Document:

exv4w27

 

Exhibit 4.27

VALERO GP HOLDINGS, LLC

and

COMPUTERSHARE INVESTOR SERVICES, LLC

Rights Agent

Form of

RIGHTS AGREEMENT

Dated as of [                        ], 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 1.
	 	Certain Definitions	 	 	1	 
	Section 2.
	 	Appointment of Rights Agent	 	 	3	 
	Section 3.
	 	Issue of Right Certificates	 	 	3	 
	Section 4.
	 	Form of Right Certificates	 	 	5	 
	Section 5.
	 	Countersignature and Registration	 	 	5	 
	Section 6.
	 	Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates	 	 	6	 
	Section 7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	 	6	 
	Section 8.
	 	Cancellation and Destruction of Right Certificates	 	 	7	 
	Section 9.
	 	Availability of Preferred Units	 	 	7	 
	Section 10.
	 	Preferred Units Record Date	 	 	8	 
	Section 11.
	 	Adjustment of Purchase Price, Number of Units or Number of Rights	 	 	8	 
	Section 12.
	 	Certificate of Adjusted Purchase Price or Number of Units	 	 	14	 
	Section 13.
	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power	 	 	14	 
	Section 14.
	 	Fractional Rights and Fractional Units	 	 	15	 
	Section 15.
	 	Rights of Action	 	 	16	 
	Section 16.
	 	Agreement of Right Holders	 	 	16	 
	Section 17.
	 	Right Certificate Holder Not Deemed a Unitholder	 	 	16	 
	Section 18.
	 	Concerning the Rights Agent	 	 	17	 
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	 	17	 
	Section 20.
	 	Duties of Rights Agent	 	 	18	 
	Section 21.
	 	Change of Rights Agent	 	 	19	 
	Section 22.
	 	Issuance of New Right Certificates	 	 	20	 
	Section 23.
	 	Redemption	 	 	20	 
	Section 24.
	 	Exchange	 	 	21	 
	Section 25.
	 	Notice of Certain Events	 	 	22	 
	Section 26.
	 	Notices	 	 	23	 
	Section 27.
	 	Supplements and Amendments	 	 	23	 
	Section 28.
	 	Successors	 	 	24	 
	Section 29.
	 	Benefits of this Agreement	 	 	24	 
	Section 30.
	 	Severability	 	 	24	 
	Section 31.
	 	Governing Law	 	 	24	 
	Section 32.
	 	Counterparts	 	 	24	 
	Section 33.
	 	Descriptive Headings	 	 	24	 
	Section 34.
	 	Force Majerue	 	 	24	 

 

 

     Agreement, dated as of [    ], 2006, between Valero GP Holdings, LLC, a Delaware limited
liability company (the “Company”), and Computershare Investor Services, LLC (the
“Rights Agent”).

     The Board of Directors of the Company has authorized and declared a dividend of one preferred
unit purchase right (a “Right”) for each Unit (as hereinafter defined) of the Company to
its unitholders, each Right representing the right to purchase one one-hundredth of a Preferred
Unit (as hereinafter defined) of the Company, upon the terms and subject to the conditions herein
set forth, and has further authorized and directed the issuance of one Right with respect to each
Unit that shall become outstanding between the date hereof (the “Record Date”) and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration Date (as such terms
are hereinafter defined).

     Accordingly, in consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:

     Section 1. Certain Definitions. For purposes of this Agreement, the following terms
have the meanings indicated:

     (a) “Acquiring Person” shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Units of the Company then outstanding, but shall
not include (i) the Company, (ii) any Subsidiary (as such term is hereinafter defined) of
the Company, (iii) any employee benefit plan of the Company or any Subsidiary of the
Company, or (iv) any entity holding Units for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an “Acquiring Person” as the
result of an acquisition of Units by the Company which, by reducing the number of units
outstanding, increases the proportionate number of units beneficially owned by such Person
to 15% or more of the Units of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Units of the Company then
outstanding by reason of unit purchases by the Company and shall, after such unit purchases
by the Company, become the Beneficial Owner of any additional Units of the Company, then
such Person shall be deemed to be an “Acquiring Person.” Notwithstanding the foregoing, if
the Board of Directors of the Company determines in good faith that a Person who would
otherwise be an “Acquiring Person”, as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Units so that such Person would no longer be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an “Acquiring Person” for any purposes of this
Agreement.

     (b) “Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as in effect on the
date of this Agreement.

 

 

     (c) A Person shall be deemed the “Beneficial Owner” of and shall be deemed to
“beneficially own” any securities:

     (i) which such Person or any of such Person’s Affiliates or Associates
beneficially owns, directly or indirectly;

     (ii) which such Person or any of such Person’s Affiliates or Associates has the
right to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for purchase or
exchange; or the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or

     (iii) which are beneficially owned, directly or indirectly, by any other Person
with which such Person or any of such Person’s Affiliates or Associates has any
agreement, arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company. Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase “then outstanding,” when used with
reference to a Person’s Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.

     (d) “Business Day” shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in New York or Illinois are authorized or obligated by
law or executive order to close.

     (e) “Close of business” on any given date shall mean 5:00 P.M., Chicago,
Illinois time, on such date; provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., Chicago, Illinois time, on the next succeeding Business Day.

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     (f) “ “Distribution Date” shall have the meaning set forth in Section 3
hereof.

     (g) “Final Expiration Date” shall have the meaning set forth in Section 7
hereof.

     (h) “Person” shall mean any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.

     (i) “Preferred Units” shall mean Junior Participating Preferred Units of the
Company having the rights and preferences set forth in the Form of Certificate of
Designations attached to this Agreement as Exhibit A.

     (j) “Redemption Date” shall have the meaning set forth in Section 7 hereof.

     (k) “Subsidiary” of any Person shall mean any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.

     (l) “Unit” or “Units” when used with reference to the Company shall
mean the units representing limited liability company interests of the Company. “Units”
when used with reference to any Person other than the Company shall mean the unit (or
equity interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person. A Unit shall not include a Preferred Unit.

     (m) “Units Acquisition Date” shall mean the first date of public announcement
by the Company or an Acquiring Person that an Acquiring Person has become such.

     Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent
to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the Units) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such co-Rights Agents as it may deem necessary or desirable, upon ten
(10) days’ prior written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and in no event be liable for, the acts or omissions of any such co-Rights Agent.

     Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the tenth day
after the Units Acquisition Date or (ii) the tenth business day (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company or any entity holding Units for or pursuant
to the terms of any such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding Units for or pursuant to the
terms of any such plan) to commence, a tender or exchange offer the consummation of which would
result in any Person becoming the Beneficial Owner of Units aggregating 15% or more of the then
outstanding Units

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(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earlier of such dates being herein referred to as the
“Distribution Date”), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Units registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates), or by a current ownership
statement issued with respect to uncertificated Units in lieu of such a certificate (an
“Ownership Statement”), and not by separate Rights Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the transfer of Units. As
soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will,
if requested, send) by first-class, insured, postage-prepaid mail, at the cost and expense of the
Company to each record holder of Units as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right Certificate, in substantially
the form of Exhibit B hereto (a “Right Certificate”), evidencing one Right for each
Unit so held. As of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

     (b) On the Record Date, or as soon as practicable thereafter, the Company will send a copy of
a Summary of Rights to Purchase Preferred Units, in substantially the form of Exhibit C
hereto (the “Summary of Rights”), by first-class, postage-prepaid mail, to each record
holder of Units as of the close of business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates, or Ownership Statements, for Units
outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates, or such Ownership Statements, registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date), the surrender for transfer of any
such certificate for Units, or the transfer of any Units covered by such an Ownership Statement,
outstanding on the Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Units represented or covered
thereby.

     (c) Certificates (or Ownership Statements) for Units which become outstanding (including,
without limitation, reacquired Units referred to in the last sentence of this paragraph (c)) after
the Record Date but prior to the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them
a legend substantially as follows:

This [certificate] [statement] also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between Valero GP
Holdings, LLC and Computershare Investor Services, LLC (as successor to
Harris Trust and Savings Bank)] (the “Rights Agreement”),
the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of Valero GP Holdings,
LLC. Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no longer be
evidenced by this [certificate] [statement]. Valero GP Holdings, LLC will
mail to the holder of this [certificate] [statement] a copy of the Rights
Agreement without charge after receipt of a written

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request therefor. Under
certain circumstances, as set forth in the Rights Agreement, Rights issued
to any Person who becomes an Acquiring Person (as defined in the Rights
Agreement) may become null and void.

