Document:

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                                                                    EXHIBIT 10.4

                           SHAMROCK LOGISTICS GP, LLC

                         YEAR 2001 ANNUAL INCENTIVE PLAN

1.       INTENT.

         The purpose of the Year 2001 Annual Incentive Plan (the "Plan") is to
         motivate management and the employees of Shamrock Logistics GP, LLC
         (the "Company") and its affiliates who perform services for Shamrock
         Logistics, L.P., a Delaware limited partnership, and its subsidiaries
         (the "Partnership") to collectively produce outstanding results,
         encourage superior performance, increase productivity, and aid in the
         retention of key employees.

2.       PLAN GUIDELINES.

         The administration of the Plan and any potential awards granted
         pursuant to the Plan is subject to the determination by the Company's
         Board of Directors and/or its Compensation Committee (collectively, the
         "Compensation Committee") that the performance goals for the applicable
         period have been achieved. The Company's Compensation Committee will
         review the Partnership's performance results for the designated
         performance period, and thereafter will determine whether or not to
         approve awards under Awards under the Plan.

3.       PERFORMANCE TARGETS.

          3.1    Designation of Performance Targets. The Company's President
                 shall recommend, subject to the Compensation Committee's
                 approval, the "performance measures" and "performance targets"
                 to be used for each calendar year (a "Plan Year"). Satisfactory
                 results, as determined by the Compensation Committee in its
                 sole discretion, must be achieved in order for an award to be
                 made pursuant to the Plan.

          3.2    Equitable Adjustment to Performance Targets. At its discretion,
                 the Compensation Committee may adjust actual performance
                 measure results for extraordinary events or accounting
                 adjustments resulting from significant asset purchases or
                 dispositions or other events not contemplated or otherwise
                 considered by the Compensation Committee when the performance
                 measures and targets were set.

4.       PARTICIPANTS.

         The Compensation Committee, in consultation with the Company's
         President, will designate members of management and employees of the
         Company and its affiliates as eligible to participate in the Plan. Said
         designated employees shall be referred to as "Participants."

5.       PARTICIPATION LEVELS.
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Shamrock Logistics Annual Incentive Plan
Page 2 of 3

         A Participant's designated level of participation in the Plan will be
         determined under criteria established or approved by the Compensation
         Committee for that Plan Year or designated performance period. Levels
         of participation in the Plan may vary according to a Participant's
         position and the relative impact he can have on the Company's and/or
         affiliates' operations. No Participant shall have any claim to be
         granted any award under the Plan, and there is no obligation for
         uniformity of treatment of Participants. The terms and conditions of
         awards need not be the same respecting each Participant.

6.       AWARD PAYOUT.

         Awards typically will be determined after the end of the Plan Year or
         designated performance period. Awards are paid in cash annually, unless
         otherwise determined by the Compensation Committee. The payment of any
         awards is conditioned on the Company's earnings and financial
         condition.

7.       TERMINATION OF EMPLOYMENT.

         Termination of a Participant's employment for any reason prior to
         payout of an award under the Plan will result in the Participant's
         forfeiture of any right, title or interest in any such award, unless
         and to the extent waived by the Compensation Committee in its
         discretion.

8.       AMENDMENT AND TERMINATION.

         The Company's Compensation Committee, at its sole discretion, may amend
         the Plan or terminate the Plan at any time.

9.       INDEMNIFICATION.

         Neither the Company, any participating affiliate, nor the Board of
         Directors, or any member or any committee thereof, of the Company or
         any participating affiliate, nor any employee of the Company or any
         participating affiliate shall be liable for any act, omission,
         interpretation, construction or determination made in connection with
         the Plan in good faith; and the members of the Company's Board of
         Directors, the Compensation Committee and/or the employees of the
         Company or any participating affiliate shall be entitled to
         indemnification and reimbursement by the Company to the maximum extent
         permitted by law in respect of any claim, loss, damage or expense
         (including counsel's fees) arising from their acts, omission and
         conduct in their official capacity with respect to the Plan.

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Shamrock Logistics Annual Incentive Plan
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10.      GENERAL PROVISIONS.

         10.1    Non-Guarantee of Employment. Nothing contained in this Plan
                 shall be construed as a contract of employment between the
                 Company and/or a participating affiliate and a Participant, and
                 nothing in this Plan shall confer upon any Participant any
                 right to continued employment with the Company or a
                 participating affiliate, or to interfere with the right of the
                 Company or a participating affiliate to terminate a
                 Participant's employment, with or without cause.

         10.2    Interests Not Transferable. Except as to withholding of
                 applicable taxes and deductions, no benefits under the Plan
                 shall be subject in any manner to alienation, sale, transfer,
                 assignment, pledge, attachment or other legal process, or
                 encumbrance of any kind, and any attempt to do so shall be
                 void.

         10.3    Controlling Law. To the extent not superseded by federal law,
                 the law of the State of Delaware shall be controlling in all
                 matters relating to the Plan.

