	 	 	0.000	%	 	 	0.500	%	 	 	0.125	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tier 4
	 	 	 	 	 	 	 	 	 	 	 	 
	BB+ or Ba1

	 	 	0.000	%	 	 	0.575	%	 	 	0.175	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tier 5
	 	 	 	 	 	 	 	 	 	 	 	 
	Less than BB+ or Ba1

	 	 	0.000	%	 	 	0.700	%	 	 	0.200	%





For purposes of the foregoing, (i) if either Moody’s or S&P shall not have in effect a rating for
the Index Debt (after having established such a rating and other than by reason of the
circumstances referred to in the last sentence of this definition), then such rating agency shall
be deemed to have established a rating in Tier 5; (ii) if both Moody’s and S&P have established a
rating for the Index Debt and such ratings established or deemed to have been established by
Moody’s and S&P shall fall within different Tiers, then (a) so long as either or both such ratings
are Investment Grade or better, the Applicable Rate shall be based on the higher of the two
ratings, unless one of the two ratings is two or more Tiers lower than the other, in which case the
Applicable Rate shall be determined by reference to the Tier next below that of the higher of the
two ratings; and (b) so long as both such ratings are below Investment Grade, the Applicable Rate
shall be based on the lower of the two ratings, unless one of the two ratings is two or more Tiers
lower than the other, in which case the Applicable Rate shall be determined by reference to the
Tier next above that of the lower of the two ratings and (iii) if the ratings established or deemed
to have been established by Moody’s and S&P for the Index Debt shall be changed (other than as a
result of a change in the rating system of Moody’s or S&P), such change shall be effective as of
the date on which it is first announced by the applicable rating agency,


2









 






irrespective of when notice of such change shall have been furnished by the Borrower to the
Administrative Agent and the Lenders pursuant to Section 5.01 or otherwise. Each change in the
Applicable Rate shall apply during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next such change. If the rating
system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the
business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good
faith to amend this definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such amendment, the
Applicable Rate shall be determined by reference to the rating most recently in effect prior to
such change or cessation.




     “Approved Fund” has the meaning assigned to such term in Section 9.04.



     “Assessment Rate” means, for any day, the annual assessment rate in effect on such day
that is payable by a member of the Bank Insurance Fund classified as “well-capitalized” and within
supervisory subgroup “B” (or a comparable successor risk classification) within the meaning of 12
C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance Corporation for
insurance by such Corporation of time deposits made in dollars at the offices of such member in the
United States; provided that if, as a result of any change in any law, rule or regulation,
it is no longer possible to determine the Assessment Rate as aforesaid, then the Assessment Rate
shall be such annual rate as shall be determined by the Administrative Agent to be representative
of the cost of such insurance to the Lenders.



     “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by
the Administrative Agent.



     “Availability Period” means the period from and including the Effective Date to but
excluding the earlier of the Maturity Date and the date of termination of the Commitments.



     “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of any particular
“person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be
deemed to have beneficial ownership of all securities that such “person” has the right to acquire
by conversion or exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition.



     “Benefit Arrangement” means at any time an employee benefit plan within the meaning of
Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any ERISA Affiliate.



     “Board” means the Board of Governors of the Federal Reserve System of the United
States of America.



     “Borrower” means Valero GP Holdings, LLC, a Delaware limited liability company.



3









 





     “Borrowing” means Loans of the same Type, made, converted or continued on the same
date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.



     “Borrowing Request” means a request by the Borrower for a Borrowing in accordance with
Section 2.03.



     “Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain closed;
provided that, when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.



     “Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in accordance with GAAP.



     “Change in Control” means any of the following events:



          (a) 100% (and not less than 100%) of the issued and outstanding Equity Interest of the general
partner(s) of the MLP shall cease to be owned, directly or indirectly, or the MLP shall cease to be
Controlled, by the Borrower; or




          (b) the occurrence of any transaction that results in any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder becoming
the Beneficial Owner, directly or indirectly, of Equity Interests representing more than 50% of the
aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the
Borrower; or




          (c) 100% (and not less than 100%) of the issued and outstanding Equity Interests in Valero GP,
LLC ceases to be directly owned by the Borrower; or




          (d) 100% (and not less than 100%) of the issued and outstanding Equity Interests in Riverwalk
Holdings, LLC ceases to be directly owned by the Borrower; or




          (e) 100% (and not less than 100%) of the issued and outstanding Equity Interests in Riverwalk
Logistics, L.P. ceases to be directly owned by Riverwalk Holdings, LLC and Valero GP, LLC.




     “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.13(b), by any lending
office of such Lender or by such Lender’s or such Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.



4









 





     “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     “Commitment” means, with respect to each Lender, the commitment of such Lender to make
Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as
such commitment may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.
The initial amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment
and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The
initial aggregate amount of the Lenders’ Commitments is $20,000,000.



     “Common Units” means the common units of limited partner interests in the MLP.



     “Consolidated Debt Coverage Ratio” means, for any day, the ratio of (a) all
Indebtedness of the MLP and its subsidiaries, on a consolidated basis, as of the last day of the
then most recent Rolling Period over (b) Consolidated EBITDA of the MLP and its subsidiaries for
such Rolling Period.



     “Consolidated EBITDA” means, without duplication, as to the MLP and its subsidiaries,
on a consolidated basis for each Rolling Period, the amount equal to Consolidated Operating Income
for such period (a) plus the following to the extent deducted from Consolidated Operating Income in
such period: (i) depreciation, amortization and other non-cash charges for such period and (ii)
cash distributions received by the MLP and its subsidiaries from Skelly-Belvieu Pipeline Company,
and similar joint ventures, during such period; (b) minus all non-cash income added to Consolidated
Operating Income in such period; and (c) plus any Material Project EBITDA Adjustments for such
period; provided that (i) Consolidated EBITDA shall be adjusted from time to time as
necessary to give pro forma effect to acquisitions or Investments (other than Joint Venture
Interests) or sales of property by the MLP and its subsidiaries permitted by the Valero Logistics
Credit Agreement and (ii) Consolidated EBITDA shall be adjusted to take into account pro forma
synergies as a result of the Acquisition in an amount equal to (A) $17,500,000 for the Rolling
Period ending on September 30, 2005, (B) $15,000,000 for the Rolling Period ending on December 31,
2005, (C) $10,000,000 for the Rolling Period ending on March 31, 2006 and (D) $5,000,000 for the
Rolling Period ending on June 30, 2006.



     “Consolidated Operating Income” means, as to the MLP and its subsidiaries on a
consolidated basis for each Rolling Period, the amount equal to gross income minus
operating expenses, general and administrative expenses, depreciation and amortization, and taxes
other than income taxes, in each case for such period.



     “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.



     “Default” means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.



5









 





     “Disclosed Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06.



     “Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is exchangeable) or upon the
happening of any event, matures or is mandatorily redeemable for any consideration other than other
Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking
fund obligation or otherwise, or is convertible or exchangeable for Indebtedness or redeemable for
any consideration other than other Equity Interests (which would not constitute Disqualified
Capital Stock) at the option of the holder thereof, in whole or in part, on or prior to the date
that is one year after the earlier of (a) the Maturity Date and (b) the date on which there are no
Loans, LC Exposure or other obligations hereunder outstanding and all of the Commitments are
terminated.



     “dollars” or “$” refers to lawful money of the United States of America.



     “Effective Date” means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 9.02).



     “Environmental Approvals” means any Governmental Approvals required under applicable
Environmental Laws.



     “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, release or threatened release of any Hazardous Material or to
health and safety matters.



     “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower or any of its subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.



     “Equity Interest” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any member interests in a
limited liability company, and general or limited partnership interests in a partnership, any and
all equivalent ownership interests in a Person and any and all warrants, options or other rights to
purchase any of the foregoing. In addition, “Equity Interest” shall include, without limitation,
with respect to the MLP, the Units and the general partner interest of the MLP.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.



6









 





     “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.



     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is,
or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.



     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.



     “Event of Default” has the meaning assigned to such term in Article VII.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, and any statute successor thereto.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income
by the United States of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the Borrower is located and
(c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.17(b)), any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.15(e),
except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time
of designation of a new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.15(a).



7









 





     “Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.



     “Financial Officer” means with respect to any Person, the chief accounting officer,
chief financial officer, treasurer or controller of such Person.



     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.



     “GAAP” means generally accepted accounting principles in the United States of America.



     “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.



     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or obligation;
provided, that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.



     “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.



8









 





     “Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments or by any other
securities providing for the mandatory payment of money (including, without limitation, preferred
stock subject to mandatory redemption or sinking fund provisions), (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of property or
services (excluding current accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all
non-contingent obligations of such Person as an account party in respect of letters of credit and
letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of
bankers’ acceptances, (k) all obligations of such Person with respect to any arrangement, directly
or indirectly, whereby such Person or its subsidiaries shall sell or transfer any material asset,
and whereby such Person or any of its subsidiaries shall then or immediately thereafter rent or
lease as lessee such asset or any part thereof, and (l) all recourse and support obligations of
such Person or any of its subsidiaries with respect to the sale or discount of any of its accounts
receivable. The Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the extent such Person is
liable therefor as a result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such Person is not liable
therefor.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Indenture” means the Indenture, dated as of July 15, 2002, between the Borrower, as
Issuer, the MLP, as Guarantor, and The Bank of New York, as Trustee, relating to the issuance of
senior debt securities, as amended, modified and supplemented from time to time in accordance
herewith.



     “Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the
Borrower that is not guaranteed by any other Person or subject to any other credit enhancement and
that is rated by Moody’s and S&P; provided that if at any time the Borrower has no such
rated senior, unsecured, long-term indebtedness, then during such time the “Index Debt” shall mean
senior, unsecured, long-term indebtedness for borrowed money of Valero Logistics that is not
guaranteed by any other Person other than the MLP and its subsidiaries or subject to any other
credit enhancement.