With respect to such certificates, or Ownership Statements, containing the foregoing legend, until
the Distribution Date, the Rights associated with the Units represented by such certificates, or
covered by such Ownership Statements, shall be evidenced by such certificates, or such Ownership
Statements, alone, and the surrender for transfer of any such certificate, or the transfer of any
Units covered by such an Ownership Statement, shall also constitute the transfer of the Rights
associated with the Units represented or covered thereby. In the event that the Company purchases
or acquires any Units after the Record Date but prior to the Distribution Date, any Rights
associated with such Units shall be deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Units which are no longer outstanding.

     Section 4. Form of Right Certificates. The Right Certificates (and the forms of
election to purchase Preferred Units and of assignment to be printed on the reverse thereof) shall
be substantially the same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one one-hundredths of a
Preferred Unit as shall be set forth therein at the price per one one-hundredth of a Preferred Unit
set forth therein (the “Purchase Price”), but the number of such one one-hundredths of a
Preferred Unit and the Purchase Price shall be subject to adjustment as provided herein.

     Section 5. Countersignature and Registration. The Right Certificates shall be
executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either manually or by facsimile signature
and shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The Right Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless countersigned. In case any officer of the Company
who shall have signed any of the Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.

     Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office, books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the Right

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Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each
of the Right Certificates.

     Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Section 14 hereof,
at any time after the close of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate
or Right Certificates (other than Right Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may
be transferred, split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a
Preferred Unit as the Right Certificate or Right Certificates surrendered then entitled such holder
to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Thereupon the Rights Agent
shall countersign and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.

     Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company’s or
Rights Agent’s request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor
to the Rights Agent for delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.

     Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) The
registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the principal office of
the Rights Agent, together with payment of the Purchase Price for each one one-hundredth of a
Preferred Unit as to which the Rights are exercised, at or prior to the earliest of (i) the close
of business on [ ], 2016 (the “Final Expiration Date”), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”),
or (iii) the time at which such Rights are exchanged as provided in Section 24 hereof.

     (b) The Purchase Price for each one one-hundredth of a Preferred Unit purchasable
pursuant to the exercise of a Right shall initially be $[ ], and shall be subject to
adjustment from time to time as provided in Section 11 or 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c) below.

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     (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Purchase Price for the
units to be purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9 hereof by
certified check, cashier’s check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i)(A) requisition from any transfer agent of the
Preferred Units certificates for the number of Preferred Units to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such requests,
or (B) requisition from the depositary agent depositary receipts representing such number
of one one-hundredths of a Preferred Unit as are to be purchased (in which case
certificates for the Preferred Units represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional units in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such holder and (iv)
when appropriate, after receipt, deliver such cash to or upon the order of the registered
holder of such Right Certificate.

     (d) In case the registered holder of any Right Certificate shall exercise less than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.

     Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof
to the Company.

     Section 9. Availability of Preferred Units. The Company covenants and agrees that it
will take all such action as may be necessary to ensure that all Preferred Units delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such Preferred Units
(subject to payment of the Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable units.

     The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Units upon the exercise of

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Rights. The
Company shall not, however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the issuance or delivery
of certificates or depositary receipts for the Preferred Units in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue
or to deliver any certificates or depositary receipts for Preferred Units upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to the Company’s
reasonable satisfaction that no such tax is due.

     Section 10. Preferred Units Record Date. Each person in whose name any certificate
for Preferred Units is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Units represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon which the
Preferred Units transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such units on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Units transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled
to any rights of a holder of Preferred Units for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.

     Section 11. Adjustment of Purchase Price, Number of Units or Number of Rights. The
Purchase Price, the number of Preferred Units covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this Section 11.

     (a) (i) In the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Units payable in Preferred Units, (B) subdivide the
outstanding Preferred Units, (C) combine the outstanding Preferred Units into a smaller
number of Preferred Units or (D) issue any units in a reclassification of the Preferred
Units (including any such reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving entity), except as otherwise provided in
this Section 11(a), the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or reclassification, and
the number and kind of units issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of units which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Units transfer books of the Company
were open, he would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.

     (ii) Subject to Section 24 of this Agreement, in the event any Person becomes an
Acquiring Person, each holder of a Right shall thereafter have a right to receive,
upon exercise thereof at a price equal to the then current Purchase

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Price multiplied
by the number of one one-hundredths of a Preferred Unit for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of Preferred
Units, such number of Units of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-hundredths of a
Preferred Unit for which a Right is then exercisable and dividing that product by
(y) 50% of the then current per unit market price of the Company’s Units (determined
pursuant to Section 11(d) hereof) on the date of the occurrence of such event. In
the event that any Person shall become an Acquiring Person and the Rights shall then
be outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.

     From and after the occurrence of such event, any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) shall be void and any holder of such Rights shall thereafter have
no right to exercise such Rights under any provision of this Agreement. No Right
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof; no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer to
an Acquiring Person whose Rights would be void pursuant to the preceding sentence
shall be cancelled.

     (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Units entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe for or purchase Preferred
Units (or units having the same rights, privileges and preferences as the Preferred Units
(“Equivalent Preferred Units”)) or securities convertible into Preferred Units or
Equivalent Preferred Units at a price per Preferred Unit or equivalent preferred unit (or
having a conversion price per unit, if a security convertible into Preferred Units or
Equivalent Preferred Units) less than the then current per unit market price of the
Preferred Units (as defined in Section 11(d)) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of which shall be
the number of Preferred Units outstanding on such record date plus the number of Preferred
Units which the aggregate offering price of the total number of Preferred Units and/or
Equivalent Preferred Units so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such current market price
and the denominator of which shall be the number of Preferred Units outstanding on such
record date plus the number of additional Preferred Units and/or Equivalent Preferred Units
to be offered for subscription or purchase (or into which the convertible securities so to
be offered are initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the aggregate par
value of the units of the Company issuable upon

-9-

 

exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Preferred Units owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record date had not
been fixed.

     (c) In case the Company shall fix a record date for the making of a distribution to
all holders of the Preferred Units (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing or surviving entity) of
evidences of indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Units) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the then current per unit
market price of the Preferred Units on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion of the assets
or evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Preferred Unit and the denominator of which shall be such
current per unit market price of the Preferred Units; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the units of the Company to be issued upon exercise of one Right.
Such adjustments shall be made successively whenever such a record date is fixed; and in
the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.

     (d) (i) For the purpose of any computation hereunder, the “current per unit market
price” of any security (a “Security” for the purpose of this Section 11(d)(i)) on any date
shall be deemed to be the average of the daily closing prices per unit of such Security for
the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to
such date; provided, however, that in the event that the current per unit market price of
the Security is determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in units of such
Security or securities convertible into such units, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the current per
unit market price shall be appropriately adjusted to reflect the current market price per
unit equivalent of such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system

-10-

 

with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System (“NASDAQ”) or such other system then in use, or,
if on any such date the Security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the Company. The term “Trading
Day” shall mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of business or, if
the Security is not listed or admitted to trading on any national securities exchange, a
Business Day.

     (ii) For the purpose of any computation hereunder, the “current per unit market
price” of the Preferred Units shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Units are not publicly traded, the
“current per unit market price” of the Preferred Units shall be conclusively deemed
to be the current per unit market price of the Units as determined pursuant to
Section 11(d)(i) (appropriately adjusted to reflect any unit split, unit dividend or
similar transaction occurring after the date hereof), multiplied by one hundred. If
neither the Units nor the Preferred Units are publicly held or so listed or traded,
“current per unit market price” shall mean the fair value per unit as determined in
good faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.

     (e) No adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Preferred Unit or one ten-thousandth of any other unit or security as
the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three years from
the date of the transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.

     (f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder
of any Right thereafter exercised shall become entitled to receive any units of the Company
other than Preferred Units, thereafter the number of such other units so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the Preferred
Units contained in Section 11(a) through (c), inclusive, and the

-11-

 

provisions of Sections 7,
9, 10 and 13 with respect to the Preferred Units shall apply on like terms to any such
other units.

     (g) All Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a Preferred Unit purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as provided
herein.