         10.4    Severability. If any Plan provision or any award is or becomes
                 or is deemed to be invalid, illegal, or unenforceable in any
                 jurisdiction or as to any person or award, or would disqualify
                 the Plan or any award under the law deemed applicable by the
                 Compensation Committee, such provision shall be construed or
                 deemed amended to conform to the applicable laws, or if it
                 cannot be construed or deemed amended without, in the
                 determination of the Compensation Committee, materially
                 altering the intent of the Plan or the award, such provision
                 shall be stricken as to such jurisdiction, person or award and
                 the remainder of the Plan and any such award shall remain in
                 full force and effect.

         10.5    No Trust or Fund Created. Neither the Plan nor any award shall
                 create or be construed to create a trust or separate fund of
                 any kind or a fiduciary relationship between the Company or any
                 participating affiliate and a participant or any other person.
                 To the extent that any person acquires a right to receive
                 payments from the Company or any participating affiliate
                 pursuant to an award, such right shall be no greater than the
                 right of any general unsecured creditor of the Company or any
                 participating affiliate.

         10.6    Headings. Headings are given to the sections of the Plan solely
                 as a convenience to facilitate reference. Such headings shall
                 not be deemed in any way material or relevant to the
                 construction or interpretation of the Plan or any provision of
                 it.

         10.7    Tax Withholding. The Company and/or any participating affiliate
                 may deduct from any payment otherwise due under this Plan to a
                 Participant (or beneficiary) amounts required by law to be
                 withheld for purposes of federal, state or local taxes.<PAGE>   1
                                                                    EXHIBIT 10.7

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                                OMNIBUS AGREEMENT

                                      among

                      ULTRAMAR DIAMOND SHAMROCK CORPORATION

                           SHAMROCK LOGISTICS GP, LLC

                            RIVERWALK LOGISTICS, L.P.

                            SHAMROCK LOGISTICS, L.P.

                                       and

                       SHAMROCK LOGISTICS OPERATIONS, L.P.

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                                OMNIBUS AGREEMENT

    THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing
Date by and among Ultramar Diamond Shamrock Corporation, a Delaware corporation
("UDS"), Shamrock Logistics GP, LLC, a Delaware limited liability company
("Shamrock GP"), Riverwalk Logistics, L.P., a Delaware limited partnership and
general partner of the MLP and the OLP ("Riverwalk"), Shamrock Logistics, L.P.,
a Delaware limited partnership (the "MLP"), and Shamrock Logistics Operations,
L.P., a Delaware limited partnership (the "OLP").

                                 R E C I T A L:

    UDS, the MLP, the OLP, Shamrock GP in its capacity as the general partner of
Riverwalk, and Riverwalk in its capacity as the general partner of each of the
MLP and the OLP, desire by their execution of this Agreement to evidence their
understanding, (i) as more fully set forth in Article II of this Agreement, with
respect to (a) those business opportunities that UDS will not pursue unless the
MLP has declined to engage in such business opportunities for its own account
and (b) the procedures whereby such business opportunities are to be offered to
the MLP and accepted or declined; (ii) as more fully set forth in Article III of
this Agreement, with respect to the indemnification obligations of UDS relating
to certain environmental and income tax liabilities, and (iii) as more fully set
forth in Article IV of this Agreement, with respect to the options by the MLP to
purchase certain assets currently under construction which were retained by UDS
at the time of the Formation Transactions.

    In consideration of the premises and the covenants, conditions, and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

                                   ARTICLE I.
                                   DEFINITIONS

    1.1 DEFINITIONS. (a) Capitalized terms used herein but not defined herein
shall have the meanings given them in the MLP Agreement.

        (b) As used in this Agreement, the following terms shall have the
respective meanings set forth below:

        "Affiliate" shall have the meaning attributed to such term in the MLP
    Agreement.

        "Agreement" means this Omnibus Agreement, as amended, modified, or
    supplemented from time to time in accordance with the terms hereof.

        "Change of Control" shall have the meaning attributed to such term in
    Section 2.4.

        "Claim" means any claim, lawsuit, demand, suit, inquiry made, hearing,
    investigation, notice of a violation, litigation, proceeding, arbitration,
    or other dispute, whether civil, criminal, administrative or otherwise.

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        "Closing Date" means the date of the closing of the initial public
    offering of common units representing limited partner interests in the MLP.

        "Conflicts Committee" shall have the meaning attributed to such term in
    the MLP Agreement.

        "Contaminant" means any substance regulated under any Environmental Law,
    or any substance defined by Environmental Law as being hazardous or toxic or
    as being a pollutant.

        "Contract" means any agreement, contract, commitment, or other binding
    arrangement or understanding, whether written or oral.