     “Interest Election Request” means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.06.



     “Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each
March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of
the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of



9









 







a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three months’ duration
after the first day of such Interest Period.



     “Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six-months thereafter (or, with the consent of each
Lender, such other period as the Lenders and the Borrower shall mutually agree upon), as the
Borrower may elect; provided, that (i) if any Interest Period would end on a day other than
a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day and (ii) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month of such Interest
Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.



     “Investment” means, as applied to any Person, any direct or indirect purchase or other
acquisition by such Person of any Equity Interests in any other Person, or any direct or indirect
loan, advance or capital contribution by such Person to any other Person, including all
Indebtedness and receivables from such other Person which are not current assets or did not arise
from sales to such other Person in the ordinary course of business, and any direct or indirect
purchase or other acquisition by such Person of any assets (other than any acquisition of assets in
the ordinary course of business).



     “Investment Grade” means a rating for Index Debt of BBB- or higher by S&P and Baa3 or
higher by Moody’s.



     “Investment Grade Person” means a Person that has issued unsecured senior debt that
has at least two of the following ratings on the date the transaction constituting a Change in
Control is consummated:



          (a) BBB- or above, in the case of S&P (or its equivalent under any successor rating categories
of S&P);




          (b) Baa3 or above, in the case of Moody’s (or its equivalent under any successor rating
categories of Moody’s); or




          (c) the equivalent in respect of the rating categories of any rating agencies substituted for
S&P or Moody’s.




     “IPO” means the initial public offering of 17,250,000 units representing limited
liability company interests in the Borrower.



     “IPO Documents” means (i) the registration statement of the Borrower on Form S-1,
including the Prospectus contained therein (File No. 333-132917), filed with the Securities and



10









 







Exchange Commission and relating to the IPO and (ii) the underwriting agreement dated July 1,
2006, among the Borrower, Sigmor Corporation, The Shamrock Pipe Line Corporation, Diamond Shamrock
Refining Company, L.P., Valero Refining-New Orleans, L.L.C, Valero Refining Company — California,
Valero Refining — Texas, L.P. and Lehman Brothers Inc., as representative of the several
underwriters named therein.



     “Issuing Bank” means each of JPMorgan Chase Bank, N.A. and SunTrust Bank, in each
case, in its capacity as an issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.04(i). Any Issuing Bank may, in its discretion, arrange for one
or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term
“Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.



     “Joint Venture Interest” means an acquisition of or Investment in Equity Interests in
another Person, held directly or indirectly by the MLP, that will not be a subsidiary of the MLP
after giving effect to such acquisition or Investment.



     “KPP” means Kaneb Pipe Line Partners, L.P., a Delaware limited partnership.



     “KSL” means Kaneb Services LLC, a Delaware limited liability company.



     “LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter of
Credit issued by such Issuing Bank.



     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements
that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of
any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.
The LC Exposure of any Issuing Bank at any time shall be the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit issued by such Issuing Bank at such time plus (b) the
aggregate amount of all LC Disbursements made by such Issuing Bank that have not yet been
reimbursed by or on behalf of the Borrower at such time.



     “Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than any such Person
that ceases to be a party hereto pursuant to an Assignment and Assumption.



     “Letter of Credit” means any letter of credit issued pursuant to this Agreement.



     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such



11









 







Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by the principal
London office of the Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period.



     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.



     “Limited Liability Company Agreement (Borrower)” means the Second Amended and Restated
Limited Liability Company Agreement of the Borrower dated as of July 19, 2006, as amended, modified
and supplemented from time to time in accordance herewith.



     “Loan Documents” means this Agreement, any notes issued pursuant to Section 2.08(e),
and any Letter of Credit, as each such agreement may be amended, supplemented or otherwise modified
from time to time as permitted hereby, and any and all instruments, certificates, or other
agreements delivered in connection with the foregoing.



     “Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.



     “Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations or condition (financial or otherwise) of the Borrower and its subsidiaries taken as a
whole, (b) the ability of the Borrower to perform any of its obligations under this Agreement or
any other Loan Document or (c) the rights of or benefits available to the Lenders under this
Agreement or any other Loan Document.



     “Material Agreements” means the Limited Liability Company Agreement (Borrower), the
Partnership Agreement (MLP) and the Indenture as each such agreement may be amended, supplemented
or otherwise modified from time to time as permitted hereby.



     “Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and the Restricted Subsidiaries in an aggregate principal amount exceeding $5,000,000.
For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the
Borrower or any Restricted Subsidiary in respect of any Swap Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that such Person would be
required to pay if such Swap Agreement were terminated at such time.



     “Material Project” means each new pipeline, storage facility, processing plant or
other capital expansion project wholly owned by the MLP or its subsidiaries, the construction of
which commenced after May 31, 2006 and which has a budgeted capital cost exceeding $25,000,000.



12









 





     “Material Project EBITDA Adjustments” means, with respect to each Material Project,
(a) for any Rolling Period ending on or prior to the last day of the fiscal quarter during which
the Material Project is completed, a percentage (based on the then-current completion percentage of
the Material Project) of an amount to be approved by the Required Lenders as the projected
Consolidated EBITDA attributable to such Material Project (such amount to be determined based on
contracts relating to such Material Project, the creditworthiness of the other parties to such
contracts and projected revenues from such contracts, capital costs and expenses, scheduled
completion, and other factors deemed appropriate by the Lenders) shall be added to actual
Consolidated EBITDA for the MLP and its subsidiaries for the fiscal quarter in which construction
of such Material Project commences and for each fiscal quarter thereafter until completion of the
Material Project (net of any actual Consolidated EBITDA attributable to such Material Project
following its completion), provided that if construction of the Material Project is not
completed by the scheduled completion date, then the foregoing amount shall be reduced by the
following percentage amounts depending on the period of delay for completion (based on the period
of actual delay or then-estimated delay, whichever is longer): (i) longer than 90 days, but not
more than 180 days, 25%, (ii) longer than 180 days but not more than 270 days, 50%, and (iii)
longer than 270 days, 100%; and (b) for each Rolling Period ending on the last day of the first,
second and third fiscal quarters, respectively, immediately following the fiscal quarter during
which the Material Project is completed, an amount equal to the projected Consolidated EBITDA
attributable to the Material Project for the period from but excluding the end of such Rolling
Period through and including the last day of the fourth fiscal quarter following the fiscal quarter
during which the Material Project is completed shall be added to Consolidated EBITDA for such
Rolling Period (net of any actual Consolidated EBITDA attributable to the Material Project for the
period from and including the date of completion through and including the last day of the fiscal
quarter during which the Material Project is completed). Notwithstanding the foregoing, (i) no
such additions shall be allowed with respect to any Material Project unless not later than 45 days
prior to commencement of construction thereof, the Borrower shall have delivered to the
Administrative Agent and the Lenders written pro forma projections of Consolidated EBITDA
attributable to such Material Project and such other information and documentation as the
Administrative Agent or any Lender may reasonably request, all in form and substance satisfactory
to the Administrative Agent and the Required Lenders, and (ii) the aggregate amount of all Material
Project EBITDA Adjustments during any period shall be limited to 20% of the total actual
Consolidated EBITDA of the MLP and its subsidiaries for such period (which total actual
Consolidated EBITDA shall be determined without including any Material Project EBITDA Adjustments
or any adjustments in respect of any acquisitions or dispositions as provided in the definition of
Consolidated EBITDA).



     “Maturity Date” means the third anniversary of the Effective Date.



     “MLP” means Valero L.P., a Delaware limited partnership.



     “Moody’s” means Moody’s Investors Service, Inc. (or any successor rating
organization).



     “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions.



13









 





     “Other Taxes” means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.



     “Partnership Agreement (MLP)” means the Third Amended and Restated Agreement of
Limited Partnership of the MLP dated as of March 18, 2003, as amended, modified and supplemented
from time to time in accordance herewith.



     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.



     “Permitted Encumbrances” means:



          (a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance
with Section 5.04;




          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with Section 5.04;




          (c) pledges and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or regulations;




          (d) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;




          (e) judgment liens in respect of judgments that do not constitute an Event of Default under
clause (j) of Article VII;




          (f) easements, zoning restrictions, rights-of-way, minor irregularities in title, boundaries,
or other survey defects, servitudes, permits, reservations, exceptions, zoning regulations,
conditions, covenants, mineral or royalty rights or reservations or oil, gas and mineral leases and
rights of others in any property of the Borrower or any Restricted Subsidiary for streets, roads,
bridges, pipes, pipe lines, railroads, electric transmission and distribution lines, telegraph and
telephone lines, the removal of oil, gas or other minerals or other similar purposes, flood
control, water rights, rights of others with respect to navigable waters, sewage and drainage
rights and similar encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of business of the MLP or any
Restricted Subsidiary; provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness; and




          (g) Liens securing an obligation of a third party neither created, assumed nor Guaranteed by
the Borrower or any Restricted Subsidiary upon lands over which easements or




14









 




similar rights are acquired by the Borrower or any Restricted Subsidiary in the ordinary
course of business of the Borrower or any Restricted Subsidiary.




     “Permitted Holder” means Valero Energy or any Investment Grade Person.



     “Permitted Investments” means:



          (a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof;




          (b) investments in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, a short term deposit rating of no lower than A2 or
P2, as such rating is set forth by S&P or Moody’s, respectively;




          (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing
within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;




          (d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria described in clause (c) above; and




          (e) investments in short term debt obligations of an issuer rated at least BBB by S&P’s or
Baa2 by Moody’s, and maturing within 30 days from the date of acquisition, in an aggregate amount
not to exceed $50,000,000 at any time.




     “Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.



     “Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which the Borrower or any ERISA Affiliate contributes or has an obligation to
contribute and is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to
be) an “employer” as defined in Section 3(5) of ERISA.