     (h) Unless the Company shall have exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations made in Sections
11(b) and (c), each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a Preferred Unit (calculated to the nearest one
one-millionth of a Preferred Unit) obtained by (i) multiplying (x) the number of one
one-hundredths of a unit covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.

     (i) The Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in substitution for any adjustment in the number of one
one-hundredths of a Preferred Unit purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be exercisable for
the number of one one-hundredths of a Preferred Unit for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the adjustment
to be made. This record date may be the date on which the Purchase Price is adjusted or
any day thereafter, but, if the Right Certificates have been issued, shall be at least 10
days later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the Company,
new Right Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in the names of
the holders of record of Right Certificates on the record date specified in the public
announcement.

-12-

 

     (j) Irrespective of any adjustment or change in the Purchase Price or the number of
one one-hundredths of a Preferred Unit issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the Purchase Price
and the number of one one-hundredths of a Preferred Unit which were expressed in the
initial Right Certificates issued hereunder.

     (k) Before taking any action that would cause an adjustment reducing the Purchase
Price below one one-hundredth of the then par value, if any, of the Preferred Units
issuable upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Preferred Units at such adjusted Purchase Price.

     (l) In any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Units or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Units or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder’s right to receive such
additional units upon the occurrence of the event requiring such adjustment.

     (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any consolidation or subdivision of the
Preferred Units, issuance wholly for cash of any Preferred Units at less than the
current market price, issuance wholly for cash of Preferred Units or securities which
by their terms are convertible into or exchangeable for Preferred Units, dividends on
Preferred Units payable in Preferred Units or issuance of rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by the Company to holders of its
Preferred Units shall not be taxable to such unitholders.

     (n) In the event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the Units payable
in Units or (ii) effect a subdivision, combination or consolidation of the Units (by
reclassification or otherwise than by payment of dividends in Units) into a greater or
lesser number of Units, then in any such case (A) the number of one one-hundredths of a
Preferred Unit purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a Preferred Unit so
purchasable immediately prior to such event by a fraction, the numerator of which is the
number of Units outstanding immediately before such event and the denominator of which is
the number of Units outstanding immediately after such event, and (B) each Unit outstanding
immediately after such event shall have issued with respect to it that number of Rights
which each Unit outstanding immediately prior to such event had

-13-

 

issued with respect to it.
The adjustments provided for in this Section 11(n) shall be made successively whenever such
a dividend is declared or paid or such a subdivision, combination or consolidation is
effected.

     Section 12. Certificate of Adjusted Purchase Price or Number of Units. Whenever an
adjustment is made as provided in Section 11 or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the Units or the
Preferred Units a copy of such certificate and (c) mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 25 hereof. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and shall not be
obligated or responsible for calculating any adjustment, nor shall it be deemed to have knowledge
of such an adjustment unless and until it shall have received such certificate.

     Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. In
the event, directly or indirectly, at any time after a Person has become an Acquiring Person, the
Company shall consolidate with, or merge with and into, any other Person, any Person shall
consolidate with the Company, or merge with and into the Company and the Company shall be the
continuing or surviving entity of such merger and, in connection with such merger, all or part of
the Units shall be changed into or exchanged for units or other securities of any other Person (or
the Company) or cash or any other property, or the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets
or earning power aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person other than the Company or one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper provision shall be made so that (i)
each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-hundredths of a Preferred Unit for
which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Units, such number of Units of such other Person (including the Company as successor
thereto or as the surviving entity) as shall equal the result obtained by (A) multiplying the then
current Purchase Price by the number of one one-hundredths of a Preferred Unit for which a Right is
then exercisable and dividing that product by (B) 50% of the then current per unit market price of
the Units of such other Person (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) the issuer of such Units shall
thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term
“Company” shall thereafter be deemed to refer to such issuer; and (iv) such issuer shall
take such steps (including, but not limited to, the reservation of a sufficient number of its Units
in accordance with Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be,
in relation to the Units thereafter deliverable upon the exercise of the Rights. The Company shall
not consummate any such consolidation, merger, sale or transfer unless prior thereto the Company
and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result of the consummation

-14-

 

of such transaction, would eliminate or substantially diminish the benefits intended to be afforded by
the Rights. The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.

     Section 14. Fractional Rights and Fractional Units. (a) The Company shall not be
required to issue fractions of Rights or to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall
be used.

     (b) The Company shall not be required to issue fractions of Preferred Units (other than
fractions which are integral multiples of one one-hundredth of a Preferred Unit) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Units (other than
fractions which are integral multiples of one one-hundredth of a Preferred Unit). Fractions of
Preferred Units in integral multiples of one one-hundredth of a Preferred Unit may, at the election
of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and preferences to which
they are entitled as beneficial owners of the Preferred Units represented by such depositary
receipts. In lieu of fractional Preferred Units that are not integral multiples of one
one-hundredth of a Preferred Unit, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Unit. For the purposes of this
Section 14(b), the current market value of a Preferred Unit shall be the closing price of a
Preferred Unit (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.

     (c) The holder of a Right by the acceptance of the Right expressly waives his right to receive
any fractional Rights or any fractional units upon exercise of a Right (except as provided above).

-15-

 

     Section 15. Rights of Action. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Units); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Units), without the consent of the Rights Agent or of the holder of
any other Right Certificate (or, prior to the Distribution Date, of the Units), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and
in this Agreement. Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations of the obligations
of any Person subject to, this Agreement.

     Section 16. Agreement of Right Holders. Every holder of a Right, by accepting the
same, consents and agrees with the Company and the Rights Agent and with every other holder of a
Right that:

     (a) prior to the Distribution Date, the Rights will be transferable only in connection
with the transfer of the Units;

     (b) after the Distribution Date, the Right Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the principal office of the Rights
Agent, duly endorsed or accompanied by a proper instrument of transfer; and

     (c) the Company and the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Units) is registered
as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the associated Units
certificate or Ownership Statement made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.

     Section 17. Right Certificate Holder Not Deemed a Unitholder. No holder, as such, of
any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Units or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or
in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such,
any of the rights of a unitholder of the Company or any right to vote for the election of directors
or upon any matter submitted to unitholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions affecting unitholders
(except as provided in Section 25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised
in accordance with the provisions hereof.

-16-

 

     Section 18. Concerning the Rights Agent. The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross negligence or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. The indemnification provided
for hereunder shall survive the expiration of the Rights and the termination of this Agreement.
The costs and expenses of enforcing this right of indemnification shall also be paid by the
Company.

     The Rights Agent may conclusively rely upon and shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Right Certificate or certificate for the
Preferred Units or Units or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper person or persons, or otherwise upon
the advice of counsel as set forth in Section 20 hereof.

     Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the
unit transfer or corporate trust powers of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof.

     In case at the time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement. In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right Certificates either in its
prior name or in its changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.

-17-

 

     Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions, and no implied
duties or obligations shall be read into this Agreement against the Rights Agent, by all of which
the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:

     (a) Before the Rights Agent acts or refrains from acting, it may consult with legal
counsel (who may be legal counsel for the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.

     (b) Whenever in the performance of its duties under this Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one
of the Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in reliance upon
such certificate.

     (c) The Rights Agent shall be liable hereunder to the Company and any other Person
only for its own gross negligence or willful misconduct.

     (d) The Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.

     (e) The Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment
in the terms of the Rights (including the manner, method or amount thereof) provided for in
Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Units to be issued
pursuant to this Agreement or any Right Certificate or as to whether any Preferred Units
will, when issued, be validly authorized and issued, fully paid and nonassessable.

-18-

 

     (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the provisions of this Agreement.

     (g) The Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions.

     (h) The Rights Agent and any unitholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal entity.

     (i) The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct.

     (j) No provision of this Agreement shall require the Rights Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.

     (k) The Rights Agent shall not be required to take notice or be deemed to have notice
of any fact, event or determination (including, without limitation, any dates or events
defined in this Agreement or the designation of any person as an Acquiring Person,
Affiliate or Associate) under this Agreement unless and until the Rights Agent shall be
specifically notified in writing by the Company of such fact, event or determination.