        "Environmental Laws" means any and all laws, statutes, judgments,
    ordinances, rules, regulations, orders, determinations, interpretations, or
    guidance of any Governmental Authority pertaining to health or the
    environment in effect in any and all jurisdictions in which any UDS Entity
    or Partnership Entity or any of their respective Affiliates is conducting or
    at any time has conducted business, or where any property of any UDS Entity
    or Partnership Entity or any of their respective Affiliates, whether leased
    or owned, is located, or where any hazardous substances generated or
    disposed of by any UDS Entity or Partnership Entity or any of their
    respective Affiliates are located. The term "Environmental Law" includes,
    without limitation, the Comprehensive Environmental Response, Compensation
    and Liability Act of 1980, as amended by the Superfund Amendments and
    Reauthorization Act of 1986 and as subsequently amended, 42 U.S.C. Section
    9601 et seq.; the Resource Conversation and Recovery Act, as amended, 42
    U.S.C. Section 6901 et seq.; the Clean Air Act, as amended, 42 U.S.C.
    Section 7401 et seq.; and the Oil Pollution Act, as amended, 33 U.S.C.
    Section 2701 et seq.

        "Environmental Liabilities and Costs" means all Losses from any Claim by
    any Person whether based on Contract, tort, implied or express warranty,
    strict liability, criminal or civil statute, including under any Remedial
    Action, Environmental Law, Environmental Permit, Environmental Lien, Order
    or agreement with any Governmental Authority, arising from environmental,
    health or safety conditions, or the release of a Contaminant into the
    environment.

        "Environmental Lien" means any Lien in favor of any Governmental
    Authority for Environmental Liabilities and Costs.

        "Environmental Permit" shall mean any Permit, license, approval, consent
    or other authorization required by or pursuant to any applicable
    Environmental Law.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        "Formation Transactions" means (i) the contributions to the OLP of
    certain crude oil pipeline and storage assets and refined product pipeline
    and terminalling assets pursuant to those certain Conveyance, Assignment and
    Bill of Sale Agreements dated effective as of July 1, 2000, by and among the
    OLP and certain subsidiaries of UDS and

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    (ii) the transfers of certain crude oil pipeline and storage assets and
    refined product pipeline and terminalling assets and certain ownership
    interests in Skelly-Belview Pipeline Company, L.L.C. to the OLP by virtue of
    the mergers of certain subsidiaries of UDS with and into the OLP effective
    as of July 1, 2000.

        "Governmental Authority" shall mean (a) the United States of America,
    (b) any state, county, municipality, or other governmental subdivision
    within the United States of America, and (c) any court or any governmental
    department, commission, board, bureau, agency, or other instrumentality of
    the United States of America or of any state, county, municipality, water
    rights, taxing, or zoning authority, or other governmental subdivision
    within the United States of America.

        "Indemnified Party" shall have the meaning assigned to such term in
    Section 3.2(a).

        "Indemnifying Party" shall have the meaning assigned to such term in
    Section 3.2(a).

        "Losses" means all liabilities, losses, costs, damages (including
    punitive, consequential and treble damages), penalties or expenses
    (including, without limitation, reasonable attorneys' fees and expenses and
    costs of investigation and litigation), and also including any expenditures
    or expenses incurred to cover, remedy or rectify any such Losses.

        "MLP" means Shamrock Logistics, L.P., a Delaware limited partnership,
    and any successors thereto.

        "MLP Agreement" means the Second Amended and Restated Agreement of
    Limited Partnership of the MLP, dated as of the Closing Date, as such
    agreement is in effect on the Closing Date, to which reference is hereby
    made for all purposes of this Agreement. No amendment or modification to the
    MLP Agreement subsequent to the Closing Date shall be given effect for the
    purposes of this Agreement unless consented to by each of the parties to
    this Agreement.

        "OLP" means Shamrock Logistics Operations, L.P., a Delaware limited
    partnership, and any successors thereto.

        "Option Purchase Amount" means (i) $64,000,000 for the Wichita Falls
    Pipeline, (ii) $6,500,000 for the Ringgold Storage Facility or (iii)
    $5,600,000 for the Southlake Terminal, respectively.

        "Order" means any decree, order, injunction, rule, judgment, consent of
    or by a Governmental Authority.

        "Partnership Entities" means Shamrock GP, Riverwalk, the MLP and the
    OLP.

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        "Person" means an individual, partnership, corporation, limited
    liability company, trust, incorporated or unincorporated association, joint
    venture, joint stock company, Governmental Authority or other legal entity
    of any kind.

        "Permits" means any licenses, permits, registrations, variances, interim
    permits, permit applications, certificates, approvals or other
    authorizations under any Regulation applicable to any UDS Entity or
    Partnership Entity.

        "Regulation" means any law, statute, regulation, ruling, rule, Order or
    Permit, of, administered or enforced by or on behalf of any Governmental
    Authority, as may be amended from time to time.

        "Remedial Action" means all actions required to (a) clean up, remove,
    treat or in any other way address Contaminants in the indoor or outdoor
    environment; (b) prevent the release or threat of release or minimize the
    further release of Contaminants so they do not migrate or endanger or
    threaten to endanger public health or welfare or the indoor or outdoor
    environment; or (c) perform pre-remedial studies and investigations and
    post-remedial monitoring and care.