     “Prime Rate” means the rate of interest per annum publicly announced from time to time
by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City;
each change in the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.



     “Register” has the meaning set forth in Section 9.04.



15









 





     “Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.



     “Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and
unused Commitments representing greater than 50% of the sum of the total Revolving Credit Exposures
and unused Commitments at such time.



     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property, with the exception of additional shares of its Equity Interests
(other than Disqualified Capital Stock)) with respect to any Equity Interest of the Borrower or any
Restricted Subsidiary, or any payment (whether in cash, securities or other property, with the
exception of additional shares of its Equity Interests (other than Disqualified Capital Stock)),
including any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interest of the Borrower or any option,
warrant or other right to acquire any such Equity Interest of the Borrower.



     “Restricted Subsidiary” means, collectively, Valero GP, LLC, Riverwalk Holdings, LLC,
and Riverwalk Logistics, L.P..



     “Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Loans and its LC Exposure at such time.



     “Riverwalk Holdings, LLC” means Riverwalk Holdings, LLC, a Delaware limited liability
company.



     “Riverwalk Logistics, L.P.” means Riverwalk Logistics, L.P., a Delaware limited
partnership



     “Rolling Period” means any period of four consecutive fiscal quarters.



     “SEC” means the Securities and Exchange Commission or any successor Governmental
Authority.



     “S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill Companies, Inc.
(or any successor rating organization).



     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding
and to be subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender under such Regulation D
or any comparable regulation. The Statutory Reserve Rate shall



16









 







be adjusted automatically on and as of the effective date of any change in any reserve
percentage.



     “subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50% of the equity or
more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as
of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by
the parent and one or more subsidiaries of the parent.



     “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or its subsidiaries shall be a
Swap Agreement.



     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.



     “Transactions” means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of
Credit hereunder.



     “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Adjusted LIBO Rate or the Alternate Base Rate.



     “Units” means the collective reference to the Common Units.



     “Valero Energy” means Valero Energy Corporation, a Delaware corporation.



     “Valero GP, LLC” means Valero GP, LLC, a Delaware limited liability company.



     “Valero Logistics” means Valero Logistics Operations, L.P., a Delaware limited
partnership.



     “Valero Logistics Credit Agreement” means that certain 5-Year Revolving Credit
Agreement dated as of December 20, 2004 among Valero Logistics, the MLP, JPMorgan Chase Bank, N.A.,
as administrative agent, and the lenders and other agents party thereto, as heretofore amended, and
as the same may from time to time be amended, modified, supplemented or restated.



17









 





     “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.



     Section 1.02 Classification of Loans and Borrowings. For purposes of this Agreement,
Loans and Borrowings may be classified and referred to by Type (e.g., a “Eurodollar Loan”
or a “Eurodollar Borrowing”).



     Section 1.03 Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.



     Section 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if the Borrower notifies the Administrative Agent
that the Borrower requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on the operation of
such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of whether any such
notice is given before or after such change in GAAP or in the application thereof, then such
provision shall be interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.



ARTICLE II

The Credits




     Section 2.01 Commitments. Subject to the terms and conditions set forth herein, each
Lender agrees to make Loans to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure
exceeding such Lender’s Commitment or (b) the sum of the total Revolving Credit Exposures exceeding
the total Commitments. Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and reborrow Loans.



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     Section 2.02 Loans and Borrowings.



          (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders
ratably in accordance with their respective Commitments. The failure of any Lender to make any
Loan required to be made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no Lender shall be responsible
for any other Lender’s failure to make Loans as required.




          (b) Subject to Section 2.12, each Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this Agreement.




          (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing
shall be in an aggregate amount that is an integral multiple of $500,000 and not less than
$1,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $500,000 and not less than $1,000,000; provided that
an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.04(e). Borrowings of more than one Type may be outstanding at the same
time; provided that there shall not at any time be more than a total of five Eurodollar Borrowings
outstanding.




          (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled
to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.




     Section 2.03 Requests for Borrowings. To request a Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar
Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of
the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York
City time, on date of the proposed Borrowing; provided that any such notice of an ABR
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.04(e) may
be given not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing.
Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved
by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:



               (i) the aggregate amount of the requested Borrowing;



               (ii) the date of such Borrowing, which shall be a Business Day;



               (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;



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               (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and



               (v) the location and number of the Borrower’s account to which funds are to be disbursed,
which shall comply with the requirements of Section 2.05.


If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an
ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s
duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing.




     Section 2.04 Letters of Credit.



          (a) General. Subject to the terms and conditions set forth herein, the Borrower may
request the issuance of Letters of Credit for its own account from any Issuing Bank, in a form
reasonably acceptable to the Administrative Agent and such Issuing Bank, at any time and from time
to time during the Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by the Borrower with,
an Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall
control.




          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication,
if arrangements for doing so have been approved by the Issuing Bank) to any Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal
or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal
or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the
name and address of the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by an Issuing Bank, the
Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in
connection with any request for a Letter of Credit. Following receipt of a notice requesting the
issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit) in accordance with this Section, the Administrative Agent shall advise each Lender of the
details thereof. A Letter of Credit shall be issued, amended, renewed or extended only if (and
upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the total LC Exposure shall not exceed $10,000,000 and (ii) the sum of the total
Revolving Credit Exposures shall not exceed the total Commitments.




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          (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of
business on the date that is five Business Days prior to the Maturity Date.




          (d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action on the part of the
Issuing Bank that issues such Letter of Credit or the Lenders, each Issuing Bank that issues a
Letter of Credit hereunder hereby grants to each Lender, and each Lender hereby acquires from such
Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage
of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of each Issuing Bank that issues a Letter of Credit
hereunder, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or
of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or
the occurrence and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding or reduction
whatsoever.




          (e) Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit issued by such Issuing Bank, the Borrower shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00
noon, New York City time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or,
if such notice has not been received by the Borrower prior to such time on such date, then not
later than 12:00 noon, New York City time, on (i) the Business Day that the Borrower receives such
notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt,
or (ii) the Business Day immediately following the day that the Borrower receives such notice, if
such notice is not received prior to such time on the day of receipt; provided that the
Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 that such payment be financed with an ABR Borrowing in an equivalent amount and, to
the extent so financed, the Borrower’s obligation to make such payment shall be discharged and
replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as provided in Section
2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank that issued such Letter of Credit the amounts so received by it
from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the
Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank that issued such Letter of Credit or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing




21









 




Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph
to reimburse an Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as
contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.




          (f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as
provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by any
Issuing Bank under a Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide a right of setoff against,
the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor any
Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or
failure to make any payment thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in transmission or
delivery of any draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of any Issuing Bank;
provided that the foregoing shall not be construed to excuse any Issuing Bank from
liability to the Borrower to the extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable
law) suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or
wilful misconduct on the part of an Issuing Bank (as finally determined by a court of competent
jurisdiction), each Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Issuing Bank that issued such Letter of Credit
may, in its sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.




          (g) Disbursement Procedures. Each Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. Such Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made
or will make an LC Disbursement thereunder; provided that any failure to give or delay in
giving such notice shall not relieve the Borrower of its obligation to reimburse such Issuing Bank
and the Lenders with respect to any such LC Disbursement.




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          (h) Interim Interest. If any Issuing Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that, if the
Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.11(c) shall apply. Interest accrued pursuant to this paragraph shall be
for the account of such Issuing Bank, except that interest accrued on and after the date of payment
by any Lender pursuant to paragraph (e) of this Section to reimburse such Issuing Bank shall be for
the account of such Lender to the extent of such payment.




          (i) Replacement of an Issuing Bank. Any Issuing Bank may be replaced at any time by
written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the
successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement
of an Issuing Bank. At the time any such replacement shall become effective, the Borrower shall
pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section
2.10(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank
shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references herein to the term
“Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to
such successor and all previous Issuing Banks, as the context shall require. After the replacement
of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall not be required to
issue additional Letters of Credit.




          (j) Cash Collateralization. If any Event of Default shall occur and be continuing, on
the Business Day that the Borrower receives notice from the Administrative Agent or the Required
Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent,
in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to the Borrower described in clause (g) or (h)
of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment of such deposits,
which investments shall be made at the option and sole discretion of the Administrative Agent and
at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such account shall be applied
by the Administrative Agent to reimburse each Issuing Bank for LC Disbursements for which it has
not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of
the Loans has been




23









 




accelerated (but subject to the consent of Lenders with LC Exposure representing greater than
50% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default
have been cured or waived.




     Section 2.05 Funding of Borrowings.



          (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof
by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower maintained with the
Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing
Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as
provided in Section 2.04(e) shall be remitted by the Administrative Agent to the Issuing Bank that
made such LC Disbursement.




          (b) Unless the Administrative Agent shall have received notice from a Lender prior to the
proposed time of any Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest
rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in such Borrowing.




     Section 2.06 Interest Elections.



          (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate Borrowing.




24









 








          (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative
Agent of such election by telephone by the time that a Borrowing Request would be required under
Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.




          (c) Each telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:




               (i) the Borrowing to which such Interest Election Request applies and, if different options
are being elected with respect to different portions thereof, the portions thereof to be allocated
to each resulting Borrowing (in which case the information to be specified pursuant to clauses
(iii) and (iv) below shall be specified for each resulting Borrowing);



               (ii) the effective date of the election made pursuant to such Interest Election Request, which
shall be a Business Day;



               (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and



               (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period contemplated by
the definition of the term “Interest Period”.


If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration.




          (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall
advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.




          (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the request of the Required
Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.




     Section 2.07 Termination and Reduction of Commitments.



          (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.




25









 








          (b) The Borrower may at any time terminate, or from time to time reduce, the Commitments;
provided that (i) each reduction of the Commitments shall be in an amount that is an
integral multiple of $1,000,000 and not less than $1,000,000 and (ii) the Borrower shall not
terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the
Loans in accordance with Section 2.09, the sum of the Revolving Credit Exposures would exceed the
total Commitments.