     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing
mailed to the Company by registered or certified mail and to each transfer agent of the Units or
Preferred Units by registered or certified mail, and to the holders of the Right Certificates by
first-class mail at the cost and expense of the Company. In the event the transfer agency
relationship in effect between the Company and the Rights Agent terminates, the Rights

-19-

 

Agent will be deemed to resign automatically on the effective date of such termination; and any required
notice will be sent by the Company. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Units or Preferred Units by registered or
certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within
a period of 30 days after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a) a corporation, limited
liability company or trust company (or similar form of entity under the laws of any state of the
United States or a foreign jurisdiction) authorized to conduct business under the laws of the
United States or any state of the United States, which is authorized under such laws to exercise
corporate trust or unitholder services powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50,000,000 or (b) an Affiliate controlled by an entity described
in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to
the successor Rights Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Units or Preferred Units, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.

     Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions
of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class of units or other
securities or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.

     Section 23. Redemption. (a) The Board of Directors of the Company may, at its
option, at any time prior to such time as any Person becomes an Acquiring Person, redeem all but
not less than all the then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any unit split, unit dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”). The redemption of the Rights by the Board of Directors may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its sole discretion may
establish.

-20-

 

     (b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Units. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method by which
the payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of Units prior to the Distribution
Date.

     Section 24. Exchange. (a) The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have become void pursuant
to the provisions of Section 11(a)(ii) hereof) for Units at an exchange ratio of one Unit per
Right, appropriately adjusted to reflect any unit split, unit dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred to as the
“Exchange Ratio”). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any
entity holding Units for or pursuant to the terms of any such plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Units then
outstanding.

     (b) Immediately upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of Units equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Units for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.

-21-

 

     (c) In the event that there shall not be sufficient Units issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to authorize additional
Units for issuance upon exchange of the Rights. In the event the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such additional Units,
the Company shall substitute, for each Unit that would otherwise be issuable upon exchange of a
Right, a number of Preferred Units or fraction thereof such that the current
per share market price of one Preferred Share multiplied by such number or fraction is equal
to the current per share market price of one Unit as of the date of issuance of such Preferred
Units or fraction thereof.

     (d) The Company shall not be required to issue fractions of Units or to distribute
certificates which evidence fractional Units. In lieu of such fractional Units, the Company shall
pay to the registered holders of the Right Certificates with regard to which such fractional Units
would otherwise be issuable an amount in cash equal to the same fraction of the current market
value of a whole Unit. For the purposes of this paragraph (d), the current market value of a whole
Unit shall be the closing price of a Unit (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.

     Section 25. Notice of Certain Events. (a) In case the Company shall propose (i) to
pay any dividend payable in units of any class to the holders of its Preferred Units or to make any
other distribution to the holders of its Preferred Units (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Preferred Units rights or warrants to subscribe for
or to purchase any additional Preferred Units or Units of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Units (other than a
reclassification involving only the subdivision of outstanding Preferred Units), (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50%
or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to,
any other Person, (v) to effect the liquidation, dissolution or winding up of the Company, or (vi)
to declare or pay any dividend on the Units payable in Units or to effect a subdivision,
combination or consolidation of the Units (by reclassification or otherwise than by payment of
dividends in Units), then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such unit dividend, or distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of participation therein by
the holders of the Units and/or Preferred Units, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Units for purposes of such
action, and in the case of any such other action, at least 10 days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of the Units and/or
Preferred Units, whichever shall be the earlier.

     (b) In case the event set forth in Section 11(a)(ii) hereof shall occur, then the
Company shall as soon as practicable thereafter give to each holder of a Right

-22-

 

Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which
notice shall describe such event and the consequences of such event to holders of Rights
under Section 11(a)(ii) hereof.

     Section 26. Notices. Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:

Valero GP Holdings, LLC

One Valero Way

San Antonio, Texas 78249

Attention:

     Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Right Certificate to or on the Rights
Agent shall be sent by registered or certified mail and shall be deemed given upon receipt and
addressed (until another address is filed in writing with the Company) as follows:

Computershare Investor Services, LLC

Two North LaSalle Street

Chicago, Illinois 60602

Attention: Keith Bradley

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.

     Section 27. Supplements and Amendments. The Company may from time to time supplement
or amend this Agreement without the approval of any holders of Right Certificates in order to cure
any ambiguity, to correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other provisions with respect to the
Rights which the Company may deem necessary or desirable, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; provided, however, that from and
after such time as any Person becomes an Acquiring Person, this Agreement shall not be amended in
any manner which would adversely affect the interests of the holders of Rights. Without limiting
the foregoing, the Company may at any time prior to such time as any Person becomes an Acquiring
Person amend this Agreement to lower the thresholds set forth in Sections 1(a) and 3(a) to not less
than the greater of (i) the sum of .001% and the largest percentage of the outstanding Units then
known by the Company to be beneficially owned by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any Subsidiary of the Company, or any
entity holding Units for or pursuant to the terms of any such plan) and (ii) 10%.

-23-

 

     Section 28. Successors. All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

     Section 29. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any person or corporation other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the Units) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Units).

     Section 30. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

     Section 31. Governing Law. This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.

     Section 32. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument.

     Section 33. Descriptive Headings. Descriptive headings of the several Sections of
this Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

     Section 34. Force Majerue. Notwithstanding anything to the contrary contained herein,
Rights Agent shall not be liable for any delays or failures in performance resulting from acts
beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage
of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss
of data due to power failures or mechanical difficulties with information storage or retrieval
systems, labor difficulties, war, or civil unrest.

-24-

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
attested, all as of the day and year first above written.

	 	 	 	 	 
	 	 	VALERO GP HOLDINGS, LLC
	 
	 	 	 	 
	Attest:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	COMPUTERSHARE INVESTOR SERVICES, LLC, as Rights Agent
	 
	 	 	 	 
	Attest:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Computershare Investor Services, LLC
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

-25-

 

Exhibit A

FORM

of

CERTIFICATE OF DESIGNATIONS

of

JUNIOR PARTICIPATING PREFERRED UNITS, SERIES I

of

VALERO GP HOLDINGS, LLC

     Valero GP Holdings, LLC, a Delaware limited liability company (hereinafter called the
“Company”), hereby certifies that the following resolution was adopted by the Board of
Directors of the Company by unanimous written consent dated as of [               ]:

     RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
this Company (hereinafter called the “Board of Directors” or the “Board”) in
accordance with the provisions of the Second Amended and Restated Limited Liability Company
Agreement of the Company (the “LLC Agreement”), the Board of Directors hereby creates a
series of Preferred Units (the “Preferred Units”), of the Company and hereby states the
designation and fixes the relative rights, preferences, and limitations thereof as follows:

     Junior Participating Preferred Units, Series I:

     Section 1. Designation and Amount. The units of such series shall be designated as
“Junior Participating Preferred Units, Series I” (the “Series I Preferred Units”) and the
number of units constituting the Series I Preferred Units shall be [    ]. Such number of units may
be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall
reduce the number of units of Series I Preferred Units to a number less than the number of units
then outstanding plus the number of units reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities issued by the
Company convertible into Series I Preferred Units.

     Section 2. Dividends and Distributions.

     (A) Subject to the rights of the holders of any units of any series of Preferred Units (or any
similar units) ranking prior and superior to the Series I Preferred Units with respect to
dividends, the holders of units of Series I Preferred Units, in preference to the holders of Units
representing limited liability company interests (the “Units”), of the Company, and of any
other junior units, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly distributions payable in cash
on [the first day of March, June, September and December in each year] (each such date being
referred to herein as a “Quarterly Distribution Payment Date”), commencing on the first
Quarterly Distribution Payment Date after the first issuance of a unit or fraction of a unit of
Series I Preferred Units, in an amount per unit (rounded to the nearest cent) equal to the greater
of (a) $[    ] or (b) subject to the provision for adjustment hereinafter set forth, [    ] times the
aggregate per unit amount of all cash distributions, and [    ] times the aggregate per unit amount
(payable in kind) of all non-cash dividends or other distributions, other than a distribution
payable in Units or a subdivision of the

Exhibit A - 1

 

outstanding Units (by reclassification or otherwise), declared on the Units since the
immediately preceding Quarterly Distribution Payment Date or, with respect to the first Quarterly
Distribution Payment Date, since the first issuance of any unit or fraction of a unit of Series I
Preferred Units. In the event the Company shall at any time declare or pay any distribution on the
Units payable in Units, or effect a subdivision or combination or consolidation of the outstanding
Units (by reclassification or otherwise than by payment of a distribution in Units) into a greater
or lesser number of Units, then in each such case the amount to which holders of units of Series I
Preferred Units were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the
number of Units outstanding immediately after such event and the denominator of which is the number
of Units that were outstanding immediately prior to such event.