        "Restricted Business" has the meaning attributed to such term in
    Section 2.1.

        "Ringgold Storage Facility" means a new crude oil storage facility at
    Ringgold, Texas that is currently being constructed by UDS and which will
    have a storage capacity of approximately 600,000 barrels.

        "Riverwalk" means Riverwalk Logistics, L.P., a Delaware limited
    partnership and general partner of the MLP and OLP.

        "Shamrock GP" means Shamrock GP, LLC, a Delaware limited liability
    company and general partner of Riverwalk.

        "Southlake Terminal" means a refined product terminal in Southlake,
    Texas that is currently undergoing construction conducted by UDS.

        "Transferred Assets" means the assets contributed or transferred to the
    Partnership Entities in the Formation Transactions.

        "UDS" means Ultramar Diamond Shamrock Corporation.

        "UDS Entities" means UDS and any of its Affiliates, other than the
    Partnership Entities.

        "Voting Stock" means securities or membership interests of any class or
    series of either UDS, Shamrock GP or Riverwalk entitling the holders thereof
    to vote on a regular basis in the election of members of the board of
    directors, board of managers or other governing body of such entity.

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        "Wichita Falls Pipeline" means the crude oil pipeline from Wichita
    Falls, Texas to UDS' McKee Refinery with a current capacity of approximately
    85,000 barrels a day, which is being expanded by UDS to a capacity of
    approximately 110,000 barrels per day, along with related crude oil storage
    facilities with a storage capacity of approximately 360,000 barrels.

                                  ARTICLE II.
                             BUSINESS OPPORTUNITIES

    2.1 RESTRICTED BUSINESSES. Subject to the terms of the MLP Agreement, for as
long as (i) Shamrock GP (or any Affiliate of UDS) is the general partner of
Riverwalk and (ii) Riverwalk (or any Affiliate of UDS) is the general partner of
the MLP or the OLP, each of the UDS Entities are prohibited from engaging in,
whether by acquisition or otherwise, the business of transporting crude oil or
refined petroleum products (including petrochemicals) or operating crude oil
storage or refined petroleum products terminalling assets in the United States
(a "Restricted Business").

    2.2 PERMITTED EXCEPTIONS. Notwithstanding any provision of Section 2.1, a
UDS Entity may pursue an opportunity to purchase or invest in, and may
ultimately purchase, own and/or operate, a Restricted Business under any of the
following circumstances:

        (a) Any business retained by a UDS Entity at the Closing;

        (b) Any further development of the Diamond-Koch Joint Venture
            petrochemicals business;

        (c) Any business with a fair market value (as determined by the board of
            directors of UDS in good faith) of less than $10 million;

        (d) Any business acquired by a UDS Entity that constitutes less than 50%
            of the fair market value (as determined by a nationally recognized
            independent financial advisor) of a larger acquisition by such UDS
            Entity; provided the MLP has been offered and declined (with the
            concurrence of a majority of the members of the Conflicts Committee)
            the opportunity to purchase such business in accordance with the
            procedures set forth in Section 2.3;

        (e) Each of the Wichita Falls Pipeline, the Southlake Terminal and the
            Ringold Storage Facility should the MLP decline to exercise its
            option to purchase them pursuant to the Purchase Option described in
            more detail in Article IV hereof; or

        (f) Any logistics assets newly constructed by a UDS Entity that the MLP
            has not elected to purchase pursuant to Section 4.3 within one year
            of completion of construction at fair market value (as determined by
            a nationally recognized independent financial advisor).

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    2.3 PROCEDURES.

        (a) If a UDS Entity becomes aware of an opportunity to purchase a
Restricted Business, then, as soon as practicable, such UDS Entity shall notify
Shamrock GP of such opportunity and deliver to Shamrock GP all information
prepared by or on behalf of such UDS Entity relating to such potential purchase.
As soon as practicable but in any event within 30 days after receipt of such
notification and information, Shamrock GP, on behalf of the MLP, shall notify
the UDS Entity that either (i) Shamrock GP, on behalf of the MLP, has elected,
with the approval of a majority of the members of the Conflicts Committee, not
to cause the MLP to pursue the opportunity to acquire such Restricted Business,
or (ii) Shamrock GP, on behalf of the MLP, has elected to cause the MLP to
pursue the opportunity to acquire such Restricted Business. If, at any time,
Shamrock GP or its Affiliates abandons such opportunity (as evidenced in writing
by Shamrock GP or such Affiliates following the request of the UDS Entity), the
UDS Entity may pursue such opportunity. Any Restricted Business which is
permitted to be purchased by an UDS Entity must be so purchased (i) within 12
months of the time the UDS Entity becomes able to pursue such acquisition in
accordance with the provisions of this Section 2.3 and (ii) on terms not
materially more favorable to the UDS Entity than were offered to the MLP. If
either of these conditions are not satisfied, the opportunity must be reoffered
to the MLP.