          (c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce
the Commitments under paragraph (b) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Commitments delivered by
the Borrower may state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of
the Commitments shall be made ratably among the Lenders in accordance with their respective
Commitments.




     Section 2.08 Repayment of Loans; Evidence of Debt.



          (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan on the Maturity Date.




          (b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such
Lender, including the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.




          (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount
of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable from the Borrower
to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.




          (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this
Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this Agreement.




          (e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such
event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to
the order of such Lender (or, if requested by such Lender, to such




26









 




Lender and its registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times
(including after an increase or reduction in such Lender’s Commitment pursuant to an assignment
pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to
the order of the payee named therein (or, if such promissory note is a registered note, to such
payee and its registered assigns).




     Section 2.09 Prepayment of Loans.



          (a) The Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this
Section.




          (b) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid;
provided that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Commitments as contemplated by Section 2.07, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with Section 2.07. Promptly
following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise
the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11 and any break funding payments required by Section 2.14.




     Section 2.10 Fees.



          (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a
facility fee, which shall accrue at the Applicable Rate on the daily amount of the Commitment of
such Lender (whether used or unused) during the period from and including the Effective Date to but
excluding the date on which such Commitment terminates; provided that, if such Lender
continues to have any Revolving Credit Exposure after its Commitment terminates, then such facility
fee shall continue to accrue on the daily amount of such Lender’s Revolving Credit Exposure from
and including the date on which its Commitment terminates to but excluding the date on which such
Lender ceases to have any Revolving Credit Exposure. Accrued facility fees shall be payable in
arrears on the last day of March, June, September and December of each year and on the date on
which the Commitments terminate, commencing on the first such date to occur after the Effective
Date; provided that any facility fees accruing after the date on which the Commitments
terminate shall be payable on demand. All facility fees shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days elapsed (including the first day but
excluding the last).




27









 








          (b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender
a participation fee with respect to its participations in Letters of Credit, which shall accrue at
the same Applicable Rate used to determine the interest rate applicable to Eurodollar Loans on the
average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Commitment terminates and the date on which
such Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which
shall accrue at the rate of 0.125% per annum on the average daily amount of that portion of the LC
Exposure attributable to such Issuing Bank (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date on which there
ceases to be any LC Exposure attributable to such Issuing Bank, as well as such Issuing Bank’s
standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall be payable on such
last day, commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the date on which the Commitments terminate and any such
fees accruing after the date on which the Commitments terminate shall be payable on demand. Any
other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 days
after demand. All participation fees and fronting fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including the first day but
excluding the last).




          (c) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a
utilization fee which shall accrue at a per annum rate equal to 0.100% on the daily amount of such
Lender’s Revolving Credit Exposure during the time the sum of the total Revolving Credit Exposures
equals or exceeds 50% of the total Commitments. Utilization fees shall be computed on the basis of
a year of 360 days and shall be payable in arrears on the last day of March, June, September and
December of each year.




          (d) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable
in the amounts and at the times separately agreed upon between the Borrower and the Administrative
Agent.




          (e) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Administrative Agent (or to an Issuing Bank, in the case of fees payable to it) for
distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall
not be refundable under any circumstances.




     Section 2.11 Interest.



          (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate
plus the Applicable Rate.




          (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.





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          (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or
other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity,
upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus
the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section
or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in
paragraph (a) of this Section.




          (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan and upon termination of the Commitments; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable
on the date of such repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.




          (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is
based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO
Rate shall be determined by the Administrative Agent, and such determination shall be conclusive
absent manifest error.




     Section 2.12 Alternate Rate of Interest. If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:



          (a) the Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period; or




          (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or
the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in
such Borrowing for such Interest Period;



then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.




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     Section 2.13 Increased Costs.



          (a) If any Change in Law shall:




               (i) impose, modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by, any Lender (except
any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or



               (ii) impose on any Lender or any Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit
or participation therein;


and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining
any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or
such Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will
pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.




          (b) If any Lender or any Issuing Bank determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s or such
Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company,
if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below
that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such Lender’s or such
Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company
with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or
such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such
Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such
reduction suffered.




          (c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary
to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.




          (d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s
right to demand such compensation; provided that the Borrower shall not be required to
compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender or such


30









 







Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to
such increased costs or reductions and of such Lender’s or such Issuing Bank’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the 270-day period referred to above shall
be extended to include the period of retroactive effect thereof.




     Section 2.14 Break Funding Payments. In the event of (a) the payment of any principal
of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other
than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant
hereto (regardless of whether such notice may be revoked under Section 2.09(b) and is revoked in
accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section
2.17, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense
to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if
any, of (i) the amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such Lender would bid
were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the Eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.



     Section 2.15 Taxes.



          (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be
made free and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.




          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.




          (c) The Borrower shall indemnify the Administrative Agent, each Lender and each Issuing Bank,
within 10 days after written demand therefor, for the full amount of any


31









 







Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or such Issuing
Bank, as the case may be, on or with respect to any payment by or on account of any obligation of
the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other
Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or
an Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or an
Issuing Bank, shall be conclusive absent manifest error.




          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.




          (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without withholding or at a
reduced rate.




     Section 2.16 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.



          (a) The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section
2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of the Administrative Agent, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York,
except payments to be made directly to an Issuing Bank as expressly provided herein and except that
payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following receipt thereof.
If any payment hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.




          (b) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then
due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance


32









 







with the amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.




          (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC Disbursements; provided
that (i) if any such participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations in LC Disbursements
to any assignee or participant, other than to the Borrower or any subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing
and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring
a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of
set-off and counterclaim with respect to such participation as fully as if such Lender were a
direct creditor of the Borrower in the amount of such participation.




          (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of the Lenders or any
Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders or such Issuing Bank, as the case may be,
the amount due. In such event, if the Borrower has not in fact made such payment, then each of the
Lenders or such Issuing Bank, as the case may be, severally agrees to repay to the Administrative
Agent forthwith on demand the amount so distributed to such Lender or such Issuing Bank with
interest thereon, for each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.




          (e) If any Lender shall fail to make any payment required to be made by it pursuant to
Sections 2.04 (d) or (e), 2.05(b) or 2.16(d), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such
Sections until all such unsatisfied obligations are fully paid.




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     Section 2.17 Mitigation Obligations; Replacement of Lenders.



          (a) If any Lender requests compensation under Section 2.13, or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender,
such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.




          (b) If any Lender requests compensation under Section 2.13, or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, or if any Lender defaults in its obligation to fund Loans hereunder, then
the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in Section 9.04), all its interests, rights and obligations under
this Agreement to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have
received the prior written consent of the Administrative Agent (and, if a Commitment is being
assigned, each Issuing Bank), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any
such assignment resulting from a claim for compensation under Section 2.13 or payments required to
be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.




ARTICLE III

Representations and Warranties




     The Borrower represents and warrants to the Lenders that:



     Section 3.01 Organization; Powers. The Borrower and each of its subsidiaries is duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.



34









 





     Section 3.02 Authorization; Enforceability. The Transactions are within the
Borrower’s and its subsidiaries’ corporate, limited liability company or partnership powers and
have been duly authorized by all necessary corporate, limited liability company or partnership and,
if required, stockholder, member or limited partner action. This Agreement has been duly executed
and delivered by the Borrower and constitutes a legal, valid and binding obligation of it,
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding in equity or at law.



     Section 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not
require any material consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except such as have been obtained or made and are in full force and
effect, (b) will not violate any applicable material law or regulation or the charter, by-laws or
other organizational documents of it or any of its subsidiaries or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture, agreement or other
instrument relating to Material Indebtedness binding upon the Borrower or any of its subsidiaries
or their assets, or give rise to a right thereunder to require any payment to be made by it or any
of its subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset
of the Borrower or any of its subsidiaries.



     Section 3.04 Financial Condition; No Material Adverse Change.



          (a) The Borrower has heretofore furnished to the Lenders (i) the consolidated balance sheet
and statements of income, partners equity and cash flows of the MLP (A) as of and for the fiscal
year ended December 31, 2005, reported on by KPMG LLP, and (B) as of and for the fiscal quarter and
the portion of the fiscal year ended March 31, 2006, certified by its chief financial officer; and
(ii) the selected unaudited pro forma condensed financial data set forth in the prospectus included
in the Registration Statement on Form S-1 filed with the SEC on March 31, 2006 (as amended) in
connection with the IPO. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the MLP and its consolidated
subsidiaries and the Borrower and its consolidated subsidiaries, as of such dates and for such
periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes
in the case of the statements referred to in clause (B) above.




          (b) Since December 31, 2005, there has been no material adverse change in the business,
assets, operations or condition (financial or otherwise) of the Borrower and its subsidiaries,
taken as a whole.




     Section 3.05 Properties.



          (a) The Borrower and the Restricted Subsidiaries each has good title to, or valid leasehold
interests in, all its real and personal property material to its business, free and clear of all
Liens except Permitted Encumbrances and Liens otherwise permitted or contemplated by this
Agreement, except where the failure to have such title or leasehold interest could not reasonably
be expected to result in a Material Adverse Effect.




35









 








          (b) The Borrower and the Restricted Subsidiaries each owns, or is licensed to use, or has made
all required federal filings (and has not been notified of any contest) with respect to, all
trademarks, tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by it and its subsidiaries does not infringe upon the rights of any
other Person, except for any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.




          Section 3.06 Litigation and Environmental Matters.




          (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of it, threatened against or affecting the Borrower
or any of its subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve this Agreement or the Transactions.




          (b) Except for the Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or (iv) knows of any
basis for any Environmental Liability.




          (c) Since the Effective Date, there has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially increased the likelihood of,
a Material Adverse Effect.




     Section 3.07 Compliance with Laws and Agreements. The Borrower and its subsidiaries
are in compliance with all laws, regulations and orders of any Governmental Authority applicable to
it or its property and all indentures, agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.