     (B) The Company shall declare a dividend or distribution on the Series I Preferred Units as
provided in paragraph (A) of this Section immediately after it declares a dividend or distribution
on the Units (other than a distribution payable in Units); provided that, in the event no dividend
or distribution shall have been declared on the Units during the period between any Quarterly
Distribution Payment Date and the next subsequent Quarterly Distribution Payment Date, a
distribution of $[    ] per unit on the Series I Preferred Units shall nevertheless be payable on
such subsequent Quarterly Distribution Payment Date.

     (C) Distributions shall begin to accrue and be cumulative on outstanding units of Series I
Preferred Units from the Quarterly Distribution Payment Date next preceding the date of issue of
such units, unless the date of issue of such units is prior to the record date for the first
Quarterly Distribution Payment Date, in which case distributions on such units shall begin to
accrue from the date of issue of such units, or unless the date of issue is a Quarterly
Distribution Payment Date or is a date after the record date for the determination of holders of
units of Series I Preferred Units entitled to receive a quarterly distribution and before such
Quarterly Distribution Payment Date, in either of which events such distributions shall begin to
accrue and be cumulative from such Quarterly Distribution Payment Date. Accrued but unpaid
distributions shall not bear interest. Distributions paid on the units of Series I Preferred Units
in an amount less than the total amount of such distributions at the time accrued and payable on
such units shall be allocated pro rata on a unit-by-unit basis among all such units at the time
outstanding. The Board of Directors may fix a record date for the determination of holders of
units of Series I Preferred Units entitled to receive payment of a distribution or distribution
declared thereon, which record date shall be not more than 60 days prior to the date fixed for the
payment thereof.

     Section 3. Voting Rights. The holders of units of Series I Preferred Units shall have
the following voting rights:

     (A) Subject to the provision for adjustment hereinafter set forth, each unit of Series I
Preferred Units shall entitle the holder thereof to [    ] votes on all matters submitted to a vote
of the unitholders of the Company. In the event the Company shall at any time declare or pay any
distribution on the Units payable in Units, or effect a subdivision or combination or consolidation
of the outstanding Units (by reclassification or otherwise than by payment of a distribution in
Units) into a greater or lesser number of Units, then in each such case the number of votes per
unit to which holders of units of Series I Preferred Units were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator of

Exhibit A - 2

 

which is the number of Units outstanding immediately after such event and the denominator of
which is the number of Units that were outstanding immediately prior to such event.

     (B) Except as otherwise provided herein, in any other Certificate of Designations creating a
series of Preferred Units or any similar unit, or by law, the holders of units of Series I
Preferred Units and the holders of units of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of unitholders of the Company.

     (C) Except as set forth herein, or as otherwise provided by law, holders of Series I
Preferred Units shall have no special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Units as set forth herein) for taking any
corporate action.

     Section 4. Certain Restrictions.

     (A) Whenever quarterly distributions or other distributions or dividends payable on the Series
I Preferred Units as provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid distributions and dividends, whether or not declared, on units of Series I Preferred Units
outstanding shall have been paid in full, the Company shall not:

          (i) declare or pay distributions, or make any other dividends, on any units ranking junior
(either as to distributions or upon liquidation, dissolution or winding up) to the Series I
Preferred Units;

          (ii) declare or pay distributions, or make any other dividends, on any units ranking on a
parity (either as to distributions or upon liquidation, dissolution or winding up) with the Series
I Preferred Units, except distributions paid ratably on the Series I Preferred Units and all such
parity units on which distributions are payable or in arrears in proportion to the total amounts to
which the holders of all such units are then entitled;

          (iii) redeem or purchase or otherwise acquire for consideration units ranking junior (either
as to distributions or upon liquidation, dissolution or winding up) to the Series I Preferred
Units, provided that the Company may at any time redeem, purchase or otherwise acquire units of any
such junior units in exchange for units of the Company ranking junior (either as to distributions
or upon dissolution, liquidation or winding up) to the Series I Preferred Units; or

          (iv) redeem or purchase or otherwise acquire for consideration any units of Series I Preferred
Units, or any units ranking on a parity with the Series I Preferred Units, except in accordance
with a purchase offer made in writing or by publication (as determined by the Board of Directors)
to all holders of such units upon such terms as the Board of Directors, after consideration of the
respective annual distribution rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.

     (B) The Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any units of the Company unless the Company could, under

Exhibit A - 3

 

paragraph (A) of this Section 4, purchase or otherwise acquire such units at such time and in
such manner.

     Section 5. Reacquired Units. Any units of Series I Preferred Units purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof.

     Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution
or winding up of the Company, no distribution shall be made (1) to the holders of units ranking
junior (either as to distributions or upon liquidation, dissolution or winding up) to the Series I
Preferred Units unless, prior thereto, the holders of units of Series I Preferred Units shall have
received $[    ] per unit, plus an amount equal to accrued and unpaid distributions and dividends
thereon, whether or not declared, to the date of such payment, provided that the holders of units
of Series I Preferred Units shall be entitled to receive an aggregate amount per unit, subject to
the provision for adjustment hereinafter set forth, equal to [    ] times the aggregate amount to be
distributed per unit to holders of Units, or (2) to the holders of units ranking on a parity
(either as to distributions or upon liquidation, dissolution or winding up) with the Series I
Preferred Units, except distributions made ratably on the Series I Preferred Units and all such
parity units in proportion to the total amounts to which the holders of all such units are entitled
upon such liquidation, dissolution or winding up. In the event the Company shall at any time
declare or pay any distribution on the Units payable in Units, or effect a subdivision or
combination or consolidation of the outstanding Units (by reclassification or otherwise than by
payment of a dividend in Units) into a greater or lesser number of Units, then in each such case
the aggregate amount to which holders of units of Series I Preferred Units were entitled
immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the number of Units
outstanding immediately after such event and the denominator of which is the number of Units that
were outstanding immediately prior to such event.

     Section 7. Consolidation, Merger, etc. In case the Company shall enter into any
consolidation, merger, combination or other transaction in which the Units are exchanged for or
changed into other units or securities, cash and/or any other property, then in any such case each
unit of Series I Preferred Units shall at the same time be similarly exchanged or changed into an
amount per unit, subject to the provision for adjustment hereinafter set forth, equal to [    ] times
the aggregate amount of units, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each Unit is changed or exchanged. In the event the Company
shall at any time declare or pay any distribution on the Units payable in Units, or effect a
subdivision or combination or consolidation of the outstanding Units (by reclassification or
otherwise than by payment of a distribution in Units) into a greater or lesser number of Units,
then in each such case the amount set forth in the preceding sentence with respect to the exchange
or change of units of Series I Preferred Units shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of Units outstanding immediately after such event
and the denominator of which is the number of Units that were outstanding immediately prior to such
event.

     Section 8. No Redemption. The units of Series I Preferred Units shall not be
redeemable.

Exhibit A - 4

 

     Section 9. Rank. The Series I Preferred Units shall rank, with respect to the payment
of distributions and the dividends of assets, junior to all series of any other class of the
Company’s Preferred Units.

     Section 10. Amendment. The Certificate of Incorporation of the Company shall not be
amended in any manner which would materially alter or change the powers, preferences or special
rights of the Series I Preferred Units so as to affect them adversely without the affirmative vote
of the holders of at least two-thirds of the outstanding units of Series I Preferred Units, voting
together as a single class.

     IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Company by
its Chairman of the Board and attested by its Secretary this day of                     , 2006.

	 	 	 	 	 
	 

	 	 	 	 
	 	 	 
	 

	 	Chairman of the Board	 	 
	 
	 	 	 	 
	Attest:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Secretary
	 	 	 	 

Exhibit A - 5

 

Exhibit B

Form of Right Certificate

			
	Certificate No. R-
	 	                     Rights

NOT EXERCISABLE AFTER [               ], 2016 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

Right Certificate

Valero GP Holdings, LLC

     This certifies that                                         , or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of [          ], 2006 (the
“Rights Agreement”), between Valero GP Holdings, LLC a Delaware limited liability company
(the “Company”), and Computershare Investor Services, LLC (the “Rights Agent”), to
purchase from the Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., Chicago, Illinois time, on [          ], 2016 at the
principal office of the Rights Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable unit of Junior Participating Preferred Units, Series
I, (the “Preferred Units”), of the Company, at a purchase price of $                     per one
one-hundredth of a Preferred Unit (the “Purchase Price”), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-hundredths of a Preferred Unit which
may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of                     , 20    , based on the Preferred Units as constituted
at such date. As provided in the Rights Agreement, the Purchase Price and the number of one
one-hundredths of a Preferred Unit which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the happening of certain
events.