        (b) If a UDS Entity acquires a Restricted Business as part of a larger
transaction in accordance with the provisions of Section 2.2(d), then, within 30
days after the consummation of such purchase, such UDS Entity shall notify
Shamrock GP of such purchase and such UDS Entity shall offer the MLP the
opportunity to purchase the Restricted Business constituting a portion of such
purchase and deliver to Shamrock GP all information prepared by or on behalf of
or in the possession of such UDS Entity relating to the Restricted Business. As
soon as practicable but in any event within 30 days after receipt of such
notification, Shamrock GP shall notify the UDS Entity that either (i) Shamrock
GP, on behalf of the MLP, has elected, with the approval of a majority of the
members of the Conflicts Committee, not to cause the MLP to purchase such
Restricted Business, in which event the UDS Entity shall be free to continue to
engage in such Restricted Business and shall be free to improve and expand such
Restricted Business if necessary to maintain existing market share, or (ii)
Shamrock GP, on behalf of the MLP, has elected to cause the MLP to purchase such
Restricted Business, in which event the following procedures shall be followed:

        (i) The UDS Entity shall submit a good faith offer to Shamrock GP to
    sell the Restricted Business (the "Offer") to any member of the Partnership
    Group designated by Shamrock GP on the terms and for the consideration
    stated in the Offer.

        (ii) The UDS Entity and Shamrock GP shall negotiate in good faith, for
    120 days after receipt of such Offer by Shamrock GP, the terms on which the
    Restricted Business will be sold to the MLP. The UDS Entity shall provide
    all information concerning the business, operations and finances of such
    Restricted Business as may be reasonably requested by Shamrock GP.

            (A) If the UDS Entity and Shamrock GP agree on such terms within 120
        days after receipt by Shamrock GP of the Offer, the MLP shall

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        purchase the Restricted Business on such terms as soon as commercially
        practicable after such agreement has been reached.

            (B) If the UDS Entity and Shamrock GP are unable to agree on the
        terms of a sale during such 120-day period, the UDS Entity shall attempt
        to sell the Restricted Business to a Person that is not an Affiliate of
        the UDS Entity (a "NonAffiliate Purchaser") within nine months of the
        termination of such 120-day period. Any such sale to a NonAffiliate
        Purchaser must be for a purchase price, as determined by the board of
        directors of UDS, not less than 95% of the purchase price last offered
        by the MLP.

            (C ) During such 120-day period the UDS Entity shall be free to make
        capital expenditures to maintain the Restricted Business and to improve
        or expand the Restricted Business if necessary to maintain the
        Restricted Business' existing market share.

        (iii) If, after the expiration of the nine-month period referred to in
    clause (ii)(B) above, the UDS Entity has not sold the Restricted Business to
    a NonAffiliate Purchaser, it shall submit another Offer (the "Second Offer")
    to Shamrock GP within seven days after the expiration of such nine-month
    period. The UDS Entity shall provide all information concerning the
    business, operations and finances of such Restricted Business as may be
    reasonably requested by Shamrock GP.

            (A) If Shamrock GP, with the concurrence of a majority of the
        members of the Conflicts Committee, elects not to cause the MLP to
        pursue the Second Offer, the UDS Entity shall be free to continue to
        engage in such Restricted Business.

            (B) If Shamrock GP shall elect to cause the MLP to purchase such
        Restricted Business, then Shamrock GP and the UDS Entity shall negotiate
        the terms of such purchase for 60 days. If the UDS Entity and Shamrock
        GP agree on such terms within 60 days after receipt by Shamrock GP of
        the Second Offer, the MLP shall purchase the Restricted Business on such
        terms as soon as commercially practicable after such agreement has been
        reached.

            (C) If during such 60-day period, no agreement has been reached
        between the UDS Entity and Shamrock GP or a member of the Partnership
        Group, the UDS Entity and Shamrock GP will engage an independent
        investment banking firm with a national reputation to determine the
        value of the Restricted Business. Such investment banking firm will
        determine the value of the Restricted Business within 30 days and
        furnish the UDS Entity and Shamrock GP its opinion of such value. The
        UDS Entity and Shamrock GP shall share equally the fees and expenses of
        such investment banking firm. Upon receipt of such opinion, Shamrock GP
        will have the option, subject to the approval of a majority of the
        members of the Conflicts Committee, to (A) cause the MLP to purchase the
        Restricted Business for an amount equal to the value determined by such
        investment banking firm or (B) decline to purchase such

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        Restricted Business, in which event the UDS Entity will be free to
        continue to engage in such Restricted Business.