     Section 3.08 Investment Company Status. Neither the Borrower nor any of its
subsidiaries is an “investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940. The Borrower is not subject to regulation under any Federal or
State statute or regulation which limits its ability to incur Indebtedness.



     Section 3.09 Taxes. The Borrower and its subsidiaries have each timely filed or
caused to be filed all Tax returns and reports required to have been filed and has paid or caused
to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which it or such subsidiary, as applicable, has set
aside on its books adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.



36









 





     Section 3.10 ERISA. Except as could not reasonably be expected to result in a
Material Adverse Effect, each ERISA Affiliate has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the Code with respect to
each Plan. Except as could not reasonably be expected to result in a Material Adverse Effect, no
ERISA Affiliate has (i) sought a waiver of the minimum funding standard under Section 412 of the
Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could reasonably be expected to result in the imposition
of a Lien or the posting of a bond or other security under ERISA or the Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA.



     Section 3.11 Disclosure. The Borrower has disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its subsidiaries is subject,
and all other matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. No reports, financial statements, certificates or
other information furnished by or on behalf of it to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with respect to
projected financial information, it represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.



     Section 3.12 Investments and Guarantees. Neither the Borrower nor any of the
Restricted Subsidiaries has any Investments or has outstanding any Guarantees, except as permitted
by this Agreement or reflected in the financial statements described in Section 3.04(a).



     Section 3.13 Casualties; Taking of Property. Neither the business nor the assets
taken as a whole of the Borrower or any of its subsidiaries (after giving effect to the payment or
anticipated payment of any proceeds of insurance) have been materially and adversely affected as a
result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of any assets or cancellation of contracts,
permits or concessions by any domestic or foreign government or any agency thereof, riot,
activities of armed forces or acts of God or of any public enemy.



ARTICLE IV

Conditions




     Section 4.01 Effective Date. The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance with Section 9.02):



          (a) The Administrative Agent (or its counsel) shall have received this Agreement, executed and
delivered by a duly authorized officer of the Borrower, and by the Lenders and the Administrative
Agent.




37









 








          (b) The Administrative Agent shall have received a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the Effective Date) of (i) Andrews Kurth LLP,
counsel for the Borrower and (ii) Bradley C. Barron, in-house counsel of the Borrower, collectively
providing the opinions set forth in Exhibit B, and each such opinion covering such other matters
relating to the Borrower, this Agreement or the Transactions as the Lenders shall reasonably
request. The Borrower hereby requests each such counsel to deliver its applicable opinion to the
Administrative Agent and the Lenders.




          (c) The Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the organization, existence
and good standing of the Borrower, the authorization of the Transactions, and any other legal
matters relating to the Borrower, the Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.




          (d) The Administrative Agent shall have received a certificate, dated the Effective Date and
signed by the President, Vice President or a Financial Officer of the Borrower, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02.




          (e) The Administrative Agent shall have received (i) counterpart originals of the Partnership
Agreement (MLP) substantially in the form listed as Exhibit 3.4 to the MLP’s annual report on Form
10-K for the fiscal year ended December 31, 2005, the Indenture and the Limited Liability Company
Agreement (Borrower) in form and substance acceptable to the Lenders, in each case duly executed by
each of the parties thereto and (ii) evidence satisfactory to the Lenders that the Limited
Liability Company Agreement (Borrower), the Indenture and the Partnership Agreement (MLP) are in
full force and effect and have not been amended or modified except to the extent such amendments or
modifications have been delivered to the Administrative Agent, which evidence may be in the form of
a certificate of the President or a Vice President (or equivalent officer) of each of the Borrower.




          (f) The Administrative Agent shall have received the financial statements referred to in
Section 3.04(a).




          (g) The Administrative Agent shall have received evidence satisfactory to it that the IPO has
been or is being concurrently consummated substantially in accordance with the IPO Documents (with
all of the material conditions precedent thereto having been satisfied in all material respects by
the parties thereto other than as consented to by the Lenders).




          (h) The Administrative Agent shall have received (i) a certificate of the President or a Vice
President (or equivalent officer) of the Borrower certifying: (A) that the IPO has been or is
concurrently being consummated substantially in accordance with the terms of the IPO Documents
(with all of the material conditions precedent thereto having been satisfied in all material
respects by the parties thereto other than as consented to by the Lenders); and (B) that attached
thereto is a true and complete executed copy of each of the IPO Documents (including all exhibits,
schedules and supplements); and (ii) such other related documents and information as the
Administrative Agent shall have reasonably requested.




38









 








          (i) The Administrative Agent shall have received evidence satisfactory to it of any necessary
shareholder, corporate, limited liability company, and partnership approvals as to authority,
enforceability and compliance with law in connection with the Transactions and the consummation of
the IPO.




          (j) The Administrative Agent shall have received all fees and other amounts due and payable on
or prior to the Effective Date (including amounts payable in respect of the ticking fee, if any),
including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder.




          (k) The Administrative Agent shall have received satisfactory evidence regarding the scope and
materiality of any environmental risks affecting the properties of the Borrower and its
subsidiaries.




          The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of the Issuing Banks to issue Letters of Credit under this Agreement
shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant
to Section 9.02) at or prior to 3:00 p.m., New York City time, on July 31, 2006 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate at such time).




     Section 4.02 Each Credit Event. The obligation of each Lender to make a Loan on the
occasion of any Borrowing, and of the Issuing Banks to issue, amend, renew or extend any Letter of
Credit, is subject to the satisfaction of the following conditions:



          (a) The representations and warranties of the Borrower set forth in this Agreement shall be
true and correct on and as of the date of such Borrowing or the date of issuance, amendment,
renewal or extension of such Letter of Credit, as applicable (unless such representations and
warranties are stated to relate to a specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date).




          (b) At the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have
occurred and be continuing.




          (c) The Administrative Agent shall have received each additional document, instrument, legal
opinion or item of information reasonably requested by the Administrative Agent, including, without
limitation, a copy of any debt instrument, security agreement or other material contract to which
the Borrower or any of its subsidiaries may be a party.




          Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a) and (b) of this Section 4.02.





39










 








ARTICLE V

Affirmative Covenants




     Commencing on the Effective Date, until the Commitments have expired or been terminated and
the principal of and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have
been reimbursed, the Borrower covenants and agrees with the Lenders that:



     Section 5.01 Financial Statements and Other Information. The Borrower will furnish to
the Administrative Agent and each Lender:



          (a) no later than 15 days following the date required by applicable SEC rules (without giving
effect to any extensions available thereunder) for the filing of such financial statements after
the end of each fiscal year of the MLP:



               (i) the audited consolidated balance sheet and related statements of income, partners equity
and cash flows of the MLP as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by KPMG LLP or other
independent public accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly in all material
respects the financial condition, results of operations and cash flows of the MLP and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied; and



               (ii) the consolidated balance sheet and related statements of income, members equity and cash
flows of the Borrower as of the end of and for such year, setting forth in each case in comparative
form the figures from the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results of operations of the
Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to the absence of footnotes.



          (b) no later than 15 days following the date required by applicable SEC rules (without giving
effect to any extensions available thereunder) for the filing of such financial statements after
the end of each of the first three fiscal quarters of each fiscal year of the MLP:



               (i) the consolidated balance sheet and related statements of income, partners equity and cash
flows of the MLP as of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal
year, all certified by one of its Financial Officers as presenting fairly in all material respects
the financial condition and results of operations of the MLP and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes; and



               (ii) the consolidated balance sheet and related statements of income, members equity and cash
flows of the Borrower as of the end of and for such fiscal quarter and



40









 







the then elapsed portion of the fiscal year, setting forth in each case in comparative form
the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of operations of the Borrower
and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of footnotes.



          (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a
certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 6.11 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;



          (d) promptly after Moody’s or S&P shall have announced a change in the rating established or
deemed to have been established for the Index Debt, written notice of such rating change; and



          (e) promptly following any request therefor, such other information regarding the operations,
business affairs and financial condition of the Borrower or any of its subsidiaries, or compliance
with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.



     Section 5.02 Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:



          (a) the occurrence of any Default;



          (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator
or Governmental Authority against or affecting the Borrower or any Affiliate (other than Valero
Energy) thereof that, if adversely determined, could reasonably be expected to result in a Material
Adverse Effect;



          (c) if and when any ERISA Affiliate (i) gives or is required to give notice to the PBGC of any
“reportable event” (as defined in Section 4043 of ERISA) with respect to any Plan which could
reasonably be expected to constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of
any such reportable event, a copy of the notice of such reportable event given or required to be
given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV
of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Code, a copy of such application;
(v) gives notice of intent to terminate any Plan under



41









 







Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or Multi-Employer Plan or in
respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which
has resulted or could reasonably be expected to result in the imposition of a Lien or the posting
of a bond or other security, a certificate of a Financial Officer of the Borrower setting forth
details as to such occurrence and action, if any, which the Borrower or applicable ERISA Affiliate
is required or proposes to take, but only to the extent that any occurrence described in the
preceding clauses (i) through (vii) could reasonably be expected to result in a Material Adverse
Effect;



          (d) any other development that results in, or could reasonably be expected to result in, a
Material Adverse Effect;



          (e) any material amendment to any Material Agreement, together with a certified copy of such
amendment; and



          (f) any of the following events, in each case if the occurrence of such event could reasonably
be expected to have a Material Adverse Effect:



               (i) the receipt by the Borrower of any notice of any claim with respect to any Environmental
Liability;



               (ii) if the President or a Vice President (or equivalent officer) of the Borrower, or the
officer of the Borrower primarily responsible for monitoring compliance by the Borrower and its
subsidiaries with Environmental Laws, shall obtain actual knowledge that there exists any
Environmental Liability pending or threatened against the Borrower or any of its subsidiaries; or



               (iii) any release, emission, discharge or disposal of any Hazardous Materials that could
reasonably be expected to form the basis of any Environmental Liability with respect to the
Borrower or any of its subsidiaries.


Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer
or President or any Vice President (or equivalent officer) of the Borrower setting forth a
description of the event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.




     Section 5.03 Existence; Conduct of Business. The Borrower will, and will cause each
of its subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section 6.03.



     Section 5.04 Payment of Obligations. The Borrower will, and will cause each of its
subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in
a Material Adverse Effect before the same shall become delinquent or in default, except where (a)
the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) 



42









 







the Borrower or such subsidiary has set aside on its books adequate reserves with respect thereto
in accordance with GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.



     Section 5.05 Maintenance of Properties; Insurance. The Borrower will, and will cause
each of its subsidiaries to, (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted, and (b) maintain,
with financially sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.



     Section 5.06 Books and Records; Inspection Rights. The Borrower will, and will cause
each of its subsidiaries to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice,
to visit and inspect its properties, to examine and make extracts from its books and records, and
to discuss its affairs, finances and condition with its officers and independent accountants, all
at such reasonable times and as often as reasonably requested.



     Section 5.07 Compliance with Laws. The Borrower will, and will cause each of its
subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property and the terms and provisions of the Material Agreements, except
where the failure to do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.



     Section 5.08 Use of Proceeds and Letters of Credit. The proceeds of the Loans will be
used for working capital and general corporate purposes of the Borrower and its Restricted
Subsidiaries. The Letters of Credit shall be used for general business purposes in the ordinary
course of business or for such other purposes as may be approved by the Administrative Agent. No
part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board, including Regulations T, U and X.



     Section 5.09 Environmental Laws. The Borrower will, and will cause each of its
subsidiaries to:



          (a) comply with all applicable Environmental Laws and obtain and comply with and maintain any
and all licenses, approvals, notifications, registrations or permits required by applicable
Environmental Laws except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect; and



          (b) conduct and complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and promptly comply with all lawful
orders and directives of all Governmental Authorities regarding Environmental Laws except to the
extent that the same are being contested in good faith by appropriate proceedings and the pendency
of such proceedings could not reasonably be expected to have a Material Adverse Effect.



43









 





ARTICLE VI

Negative Covenants




     Commencing on the Effective Date, until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:



     Section 6.01 Indebtedness. The Borrower will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:



          (a) Indebtedness created under this Agreement (including intercompany Indebtedness permitted
by Section 6.04(c));



          (b) other Indebtedness not to exceed $5,000,000 in the aggregate at any one time outstanding.



     Section 6.02 Liens. The Borrower will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned
or hereafter acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except Permitted Encumbrances.



     Section 6.03 Fundamental Changes.



          (a) The Borrower will not, and will not permit any Restricted Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of its assets, or all or substantially all of the Equity
Interests of any of the Restricted Subsidiaries (in each case whether now owned or hereafter
acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) any subsidiary of the
Borrower may merge into the Borrower in a transaction in which the Borrower is the surviving
entity, (ii) any subsidiary of the Borrower may merge into any Restricted Subsidiary in a
transaction in which the surviving entity is a Restricted Subsidiary, and (iii) any Restricted
Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation
or dissolution is in the best interests of the Borrower and is not materially disadvantageous to
the Lenders; provided that any such merger involving a Person that is not a wholly owned
subsidiary immediately prior to such merger shall not be permitted.



          (b) The Borrower will not, and will not permit any Restricted Subsidiary to, conduct, transact
or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Equity Interests in the MLP or any
Restricted Subsidiary, as applicable.



     Section 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. The Borrower
will not, and will not permit any Restricted Subsidiary to, purchase, hold or acquire any
Investment in or Guarantee any obligations of, any other Person, or purchase or otherwise



44









 







acquire (in one transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:



          (a) Permitted Investments;



          (b) Investments by the Borrower or any Restricted Subsidiary in the Equity Interests of the
MLP, so long as at the time thereof and immediately after giving effect thereto, no Default shall
occur and be continuing;



          (c) loans or advances made (i) by the Borrower to any Restricted Subsidiary, (ii) by any
Restricted Subsidiary to the Borrower or (iii) by any Restricted Subsidiary to any other Restricted
Subsidiary, so long as at the time thereof and immediately after giving effect thereto, no Default
shall occur and be continuing; and



          (d) Guarantees constituting Indebtedness permitted by Section 6.01(b).



     Section 6.05 Swap Agreements. The Borrower will not, and will not permit any
Restricted Subsidiary to, enter into any Swap Agreement.



     Section 6.06 Restricted Payments. The Borrower will not, and will not permit any
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, except (a) any Restricted Subsidiary may declare and pay Restricted Payments to
its parent, (b) the Borrower may make Restricted Payments pursuant to and in accordance with equity
incentive plans or other benefit plans for management or employees of the Borrower, (c) Valero GP,
LLC may make Restricted Payments pursuant to and in accordance with equity incentive plans or other
benefit plans for management or employees of Valero GP, LLC and (d) as long as no Default has
occurred and is continuing or would result therefrom, the Borrower may make Restricted Payments in
accordance with the terms of the Limited Liability Company Agreement (Borrower).



     Section 6.07 Transactions with Affiliates. The Borrower will not, and will not permit
any Restricted Subsidiary to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) at prices and on terms and conditions not less
favorable to the Borrower or such Restricted Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties, (b) transactions between or among the Borrower and the
Restricted Subsidiaries not involving any other Affiliate, (c) any Restricted Payment permitted by
Section 6.06 and (d) pursuant to the agreements listed on Schedule 6.07, which agreements are at
prices and on terms and conditions not less favorable to it than could be obtained on an
arm’s-length basis from unrelated third parties.



     Section 6.08 Restrictive Agreements. The Borrower will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any Restricted Subsidiary to create, incur or permit to exist any Lien
upon any of its property or assets, or (b) the ability of any Restricted Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Restricted Subsidiary or to Guarantee
Indebtedness of the Borrower



45









 







or any Restricted Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not apply
to restrictions and conditions (x) existing on the date of this Agreement identified on Schedule
6.08 (but shall apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition so as to cause such restriction or condition to be
more restrictive than the restriction or condition in existence on the date of this Agreement) or
(y) arising or agreed to after the date of this Agreement; provided that such restrictions
or conditions are not more restrictive than the restrictions and conditions existing on the date of
this Agreement and (iii) clause (a) of the foregoing shall not apply to customary provisions in
leases and other contracts restricting the assignment thereof.



     Section 6.09 Limitation on Modifications of Other Agreements. The Borrower will not,
and will not permit any of its subsidiaries to, amend, modify or change, or consent to any
amendment, modification or change to, any of the terms of, the Material Agreements, except to the
extent the same could not reasonably be expected to have a Material Adverse Effect.



     Section 6.10 Creation of Subsidiaries. The Borrower will not, and will not permit any
Restricted Subsidiary to, at any time create or acquire any subsidiary.



     Section 6.11 Financial Condition Covenants.



          (a) The Borrower will not permit at any time the Consolidated Debt Coverage Ratio to be in
excess of 4.75 to 1.00 for any Rolling Period ending on or subsequent to September 30, 2006;
provided that if at any time the MLP or any of its subsidiaries consummates an acquisition
(including the Acquisition) for which the MLP or any of its subsidiaries has paid aggregate net
consideration of at least $100,000,000, then, for the two Rolling Periods the last day of which
immediately follow the date on which such acquisition is consummated, the numerator of the maximum
Consolidated Debt Coverage Ratio otherwise permitted above shall be increased by 0.5; thereafter,
compliance shall be determined by reverting back to a ratio of 4.75 to 1.00.



          (b) The Borrower will not, as of the last day of any fiscal quarter, permit the aggregate cash
distributions paid by the MLP to the Restricted Subsidiaries and by the Restricted Subsidiaries to
the Borrower in respect of the Borrower’s indirectly owned Equity Interests in the MLP during the
Rolling Period ending on such day to be less than $25,000,000.



     Section 6.12 Disposition of Assets. The Borrower will not, and will not permit any
Restricted Subsidiary to, sell, assign, convey or otherwise transfer any property except (i) sales,
conveyances, transfers or other dispositions of assets no longer used or useful in the Borrower’s
or such Restricted Subsidiary’s business, (ii) sales, conveyances, transfers or other dispositions
of Permitted Investments, (iii) Restricted Payments made in accordance with this Agreement, (iv)
sales, conveyances, transfers or other dispositions of property in the ordinary course of the
Borrower’s or such Restricted Subsidiary’s business, and (v) sales, conveyances, transfers or other
dispositions of property related to or necessary to permit the Borrower or any Restricted
Subsidiary to administer any Unit incentive plans (including the purchase and sale of Units on the
open market to account for the exercise of Unit options and vesting of restricted Units).