     This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and the above-mentioned offices of the
Rights Agent.

     This Right Certificate, with or without other Right Certificates, upon surrender at the
principal office of the Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like

Exhibit B - 1

 

aggregate number of Preferred Units as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not exercised.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at a redemption price of $0.01 per Right or (ii) maybe exchanged
in whole or in part for Preferred Units or units of the Company’s Units.

     No fractional Preferred Units will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a
Preferred Unit, which may, at the election of the Company, be evidenced by depositary receipts),but
in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

     No holder of this Right Certificate shall be entitled to vote or receive distributions or be
deemed for any purpose the holder of the Preferred Units or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a unitholder of the Company or any right to vote for the election of directors or upon
any matter submitted to unitholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting unitholders (except
as provided in the Rights Agreement), or to receive distributions or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised
as provided in the Rights Agreement.

     This Right Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent.

     WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of                                         , 20    .

	 	 	 	 	 	 	 
	ATTEST:	 	VALERO GP HOLDINGS, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Countersigned:	 	 	 	 
	 
	 	 	 	 	 	 
	COMPUTERSHARE INVESTOR SERVICES, LLC	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Authorized Signature	 	 	 	 

Exhibit B - 2

 

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Right Certificate.)

     FOR VALUE RECEIVED                                          hereby sells, assigns and transfers unto
                                         (Please print name and address of transferee) this Right Certificate,
together with all right, title and interest therein, and does hereby irrevocably constitute and
appoint                                          Attorney, to transfer the within Right Certificate on the books of
the within-named Company, with full power of substitution.

Dated:                                         , 20    .

	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 
	 

	 	Signature	 	 

Signature Guaranteed:

     Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.

 

     The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).

	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 
	 

	 	Signature	 	 

Exhibit B - 3

 

Form of Reverse Side of Right Certificate — continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise

Rights represented by the Right Certificate.)

To: VALERO GP HOLDINGS, LLC

     The undersigned hereby irrevocably elects to exercise Rights represented by this Right
Certificate to purchase the Preferred Units issuable upon the exercise of such Rights and requests
that certificates for such Preferred Units be issued in the name of:

Please insert social security

or other identifying number

 

 

(Please print name and address)

 

 

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered in the name of and
delivered to:

Please insert social security

or other identifying number

 

 

(Please print name and address)

 

 

Dated:                                         , 20    .

	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 
	 

	 	Signature	 	 

Signature Guaranteed:

     Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.

Exhibit B - 4

 

Form of Reverse Side of Right Certificate — continued

 

     The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).

	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 
	 

	 	Signature	 	 

NOTICE

     The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.

     In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.

Exhibit B - 5

 

Exhibit C

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED UNITS

     On [               ], 2006, the Board of Directors of Valero GP Holdings, LLC (the
“Company”) declared a distribution of one preferred unit purchase right (a “Right”)
for each outstanding unit representing limited liability company interests (the “Units”),
of the Company. Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a unit of Junior Participating Preferred Units, Series I (the “Preferred
Units”), of the Company at a price of $[    ] per one one-hundredth of a Preferred Unit (the
“Purchase Price”), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, as amended (the “Rights Agreement”), between the Company and
Computershare Investor Services, LLC, as Rights Agent (the “Rights Agent”).

     Until the earlier to occur of (i) 10 days following a public announcement that a person or
group of affiliated or associated persons (an “Acquiring Person”) have acquired beneficial
ownership of 15% or more of the outstanding Units or (ii) 10 business days (or such later date as
may be determined by action of the Board of Directors prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which would result in
the beneficial ownership by a person or group of 15% or more of the outstanding Units (the earlier
of such dates being called the “Distribution Date”), the Rights will be evidenced by
certificates for Units, or by a current ownership statement issued with respect to uncertificated
Units in lieu of such a certificate (an “Ownership Statement”), with a copy of this Summary
of Rights attached thereto.

     The Rights Agreement provides that, until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be transferred with and only with the Units. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new certificates or
Ownership Statements for Units issued after the Record Date upon transfer or new issuance of Units
will contain a notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any
certificates for Units, or the transfer of any Units covered by an Ownership Statement, outstanding
as of the Record Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated with the Units
represented by such certificate or covered by such Ownership Statement. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights (“Right
Certificates”) will be mailed to holders of record of the Units as of the close of business on
the Distribution Date and such separate Right Certificates alone will evidence the Rights.

     The Rights are not exercisable until the Distribution Date. The Rights will expire on [     ], 2016
(the “Final Expiration Date”), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described
below.

Exhibit C - 1

 

     The Purchase Price payable, and the number of Preferred Units or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a unit dividend on, or a subdivision, combination or reclassification
of, the Preferred Units, (ii) upon the grant to holders of the Preferred Units of certain rights or
warrants to subscribe for or purchase Preferred Units at a price, or securities convertible into
Preferred Units with a conversion price, less than the then-current market price of the Preferred
Units or (iii) upon the distribution to holders of the Preferred Units of evidences of indebtedness
or assets (excluding regular periodic cash distributions paid out of earnings or retained earnings
or distributions payable in Preferred Units) or of subscription rights or warrants (other than
those referred to above).

     The number of outstanding Rights and the number of one one-hundredths of a Preferred Unit
issuable upon exercise of each Right are also subject to adjustment in the event of a unit split of
the Units or a unit distribution on the Units payable in Units or subdivisions, consolidations or
combinations of the Units occurring, in any such case, prior to the Distribution Date. Preferred
Units purchasable upon exercise of the Rights will not be redeemable. Each Preferred Unit will be
entitled to a minimum preferential quarterly dividend payment of $[    ] per share but will be
entitled to an aggregate dividend of [    ] times the dividend declared per Unit. In the event of
liquidation, the holders of the Preferred Units will be entitled to a minimum preferential
liquidation payment of $[    ] per share but will be entitled to an aggregate payment of [    ] times
the payment made per Unit. Each Preferred Share will have [    ] votes, voting together with the
Units. Finally, in the event of any merger, consolidation or other transaction in which Units are
exchanged, each Preferred Unit will be entitled to receive [    ] times the amount received per Unit.
These rights are protected by customary antidilution provisions.

     Because of the nature of the Preferred Units’ dividend, liquidation and voting rights, the
value of the one one-hundredth interest in a Preferred Unit purchasable upon exercise of each Right
should approximate the value of one Unit.

     In the event that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold after a person or
group has become an Acquiring Person, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then current exercise
price of the Right, that number of units or shares of common stock, as the case may be, of the
acquiring company which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Units having a market value of
two times the exercise price of the Right.

     At any time after any person or group becomes an Acquiring Person and prior to the acquisition
by such person or group of 50% or more of the outstanding Units, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Unit, or one one-hundredth of a
Preferred Unit (or of a share of a class or series of the Company’s preferred units having
equivalent rights, preferences and privileges), per Right (subject to adjustment).

Exhibit C - 2

 

     With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional Preferred
Units will be issued (other than fractions which are integral multiples of one one-hundredth of a
Preferred Unit, which may, at the election of the Company, be evidenced by depositary receipts) and
in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred
Units on the last trading day prior to the date of exercise.

     At any time prior to the acquisition by a person or group of affiliated or associated persons
of beneficial ownership of 15% or more of the outstanding Units, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $0.01 per Right (the
“Redemption Price”). The redemption of the Rights may be made effective at such time on
such basis with such conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.

     The terms of the Rights may be amended by the Board of Directors of the Company without the
consent of the holders of the Rights, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Units then known to the Company to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%, except that from and after such time as any person
or group of affiliated or associated persons becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights.

     Until a Right is exercised, the holder thereof, as such, will have no rights as a unitholder
of the Company, including, without limitation, the right to vote or to receive distributions.