    2.4 CHANGE OF CONTROL. If a Change of Control of UDS or each of Shamrock GP
or Riverwalk occurs, the provisions of this Article II shall not apply to the
existing logistics activities of any acquiring entity. A Change of Control of
UDS or each of Shamrock GP or Riverwalk shall be deemed to have occurred upon
the occurrence of one or more of the following events: (i) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the UDS or Shamrock
GP to any Person or its Affiliates, unless immediately following such sale,
lease, exchange or other transfer such assets are owned, directly or indirectly,
by the UDS Entities or Shamrock GP; (ii) the consolidation or merger of UDS or
Shamrock GP with or into another Person pursuant to a transaction in which the
outstanding Voting Stock of UDS or Shamrock GP is changed into or exchanged for
cash, securities or other property, other than any such transaction where (a)
the outstanding Voting Stock of UDS or Shamrock GP is changed into or exchanged
for Voting Stock of the surviving corporation or its parent and (b) the holders
of the Voting Stock of UDS or Shamrock GP immediately prior to such transaction
own, directly or indirectly, not less than a majority of the Voting Stock of the
surviving corporation or its parent immediately after such transaction; or (iii)
a "person" or "group" (within the meaning of Sections 13(d) or 14(d)(2) of the
Exchange Act) being or becoming the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) of more than 50% of all Voting Stock of
UDS or Shamrock GP then outstanding, other than in a merger or consolidation
which would not constitute a Change of Control under clause (ii) above.

    2.5 SCOPE OF RESTRICTED BUSINESS PROHIBITION. Except as provided in this
Article II and the Partnership Agreement, each UDS Entity shall be free to
engage in any business activity whatsoever, including those that may be in
direct competition with any Partnership Entity.

    2.6 ENFORCEMENT. The UDS Entities agree and acknowledge that the Partnership
Group does not have an adequate remedy at law for the breach by the UDS Entities
of the covenants and agreements set forth in this Article II, and that any
breach by the UDS Entities of the covenants and agreements set forth in Article
II would result in irreparable injury to the Partnership Group. The UDS Entities
further agree and acknowledge that any member of the Partnership Group may, in
addition to the other remedies which may be available to the Partnership Group
hereunder or under applicable law, file a suit in equity to enjoin the UDS
Entities from such breach, and consent to the issuance of injunctive relief
hereunder.

                                  ARTICLE III.
                                 INDEMNIFICATION

    3.1 Indemnification of Partnership Entities by UDS. In addition to its
indemnification obligations under certain (i) Indemnity Agreements entered into
in connection with the mergers of certain subsidiaries of UDS with and into the
OLP effective as of July 1, 2000, and (ii) Conveyance, Assignment and Bill of
Sale Agreements dated effective as of July 1, 2000, by and among the OLP and
certain subsidiaries of UDS, UDS, on behalf of each of the respective UDS
Entities, shall indemnify, defend and hold harmless the Partnership Entities
from

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and against (A) any and all Losses that are caused by, arise out of or are
attributable to Environmental Liabilities and Costs related to the Transferred
Assets that arose or relate to conditions existing prior to Closing and which
are discovered by the MLP within 10 years of the Closing (excluding
Environmental Liabilities and Costs to the extent such Environmental Liabilities
and Costs result from a change in law after closing) and (B) all federal, state
and local income tax liabilities attributable to the operation of the
Transferred Assets prior to the Closing Date, including any such income tax
liabilities of UDS and its Affiliates that may result from the consummation of
the Formation Transactions.

    3.2 INDEMNIFICATION PROCEDURES.

        (a) As used in this Section 3.2, the term "Indemnifying Party" refers to
UDS in the case of any indemnification obligation arising under Section 3.1, and
the term "Indemnified Party" refers to the Partnership Entities, as applicable,
in the case of any indemnification obligation arising under Section 3.1.

        (b) If any action, suit or proceeding shall be brought against an
Indemnified Party, or if the Indemnified Party should otherwise become aware of
facts giving rise to a claim for indemnification pursuant to Section 3.1, the
Indemnified Party shall promptly notify the Indemnifying Party in writing
specifying the nature of and specific basis for such claim.

        (c) The Indemnifying Party shall have the right to control all aspects
of the defense of (and any counterclaims with respect to) any claims brought
against the Indemnified Party that are covered by the indemnification set forth
in Section 3.1, including, without limitation, the selection of counsel,
determination of whether to appeal any decision of any court and the settling of
any such matter or any issues relating thereto; provided, however, that no such
settlement shall be entered into without the consent of the Indemnified Party
unless it includes a full release of the Indemnified Party from such matter or
issues, as the case may be.