46









 





ARTICLE VII

Events of Default




     From (and including) the Effective Date, if any of the following events (“Events of
Default”) shall occur:



          (a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation
in respect of any LC Disbursement when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or otherwise;



          (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in clause (a) of this Article) payable under this Agreement, when
and as the same shall become due and payable, and such failure shall continue unremedied for a
period of five Business Days;



          (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any
of its subsidiaries in or in connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with the Loan Documents or any amendment or modification
hereof or waiver hereunder, shall prove to have been incorrect in any material respect when made or
deemed made;



          (d) the Borrower shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.02(a), (c) or (e), Section 5.03 (with respect to the Borrower’s existence),
Section 5.08 or in Article VI;



          (e) the Borrower shall fail to observe or perform any covenant, condition or agreement
contained in the Loan Documents (other than those specified in clause (a), (b) or (d) of this
Article), and such failure shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be given at the request of any
Lender);



          (f) the Borrower or any Restricted Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material Indebtedness, when and
as the same shall become due and payable (subject to any applicable grace period), whether by
acceleration or otherwise, of any Material Indebtedness; or a default shall occur in the
performance or observance of any obligation or condition with respect to any Material Indebtedness
if the effect of such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient to permit the holder
or holders of such Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity;



          (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any
Restricted Subsidiary or its debts, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar
official



47









 







for the Borrower or any Restricted Subsidiary or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;



          (h) the Borrower or any Restricted Subsidiary shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (g) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any Restricted Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose
of effecting any of the foregoing;



          (i) the Borrower or any Restricted Subsidiary shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;



          (j) one or more judgments for the payment of money in an aggregate amount in excess of
$5,000,000 and that are not covered by insurance shall be rendered against the Borrower or any
Restricted Subsidiary, or any combination thereof and the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or
any Restricted Subsidiary to enforce any such judgment;



          (k) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its subsidiaries in an aggregate amount exceeding
$5,000,000;



          (l) the Borrower or any Restricted Subsidiary shall incur an Environmental Liability requiring
payment in any Rolling Period in excess of $5,000,0000 that is not covered by insurance or that
remains undischarged for a period of 30 days;



          (m) this Agreement after delivery thereof shall for any reason, except to the extent permitted
by the terms hereof (or as waived by the Lenders in accordance with Section 9.02), cease to be
valid, binding and enforceable in accordance with its terms against the Borrower or shall be
repudiated by the Borrower, or the Borrower shall so state in writing;



(n) a Change in Control shall occur; or




          (o) one or more “Events of Default” under (and as defined in) the Valero Logistics Credit
Agreement shall occur and be continuing;


then, and in every such event (other than an event with respect to the Borrower described in clause
(g) or (h) of this Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or different times: (i)


48









 






terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be due and payable),
and thereupon the principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become
due and payable immediately, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower
described in clause (g) or (h) of this Article, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest thereon and all fees
and other obligations of the Borrower accrued hereunder, shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower.




ARTICLE VIII

The Administrative Agent




     Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent
as its agent and authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms hereof, together
with such actions and powers as are reasonably incidental thereto.



     The bank serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any of its subsidiaries or other
Affiliate thereof as if it were not the Administrative Agent hereunder.



     The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall
not be subject to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby that the Administrative Agent is required to exercise in writing as
directed by the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower or any of its subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or wilful misconduct. The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection



49









 







herewith, (iii) the performance or observance of any of the covenants, agreements or other
terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.



     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any liability for relying
thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.



     The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any
such sub-agent, and shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as Administrative Agent.



     Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Banks and the Borrower. Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor. If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent
which shall be a Lender and a commercial bank with an office in New York, New York and having a
combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of
any actions taken or omitted to be taken by any of them while it was acting as Administrative
Agent.



     Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it



50









 







has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any related agreement or any document furnished
hereunder or thereunder.



     The Syndication Agent shall not have any duties, responsibilities or liabilities under this
Agreement or the other Loan Documents other than its duties, responsibilities and liabilities in
its capacity as a Lender hereunder.



ARTICLE IX

Miscellaneous




     Section 9.01 Notices.



          (a) Except in the case of notices and other communications expressly permitted to be given by
telephone (and subject to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:



               (i) if to the Borrower, to it at One Valero Way, San Antonio, Texas 78249-1112, Attention of
Senior Vice President and Chief Financial Officer (Telecopy No. (210) 345-3629);



               (ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency Services
Group, 1111 Fannin, 8th Floor, Houston, Texas 77002, Attention of Maria Arreola (Telecopy No. (713)
750-2228);



               (iii) if to JPMorgan Chase Bank, N.A., in its capacity as Issuing Bank, to it at JPMorgan
Chase Bank, N.A., Letter of Credit Group, Global Trade Services, 10420 Highland Manor Dr., Tampa,
Florida 33610, Attention of James Alonzo (Telecopy No. (813) 432-5161);



               (iv) if to SunTrust Bank, in its capacity as Issuing Bank, to it at SunTrust Bank, 25 Park
Place, 16th Floor, Standby Letter of Credit Dept., MC-3706, Atlanta, Georgia 30303, Attention of
Nivetta Freeman (Telecopy No. (404) 588-8129)), with a copy to it at the same address and telecopy
number, Attention of Aimee Maier;



               (v) if to any other Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.



          (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in
its discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved



51









 







by it; provided that approval of such procedures may be limited to particular notices or
communications.



          (c) Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt.



     Section 9.02 Waivers; Amendments.



          (a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in
exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the Administrative Agent, the Issuing Banks
and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they
would otherwise have. No waiver of any provision of this Agreement or consent to any departure by
the Borrower therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, any Lender or any Issuing
Bank may have had notice or knowledge of such Default at the time.



          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified (except
as expressly set forth herein or therein) except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative
Agent with the consent of the Required Lenders; provided that no such agreement shall (i)
increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the
principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or
any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written consent of each
Lender, (v) waive or amend Section 4.01, without the written consent of each Lender or (vi) change
any of the provisions of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to waive, amend or modify
any rights hereunder or make any determination or grant any consent hereunder, without the written
consent of each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or any Issuing Bank hereunder
without the prior written consent of the Administrative Agent or such Issuing Bank, as the case may
be.



52









 





     Section 9.03 Expenses; Indemnity; Damage Waiver.



          (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this Agreement or any
amendments, modifications or waivers of the provisions hereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses
incurred by the Administrative Agent, any Issuing Bank or any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent, any Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made or Letters of Credit
issued hereunder, including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.



          (b) The Borrower shall indemnify the Administrative Agent, each Issuing Bank and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and disbursements of any
counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or the consummation of the Transactions or
any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by any Issuing Bank to honor a demand for payment under a
Letter of Credit issued by it if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the Borrower or any of
its subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its
subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.



          (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the
Administrative Agent or any Issuing Bank under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent or such Issuing Bank, as the case may be, such
Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed
expense or indemnified loss, claim, damage, liability or related expense, as the



53









 







case may be, was incurred by or asserted against the Administrative Agent or such Issuing Bank
in its capacity as such.



          (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.



          (e) All amounts due under this Section shall be payable not later than 5 Business Days after
written demand therefor.



     Section 9.04 Successors and Assigns.



          (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby (including any
Affiliate of any Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby (including any Affiliate of any Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of
this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.



          (b)



               (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to
one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:



                    (A) the Borrower, provided that no consent of the Borrower shall be required for an assignment
to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and
is continuing, any other assignee;



                    (B) the Administrative Agent, provided that no consent of the Administrative Agent shall be
required for an assignment of any Commitment to an assignee that is a Lender with a Commitment
immediately prior to giving effect to such assignment; and



                    (C) each Issuing Bank.



               (ii) Assignments shall be subject to the following additional conditions:



54









 





                    (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any
Class, the amount of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect to such assignment
is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is continuing;



                    (B) each partial assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement;



                    (C) the parties to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of $3,500; and



                    (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.



     For the purposes of this Section 9.04(b), the term “Approved Fund” has the following meaning:



     “Approved Fund” means any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary
course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a
Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.



               (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.04 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.



               (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitment of, and
principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and
the Borrower, the Administrative Agent, the Issuing Banks and



55









 







the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, the Issuing Banks and
any Lender, at any reasonable time and from time to time upon reasonable prior notice.



               (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either the assigning Lender or the
assignee shall have failed to make any payment required to be made by it pursuant to Section
2.04(d) or (e), 2.05(b), 2.16(d) or 9.03(b), the Administrative Agent shall have no obligation to
accept such Assignment and Assumption and record the information therein in the Register unless and
until such payment shall have been made in full, together with all accrued interest thereon. No
assignment shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.



          (c)



               (i) Any Lender may, without the consent of the Borrower, the Administrative Agent or any
Issuing Bank, sell participations to one or more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations
under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same
extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b)
of this Section. To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject
to Section 2.16(c) as though it were a Lender.



               (ii) A Participant shall not be entitled to receive any greater payment under Section 2.13 or
Section 2.15 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits



56









 







of Section 2.15 unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.



          (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.



     Section 9.05 Survival. All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03
and Article VIII shall survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this Agreement or any provision
hereof.



     Section 9.06 Counterparts; Integration; Effectiveness. This Agreement may be executed
in counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other required parties hereto, and thereafter shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and assigns. Delivery
of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.



     Section 9.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.



57









 





     Section 9.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against
any of and all the obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of setoff) which such
Lender may have.



     Section 9.09 Governing Law; Jurisdiction; Consent to Service of Process.



          (a) This Agreement shall be construed in accordance with and governed by the law of the State
of New York.



          (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its properties in the courts of any
jurisdiction.



          (c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.



          (d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.



     Section 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (a)
CERTIFIES THAT NO



58









 







REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     Section 9.11 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.



     Section 9.12 Confidentiality. Each of the Administrative Agent, the Issuing Banks and
the Lenders agrees to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
any regulatory authority, (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, any Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes of this Section,
“Information” means all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the Administrative Agent, any
Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower;
provided that, in the case of information received from the Borrower after the date hereof,
such information is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such Person would accord to
its own confidential information.



     Section 9.13 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges
and other amounts which are treated as interest on such Loan under applicable law (collectively the
“Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance
with applicable law, the rate of interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful, the interest and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the



59









 







interest and Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been
received by such Lender.



     Section 9.14 USA Patriot Act. Each Lender that is subject to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby
notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain,
verify and record information that identifies the Borrower, which information includes the name and
address of the Borrower and other information that will allow such Lender to identify the Borrower
in accordance with the Act.



60









 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.