     A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
Exhibit [    ] to a Registration Statement on Form S-8 filed [               ], 2006 (Registration
No. 333-[     ]). Copies of the Rights Agreement and amendments thereto are available free of
charge from the Company. This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, as amended, which is hereby
incorporated herein by reference.

Exhibit C - 3exv10w01

 

Exhibit 10.01

SUMMARY OF TERMS AND CONDITIONS

Valero GP Holdings, LLC

$20,000,000 3-YEAR SENIOR UNSECURED REVOLVING CREDIT FACILITY

June 2006

I. AMOUNT AND TERMS OF SENIOR UNSECURED REVOLVING CREDIT FACILITY.

	 	 	 	 	 
	Revolving Credit Facility:
	 	 

	 	A revolving credit facility (the “3-Year Facility”).
	 	 	 
	 	 
	Aggregate Amount:
	 	 

	 	Up to $20,000,000.
	 	 	 
	 	 
	Borrower:
	 	 

	 	Valero GP Holdings, LLC, a Delaware limited liability company (the
“Borrower”).
	 	 	 
	 	 
	Co-Lead Arrangers
and Joint Bookrunners:
	 	 

	 	J.P. Morgan Securities Inc. (“JPMSI”) and SunTrust Robinson Humphrey, a
division of SunTrust Capital Markets, Inc. (“SunTrust Capital” and, together
with JPMSI, the “Co-Arrangers”).
	 	 	 
	 	 
	Administrative Agent:
	 	 

	 	JPMorgan Chase Bank, N.A. (“JPMorgan”).
	 	 	 
	 	 
	Syndication Agent:
	 	 

	 	SunTrust Bank.
	 	 	 
	 	 
	Lenders:
	 	 

	 	JPMorgan and SunTrust Bank.
	 	 	 
	 	 
	Effective Date:
	 	 

	 	The date on which the conditions precedent to the initial extension of credit
under the 3-Year Facility are satisfied.
	 	 	 
	 	 
	Termination Date:
	 	 

	 	The third anniversary of the Effective Date.
	 	 	 
	 	 
	Maturity:
	 	 

	 	All Loans outstanding under the 3-Year Facility will mature on the
Termination Date.
	 	 	 
	 	 
	Type of Loans:
	 	 

	 	The full amount of the 3-Year Facility will be made available to the Borrower
in the form of revolving credit loans (“Loans”) for working capital and
general partnership purposes.
	 	 	 
	 	 
	Letters of Credit:
	 	 

	 	A portion of the 3-Year Facility not in excess of $10,000,000 shall be
available for the issuance of letters of credit (the “Letters of Credit”) by
JPMorgan (in such capacity, the “Issuing Lender”). No Letter of Credit shall
have an expiration date after the earlier of (a) one year after the date of
issuance and (b) the date that is five Business Days prior to the Termination Date.

 

 

	 	 	 	 	 
	 	 	 

	 	Each Lender shall purchase a ratable undivided participating interest in any
Letter of Credit and shall fund its portion of each drawing under such Letter
of Credit on the date of such drawing. The payment of a drawing under any
Letter of Credit shall be deemed to be the making of Loans by the Lenders to
the Borrower.
	 	 	 
	 	 
	 	 	 

	 	The Borrower shall pay a letter of credit
commission to JPMorgan for the account of the
Lenders (including JPMorgan), on the drawable
amount of each Letter of Credit at a rate per
annum equal to the Applicable Margin for
Eurodollar Loans under the 3-Year Facility. The
Borrower shall pay a separate letter of credit
commission to the Issuing Lender, for its own
account, on the drawable amount of each Letter of
Credit in an amount equal to 1/8 of 1% per annum.
Such letter of credit commissions shall be
payable quarterly in arrears and on the
Termination Date.
	 	 	 
	 	 
	II. GENERAL PROVISIONS
	 	 
	 	 
	 	 	 
	 	 
	Interest Rate Options:
	 	 

	 	The Borrower may elect that all or a portion of
the Loans bear interest at a rate per annum
equal to either:
	 	 	 
	 	 
	 	 	(a)  

	 	The higher
of (i) the rate from time to time publicly announced
by JPMorgan in New York City as its prime rate and
(ii) the federal funds effective rate from time to
time plus 1/2 of 1% (such higher rate, the
“Alternate Base Rate”) (this rate is not
intended to be the lowest rate charged by JPMorgan to
its borrowers) plus the Applicable Margin (as defined
below); or
	 	 	 
	 	 
	 	 	(b)

	 	The rate
(grossed-up for reserve requirements) equal to the
average of the offered quotations appearing on Page
3750 of the Dow Jones Market Service as of
approximately 11:00 a.m., London time, on the day two
business days prior to the first day of such interest
period for dollar deposits having a term comparable
to such interest period and in an amount comparable
to the principal amount of the eurodollar loan to
which such interest period relates (“Eurodollar
Rate”) plus the Applicable Margin (as defined
below). Interest periods of 1, 2, 3, and 6 months
shall be available.
	 	 	 
	 	 
	Applicable Margin:
	 	 

	 	The Applicable Margin with respect to Loans made pursuant to the 3-Year Facility
and

2

 

	 	 	 	 	 
	 	 	 

	 	bearing interest at a rate based on the Alternate
Base Rate or the Eurodollar Rate at any time
during any quarter shall be the rate per annum as
determined by reference to the pricing grid
attached hereto as Annex I.
	 	 	 
	 	 
	Interest

Payment Dates:
	 	 

	 	In the case of Loans bearing interest based upon the
Alternate Base Rate, quarterly in arrears.
	 	 	 
	 	 
	 	 	 

	 	In the case of Loans bearing interest based upon
the Eurodollar Rate, on the last day of each
relevant interest period and, in the case of any
interest period longer than three months, also on
each successive date three months after the first
day of such interest period.
	 	 	 
	 	 
	Overdue Rate:
	 	 

	 	Overdue principal, interest, fees and other amounts
owing will bear interest at 2% over the rate
otherwise applicable thereto.
	 	 	 
	 	 
	Reserve Requirements

Yield Protection:
	 	 

	 	The rate quoted as the Eurodollar Rate will be
grossed-up for the maximum reserve requirements
prescribed for eurocurrency liabilities. In
addition, the financing agreements will contain
customary provisions relating to (a) increased costs,
capital adequacy protection, withholding and other
taxes and illegality and (b) indemnification of the
Lenders for “breakage costs” incurred in connection
with, among other things, any prepayment of a
Eurodollar Loan on a day other than the last day of
an interest period with respect thereto.
	 	 	 
	 	 
	Facility Fees:
	 	 

	 	The Borrower shall pay a facility fee based on each
Lender’s allocated commitment irrespective of usage
at the applicable rate per annum for the 3-Year
Facility as determined by reference to the pricing
grid attached hereto as Annex I. The facility fees
shall be payable quarterly in arrears commencing with
the Effective Date.
	 	 	 
	 	 
	Utilization Fees:
	 	 

	 	The Borrower shall pay a utilization fee payable on
each Lender’s credit exposure whenever usage under
the 3-Year Facility exceeds 50%, at the applicable
rate per annum for the 3-Year Facility as determined
by reference to the pricing grid attached hereto as
Annex I. The utilization fees shall be payable
quarterly in arrears.
	 	 	 
	 	 
	Rate and Fee Basis:
	 	 

	 	Interest on Alternate Base Rate Loans (to the extent
based on the prime rate) shall be calculated on the
basis of a year of 365 or 366

3

 

	 	 	 	 	 
	 	 	 

	 	days, as the case may be, for actual days
elapsed. All other interest and fees shall be
calculated on the basis of a year of 360 days for
actual days elapsed.
	 	 	 
	 	 
	Optional Reduction

Of Revolving Credit

Commitments:
	 	 

	 	Upon not less than 3 Business Days’ notice,
without premium or penalty, in minimum amounts of
$1,000,000 and to be accompanied by prepayment of
Loans (together with break funding costs, if any)
in excess of the 3-Year Facility commitments as
reduced. Any such optional reductions shall
permanently reduce the 3-Year Facility
commitments.
	 	 	 
	 	 
	Optional

Prepayments:
	 	 

	 	Without premium or penalty, in minimum amounts to
be determined and together with break funding
costs if other than on the last day of an interest
period in the case of Loans bearing interest based
upon the Eurodollar Rate.
	 	 	 