        (d) The Indemnified Party agrees, at its own cost and expense, to
cooperate fully with the Indemnifying Party with respect to all aspects of the
defense of any claims covered by the indemnification set forth in Section 3.1,
including, without limitation, the prompt furnishing to the Indemnifying Party
of any correspondence or other notice relating thereto that the Indemnified
Party may receive, permitting the name(s) of the Indemnified Party to be
utilized in connection with such defense, the making available to the
Indemnifying Party of any files, records or other information of the Indemnified
Party that the Indemnifying Party considers relevant to such defense and the
making available to the Indemnifying Party of any employees of the Indemnified
Party; provided, however, that in connection therewith the Indemnifying Party
agrees to use reasonable efforts to minimize the impact thereof on the
operations of such Indemnified Party. In no event shall the obligation of the
Indemnified Party to cooperate with the Indemnifying Party as set forth in the
immediately preceding sentence be construed as imposing upon the Indemnified
Party an obligation to hire and pay for counsel in connection with the defense
of any claims covered by the indemnification set forth in this Article III;
provided, however, that an Indemnified Party may, at its own option, cost and
expense, hire and pay for counsel in connection with any such defense. The
Indemnifying Party agrees to keep any such counsel hired by the Indemnified
Party reasonably informed as to the status of any such defense, but the
Indemnifying Party shall have the right to retain sole control over such
defense.

                                       9
<PAGE>   11
        (e) In determining the amount of any Loss for which any Indemnified
Party is entitled to indemnification under this Article III, the gross amount
thereof will be reduced by any insurance proceeds realized or to be realized by
such Indemnified Party, and such correlative insurance benefit shall be net of
any insurance premium that becomes due as a result of such claim.

                                  ARTICLE IV.

        4.1. PURCHASE OPTION FOR ASSETS CURRENTLY UNDER CONSTRUCTION. UDS, on
behalf of the UDS Entities, hereby grants the MLP, on behalf of the OLP, the
unconditional right and option to purchase and acquire from the applicable UDS
Entity all of the respective UDS Entity's right, title and interest in, to and
under any or all of (i) the Wichita Falls Pipeline, (ii) the Ringgold Storage
Facility and (iii) the Southlake Terminal, at any time, from time to time and no
later than one year from the date of notice from UDS of completion of
construction of such asset, such notice to be given as soon as practicable, for
a purchase price that is equal to the respective Option Purchase Amount, by
delivery to UDS, on behalf of the respective UDS Entity, of a written notice of
the exercise of such purchase option. The MLP may exercise this purchase option
with respect to all, part or none of the enumerated assets.

        4.2. CLOSING OF PURCHASE OPTION. Closing of purchase and sale pursuant
to this Article IV shall be conducted at such location mutually agreed upon by
UDS and the MLP. At closing, UDS will sell and assign to the OLP by deed, bill
of sale, assignment of contract rights or other appropriate documentation all of
UDS's (or the applicable UDS Entity's) right, title and interest in, to and
under the Wichita Falls Pipeline, the Ringgold Storage Facility or the Southlake
Terminal, as applicable and the OLP, shall make payment of the applicable Option
Purchase Amount to UDS or the applicable UDS Entity in cash or by electronic
wire transfer of immediately available funds to an account designated by UDS in
writing.

        4.3. PURCHASE OPTION FOR LOGISTICS ASSETS CONSTRUCTED BY UDS IN THE
FUTURE. If a UDS Entity constructs any new logistics assets then, as soon as
practicable, such UDS Entity shall notify Shamrock GP of the completion of such
construction and such UDS Entity shall offer the MLP the opportunity to elect to
purchase, or have a subsidiary elect to purchase, the newly constructed assets
by written notice delivered to the UDS Entity no later than one year from the
date of notice. If Shamrock GP, with the concurrence of a majority of the
members of the Conflicts Committee, elects to purchase such assets, then
Shamrock GP and the UDS Entity shall negotiate the terms of such purchase for 60
days. If the UDS Entity and Shamrock GP agree on such terms within 60 days after
receipt by the UDS Entity of the notice of election to purchase, the MLP shall
purchase the newly constructed assets on such terms as soon as commercially
practicable after such agreement has been reached.

        If during such 60-day period, no agreement has been reached between the
UDS Entity and Shamrock GP, the UDS Entity and Shamrock GP will engage an
independent investment banking firm with a national reputation to determine the
value of the newly constructed assets. Such investment banking firm will
determine the value of the newly constructed assets within 30 days and furnish
the UDS Entity and Shamrock GP its opinion of such value. The UDS Entity and
Shamrock GP shall share equally the fees and expenses of such investment banking
firm. Upon receipt of such opinion, Shamrock GP will have the option,

                                       10
<PAGE>   12
subject to the approval of a majority of the members of the Conflicts Committee,
to (A) purchase the newly constructed assets for an amount equal to the value
determined by such investment banking firm or (B) decline to purchase such newly
constructed assets, in which event, the UDS Entity will be free to continue to
own and operate such newly constructed assets.

                                   ARTICLE V.
                                  MISCELLANEOUS

    5.1 CHOICE OF LAW; SUBMISSION TO JURISDICTION. This Agreement shall be
subject to and governed by the laws of the State of Delaware, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state.

    5.2 NOTICE. All notices or requests or consents provided for or permitted to
be given pursuant to this Agreement must be in writing and must be given by
depositing same in the United States mail, addressed to the Person to be
notified, postpaid, and registered or certified with return receipt requested or
by delivering such notice in person or by telecopier or telegram to such party.
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a party
pursuant to this Agreement shall be sent to or made at the address set forth
below such party's signature to this Agreement, or at such other address as such
party may stipulate to the other parties in the manner provided in this Section
5.2.