	 	 	 	 	 
	 	VALERO GP HOLDINGS, LLC

 	 
	 	By  	/s/
Steven A. Blank	 
	 	 	Steven A. Blank 	 
	 	 	Senior Vice President, Chief Financial Officer

and Treasurer 	 
	 



Signature Page to

3-Year Revolving Credit Agreement

S-1





 









 





	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., individually and as

Administrative Agent

 	 
	 	By  	/s/
Robert W. Traband	 
	 	 	Name:  	Robert W. Traband	 
	 	 	Title:  	Vice President	 
	 



Signature Page to

3-Year Revolving Credit Agreement

S-2




 









 








	 	 	 	 	 
	 	SUNTRUST BANK, individually and as Syndication Agent

 	 
	 	By  	/s/
David Edge	 
	 	 	Name:  	David Edge	 
	 	 	Title:  	Managing Director	 
	 



Signature Page to

3-Year Revolving Credit Agreement

S-3




 









 








EXHIBIT A




Form of Assignment and Assumption





     This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment
and Assumption as if set forth herein in full.



     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit and
guarantees included in such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and assignment is
without recourse to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.



	 	 	 	 	 	 	 
	1.

	 	Assignor:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	2.

	 	Assignee:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	[and is an Affiliate/Approved Fund of [identify Lender]1]
	 
	 	 	 	 	 	 
	3.

	 	Borrower(s):	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	4.	 	Administrative Agent:           JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement








 




			
	1	 	Select as applicable.




Exhibit A-1









 











	5.	 	Credit Agreement: The 3-Year Revolving Credit Agreement dated as of July 19, 2006 among Valero GP Holdings, LLC, the
Lenders parties thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
	 
	6.	 	Assigned Interest:





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Aggregate	 	 	 	 
	 	 	Amount of	 	Amount of	 	Percentage Assigned
	 	 	Commitment/Loans	 	Commitment/Loans	 	of
	Facility Assigned 2	 	for all Lenders	 	Assigned	 	Commitment/Loans3
	 

	 	 	$	 	 	 	$	 	 	 	%	 
	 

	 	 	$	 	 	 	$	 	 	 	%	 
	 

	 	 	$	 	 	 	$	 	 	 	%	 






     Effective Date:                          , 20   [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]



     The terms set forth in this Assignment and Assumption are hereby agreed to:



	 	 	 	 	 
	 	ASSIGNOR





[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 
	 	ASSIGNEE





[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 





 




			
	2	 	Fill in the appropriate terminology for the
types of facilities under the Credit Agreement that are being assigned under
this Assignment (e.g. “Revolving Commitment,” “Tranche A
Commitment,” “Tranche B Commitment,” etc.)
	 
	3	 	Set forth, to at least 9 decimals, as a
percentage of the Commitment/Loans of all Lenders thereunder.






Exhibit A-2









 





	 	 	 	 	 
	[Consented to and]4 Accepted:	 	 
	 
	 	 	 	 
	[NAME OF ADMINISTRATIVE AGENT], as	 	 
	Administrative Agent	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	[Consented to:]5	 	 
	 
	 	 	 	 
	[NAME OF RELEVANT PARTY]	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 








 




			
	4	 	To be added only if the consent of the
Administrative Agent is required by the terms of the Credit Agreement.
	 
	5	 	To be added only if the consent of the
Borrower and/or other parties (e.g. Swingline Lender, Issuing Bank) is required
by the terms of the Credit Agreement.





Exhibit A-3









 





ANNEX 1




[__________________]6




STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION




     1. Representations and Warranties.



     1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document 7 , (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the
financial condition of the Borrower, any of its subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower,
any of its subsidiaries or Affiliates or any other Person of any of their respective obligations
under any Loan Document.



     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered pursuant to Section ___thereof, as
applicable, and such other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision independently and
without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender 8 , attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on
the Administrative Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with





 




			
	6	 	Describe Credit Agreement at option of
Administrative Agent.
	 
	7	 	The term “Loan Document” should
be conformed to that used in the Credit Agreement.
	 
	8	 	The concept of “Foreign Lender”
should be conformed to the section in the Credit Agreement governing
withholding taxes and gross-up.




Exhibit A-4









 










     their terms all of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.



     2. Payments. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.



     3. General Provisions. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and assigns. This Assignment
and Assumption may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in
accordance with, the law of the State of New York.




Exhibit A-5










 








EXHIBIT B




OPINION OF COUNSEL FOR THE BORROWER




[     ], 2006




To the Lenders and the Administrative
  Agent
Referred to Below

c/o JPMorgan Chase Bank, N.A., as
  Administrative
Agent

270 Park Avenue

New York, New York 10017




Dear Sirs:




     [I/We] have acted as counsel for Valero GP Holdings, LLC (the “Borrower”), in
connection with the Credit Agreement dated as July [     ], 2006 (the “Credit Agreement”),
among the Borrower, the banks and other financial institutions identified therein as Lenders, and
JPMorgan Chase Bank, N.A., as Administrative Agent, and the other Loan Documents identified below.
This opinion is being furnished to you pursuant to Section 4.01(b) of the Credit Agreement. Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.



     In that connection, we have examined executed copies of the Credit Agreement and the notes
executed and delivered on the date hereof pursuant to Section 2.08(e) of the Credit Agreement (the
“Loan Documents”).



     In addition, [I, or individuals under my direction,/We] have examined originals or copies,
certified or otherwise identified to [my/our] satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such other investigations
of fact and law as [I/we] have deemed necessary or advisable for purposes of this opinion.



     Upon the basis of the foregoing, [I am/we are] of the opinion that:



     1. The Loan Documents constitute the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower under the law of the State of New York in accordance with their
respective terms.



     2. In a case properly argued and presented, a Texas court or a Federal court sitting in Texas
and applying Texas conflict of law principles, as set out in Section 35.51 of the Texas Business
and Commerce Code, would give effect to the provisions of the Loan Documents selecting New York law
as governing, and would apply the substantive laws of the State of New York in construing the Loan
Documents.



     3. Under the circumstances contemplated by the Credit Agreement, the making of the Loans will
not violate Section 7 of the Securities Exchange Act of 1934, as amended, or any



Exhibit B-1









 







regulation issued pursuant thereto, including without limitation, the provisions of Regulation
T, U or X of the Board of Governors of the Federal Reserve System.



     4. The Borrower is not an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.



     5. The Borrower (a) is a limited liability company duly formed and validly existing under the
laws of the State of Delaware and (b) has the limited liability company power and authority to (i)
own property and conduct the business in which it is currently engaged and in which it proposes, as
of the date hereof, to be engaged after the date hereof, (ii) make, deliver and perform the Loan
Documents to which it is a party in accordance with the terms and provisions thereof and (iii)
borrow under the Credit Agreement.



     6. The execution, delivery and performance of the Credit Agreement by the Borrower, and the
borrowings by the Borrower under the Credit Agreement, have been duly authorized by all necessary
actions on behalf of the Borrower and each other Person whose authorization is relevant to, or
constitutes, authorization on behalf of the Borrower.



     7. The Loan Documents have been duly executed and delivered on behalf of the Borrower.



     8. No approvals or consents of any governmental authority of the State of Texas or the United
States of America or other consents or approvals by any other Person which have not been obtained
on or prior to the date hereof are required (a) in connection with the participation by the
Borrower in connection with the transactions under the Loan Documents or the execution, delivery
and performance by the Borrower of the Loan Documents to which it is a party, or (b) for the
validity and enforceability of the Loan Documents and the exercise by the Lenders of their rights
and remedies thereunder.



     9. The execution, delivery and performance by the Borrower of the Loan Documents will not (a)
violate any provision of the Limited Liability Company Agreement (Borrower), (b) result in the
breach of, or constitute a default under, any indenture or loan or credit agreement or any other
material agreement, lease or instrument, known to me after due inquiry, to which the Borrower is a
party or by which its properties may be bound, (c) result in, or require, the creation or
imposition of any Lien on any of its properties or revenues pursuant to any requirement of law,
rule regulation or order of any governmental authority of the State of Texas or the United States
of America or material contractual obligation binding upon the Borrower, or (d) result in any
violation by the Borrower of any applicable law of the State of Texas or the United States of
America.



     10. The Borrower is not subject to regulation under any statute or regulation of the State of
Texas or the United States of America that limits its ability to incur indebtedness.



     11. To my knowledge (having made due inquiry with respect thereto), except as disclosed in the
Credit Agreement, no litigation, investigation or proceeding of or before any arbitrator or
governmental authority is pending or threatened by or against the Borrower or against any of the
properties or revenues of either (a) with respect to the Loan Documents or any



Exhibit B-2









 







of the transactions contemplated thereby or (b) which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.




Exhibit B-3









 








SCHEDULE 2.01




	 	 	 	 	 
	LENDER	 	COMMITMENT
	JPMorgan Chase Bank, N.A.
	 	$	10,000,000	 
	 
	 	 	 	 
	SunTrust Bank
	 	$	10,000,000	 
	 
	 	 	 	 
	Total
	 	$	20,000,000	 






Schedule 2.01
















 








SCHEDULE 3.06




Disclosed Matters



Grace Litigation. All actions, suits, proceedings, claims and Environmental Liabilities arising
out of or relating to the Otis pipeline as described in the Borrower’s Registration Statement on
Form S-1, as amended.



Port of Vancouver. All actions, suits, proceedings, claims and Environmental Liabilities arising
out of or relating to Valero L.P.’s (and its subsidiaries’) Port of Vancouver property as described
in the Borrower’s Registration Statement on Form S-1, as amended.




Schedule 3.06





 









 








SCHEDULE 6.07




Affiliate Agreements



Administration Agreement, dated July 19, 2006, between Valero GP Holdings, LLC and Valero GP, LLC



Non-Compete Agreement, dated July 19, 2006, between Valero GP Holdings, LLC, Valero L.P., Riverwalk
Logistics, L.P. and Valero GP, LLC




Schedule 6.07





 









 








SCHEDULE 6.08




Existing Restrictions



None.




Schedule 6.07