    5.3 ENTIRE AGREEMENT; SUPERSEDURE. This Agreement constitutes the entire
agreement of the parties relating to the matters contained herein, superseding
all prior contracts or agreements, whether oral or written, relating to the
matters contained herein.

    5.4 EFFECT OF WAIVER OR CONSENT. No waiver or consent, express or implied,
by any party to or of any breach or default by any Person in the performance by
such Person of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such Person of the same or any other obligations of such Person hereunder.
Failure on the part of a party to complain of any act of any Person or to
declare any Person in default, irrespective of how long such failure continues,
shall not constitute a waiver by such party of its rights hereunder until the
applicable statute of limitations period has run.

    5.5 AMENDMENT OR MODIFICATION. This Agreement may be amended or modified
from time to time only by the written agreement of all the parties hereto;
provided, however, that the MLP may not, without the prior approval of a
majority of the members of the Conflicts Committee, agree to any amendment or
modification of this Agreement that, in the reasonable discretion of Shamrock
GP, will adversely affect the holders of Common Units. Each such instrument
shall be reduced to writing and shall be designated on its face an "Amendment"
or an "Addendum" to this Agreement.

                                       11
<PAGE>   13
    5.6 ASSIGNMENT. No party shall have the right to assign its rights or
obligations under this Agreement without the consent of the other parties
hereto.

    5.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.

    5.8 SEVERABILITY. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.

    5.9 GENDER, PARTS, ARTICLES AND SECTIONS. Whenever the context requires, the
gender of all words used in this Agreement shall include the masculine, feminine
and neuter, and the number of all words shall include the singular and plural.
All references to Article numbers and Section numbers refer to Parts, Articles
and Sections of this Agreement, unless the context otherwise requires.

    5.10 FURTHER ASSURANCES. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.

    5.11 WITHHOLDING OR GRANTING OF CONSENT. Each party may, with respect to any
consent or approval that it is entitled to grant pursuant to this Agreement,
grant or withhold such consent or approval in its sole and uncontrolled
discretion, with or without cause, and subject to such conditions as it shall
deem appropriate.

    5.12 LAWS AND REGULATIONS. Notwithstanding any provision of this Agreement
to the contrary, no party hereto shall be required to take any act, or fail to
take any act, under this Agreement if the effect thereof would be to cause such
party to be in violation of any applicable law, statute, rule or regulation.

    5.13 NEGOTIATION OF RIGHTS OF LIMITED PARTNERS, ASSIGNEES, AND THIRD
PARTIES. The provisions of this Agreement are enforceable solely by the parties
to this Agreement, and no Limited Partner, Assignee or other Person shall have
the right, separate and apart from the MLP, to enforce any provision of this
Agreement or to compel any party to this Agreement to comply with the terms of
this Agreement.

                                       12
<PAGE>   14
    IN WITNESS WHEREOF, the parties have executed this Agreement on, and
effective as of, the Closing Date.

                                     ULTRAMAR DIAMOND SHAMROCK CORPORATION

                                     By:
                                         ---------------------------------------
                                     Name:
                                           -------------------------------------
                                     Title:
                                           -------------------------------------

                                     Address for Notice:
                                                        ------------------------

                                                        ------------------------
                                     Telecopy Number:
                                                        ------------------------

                                     SHAMROCK LOGISTICS GP, LLC

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                            ------------------------------------

                                     Address for Notice:
                                                        ------------------------

                                                        ------------------------
                                     Telecopy Number:
                                                        ------------------------

                                       13
<PAGE>   15

                                     RIVERWALK LOGISTICS, L.P.

                                     By:    Shamrock Logistics GP, LLC
                                            its general partner

                                     By:
                                          --------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                            ------------------------------------

                                     Address for Notice:
                                                        ------------------------

                                                        ------------------------
                                     Telecopy Number:
                                                        ------------------------

                                     SHAMROCK LOGISTICS, L.P.

                                     By:    Riverwalk Logistics, L.P.
                                            its general partner

                                     By:    Shamrock Logistics GP, LLC
                                            Its general partner

                                     By:
                                         ---------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                            ------------------------------------

                                                        ------------------------
                                     Address for Notice:
                                                        ------------------------
                                     Telecopy Number:
                                                        ------------------------

                                       14
<PAGE>   16
                                     SHAMROCK LOGISTICS OPERATIONS, L.P.

                                     By:    Riverwalk Logistics, L.P.
                                            its general partner

                                     By:    Shamrock Logistics GP, LLC
                                            Its general partner

                                     By:
                                         ---------------------------------------
                                     Name:
                                            ------------------------------------
                                     Title:
                                            ------------------------------------

                                     Address for Notice:
                                                        ------------------------

                                                        ------------------------
                                     Telecopy Number:
                                                        ------------------------

                                       15

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