	 	 
	Documentation:
	 	 

	 	The definitive documentation (the “Documentation”)
will be subject to (a) negotiation between the
Administrative Agent, the Co-Arrangers and the
Borrower and (b) the approval of the Lenders.
	 	 	 
	 	 
	Commitment Termination:
	 	 

	 	The commitments of the Lenders shall terminate if
the Documentation, satisfactory to the
Co-Arrangers, the Administrative Agent and its
counsel, shall not have been negotiated, executed
and delivered on or prior to July 31, 2006.
	 	 	 
	 	 
	Certain Conditions:
	 	 

	 	The obligations of the Lenders to make the initial
extensions of credit under the 3-Year Facility
will be conditioned upon satisfaction of
conditions precedent customary for financings of
this type, including, without limitation, the
following:
	 	 	 
	 	 
	 	 	 

	 	(a) The Borrower shall have executed and
delivered the Documentation to which it is
intended to be a party, each satisfactory in form
and substance to the Lenders.
	 	 	 
	 	 
	 	 	 

	 	(b) The Lenders shall have received the audited
consolidated financial statements of Valero L.P.,
a Delaware limited partnership (the
“MLP”), for the year ending 2005 and the
Borrower’s registration statement on Form S-1, as
amended. Such financial statements shall be
prepared in accordance with GAAP and fairly
present the financial condition of the MLP and
its

4

 

	 	 	 	 	 
	 	 	 

	 	consolidated subsidiaries or the Borrower and its
consolidated subsidiaries, as applicable.
	 	 	 
	 	 
	 	 	 

	 	(c) The Lenders shall have received the unaudited
consolidated financial statements of the MLP for
the fiscal quarter ended March 31, 2006. Such
financial statements shall be prepared in
accordance with GAAP and fairly present the
financial condition of the MLP and its
consolidated subsidiaries or the Borrower and its
consolidated subsidiaries, as applicable.
	 	 	 
	 	 
	 	 	 

	 	(d) The Lenders shall have received satisfactory
legal opinions from counsel to the Borrower.
	 	 	 
	 	 
	 	 	 

	 	(e) The Administrative Agent and the Lenders
shall have received all fees and expenses
required to be paid or delivered on or before the
Effective Date.
	 	 	 
	 	 
	 	 	 

	 	(f) The Lenders shall have received satisfactory
evidence of any necessary shareholder, corporate,
limited liability company, and partnership
approvals and as to authority, enforceability and
compliance with law.
	 	 	 
	 	 
	 	 	 

	 	(g) The Lenders shall have received a certificate
of the Borrower certifying as to the matters
described in (a) and (b) of “Conditions to all
Loans” below.
	 	 	 
	 	 
	 	 	 

	 	(h) The Lenders shall have received a copy of the
Borrower’s limited liability company agreement
and the MLP’s partnership agreement (in each
case, together with any and all amendments
thereto) certified by an officer of the Borrower
or the MLP, respectively, to be complete and in
full force and effect.
	 	 	 
	 	 
	 	 	 

	 	(i) The Lenders shall have received such other
corporate documents and other instruments as are
customary for transactions of this type or as
they may reasonably request.
	 	 	 
	 	 
	 	 	 

	 	(j) The Borrower’s initial public offering shall
have been closed.
	 	 	 
	 	 
	Conditions to all Loans:
	 	 

	 	The making of each extension of credit will be conditioned upon (a) all representations
and warranties in the credit documentation (including without limitation, the no
material adverse change and litigation representations) being true and correct and (b)
there being no default or event of default in existence at the

5

 

	 	 	 	 	 
	 	 	 

	 	time of, or after giving effect to the making of, such extension of credit.
	 	 	 
	 	 
	Representations and Warranties:
	 	 

	 	Customary for financings of this type (including customary materiality qualifications)
and substantially similar to the representations and warranties contained in the 5-Year
Revolving Credit Agreement dated as of December 20, 2004 among Valero Logistics
Operations, L.P., the MLP, JPMorgan, as administrative agent, and the other agents and
lenders party thereto (as heretofore amended, the “Valero Logistics Credit Facility”),
including, without limitation, financial condition, material adverse changes, existence,
compliance with law, partnership power and authorization, enforceable obligations, no
legal bar, no material litigation, no defaults, ownership of property, liens,
intellectual property, no burdensome restrictions, taxes, ERISA, Investment Company Act
and other regulations, subsidiaries, environmental matters, accuracy and completeness of
information and partnership and related agreements.
	 	 	 
	 	 
	Affirmative Covenants:
	 	 

	 	Customary for financings of this type (including customary materiality qualifications)
and substantially similar to the Valero Logistics Credit Facility, including, without
limitation, delivery of annual and quarterly financial statements of the MLP, the
Borrower and its subsidiaries, reports, accountants’ letters, officers’ certificates,
compliance certificates and other information requested by the Lenders; notices of
defaults, litigation and material events; payment of taxes and other obligations;
continuation of business and maintenance of existence, rights and privileges; compliance
with contractual obligations and laws; maintenance of property and insurance;
maintenance of books and records; right of the Lenders to inspect property and books and
records; use of proceeds; and environmental compliance and environmental indemnity.
	 	 	 
	 	 
	Financial Covenants:
	 	 

	 	Financial covenants shall include:
	 	 	 
	 	 
	 	 	 

	 	(a) Total Debt to EBITDA Ratio of the MLP and its
subsidiaries as of the last day of each fiscal
quarter (each, a “Calculation Date”),
calculated using Total Debt as of such
Calculation Date and EBITDA for the four most
recent fiscal quarters (each, a “Rolling
Period”), shall not exceed 4.75 to 1.0;
provided that if the MLP or its subsidiaries have
consummated an acquisition for aggregate net
consideration of at

6

 

	 	 	 	 	 
	 	 	 

	 	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 such ratio shall be
increased by 0.5; thereafter, compliance shall be
determined by reverting back to a ratio of 4.75
to 1.0.
	 	 	 
	 	 
	 	 	 

	 	The definition of EBITDA for purposes of
calculating the financial covenant shall be the
same definition used in the Valero Logistics
Credit Facility.
	 	 	 
	 	 
	 	 	 

	 	(b) As of the last day of each fiscal quarter,
the Borrower shall have received an aggregate
cash distribution in respect of its indirect
interests in the MLP of not less than $25,000,000
during the Rolling Period ending on such day.
	 	 	 
	 	 
	Negative Covenants:
	 	 

	 	Customary for financings of this type (including
customary materiality qualifications), including, but
not limited to, limitations on: (a) debt; (b) liens
(other than permitted liens); (c) fundamental changes
(including sales of subsidiaries and substantial
assets); (d) mergers and acquisitions; (e)
liquidations; (f) transactions with affiliates; (g)
changes in business conducted; (h) creation of
subsidiaries; (i) restrictions affecting
subsidiaries’ ability to make transfers, dividends
and loans; (j) hedging transactions; (k) investments
and loans; and (l) distributions on, or purchases or
redemptions of, the capital stock of the Borrower
(other than distributions, so long as no default
exists, to allow the Borrower to make cash
distributions in accordance with its limited
liability company agreement).
	 	 	 
	 	 
	Events of Default:
	 	 

	 	Customary for financings of this type and
substantially similar to (including with respect to
cure periods) the Valero Logistics Credit Facility,
including, without limitation, nonpayment of
principal, interest, fees or other amounts (subject
to a five Business Day cure period for failure to pay
amounts other than principal and reimbursement
obligations), violation of covenants (with cure
periods as to certain covenants), inaccuracy of
representations and warranties, cross-default to
indebtedness of the Borrower and its subsidiaries
(including the MLP) and joint ventures subject to an
aggregate minimum threshold to be agreed upon,
bankruptcy, insolvency, judgments resulting in a
liability not covered by insurance of a minimum
threshold to be agreed upon, ERISA event,

7

 

	 	 	 	 	 
	 	 	 

	 	environmental liability not covered by insurance or discharged in excess of a
minimum threshold to be agreed upon, and Change of Control (as “Change of
Control” is defined below).
	 	 	 
	 	 
	Change of Control:
	 	 

	 	(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 Valero Energy
Corporation, a Delaware corporation, or an entity
that has issued unsecured senior debt that has an
investment grade rating by at least S&P and
Moody’s, becoming the beneficial owner, directly
or indirectly, of more than 50% of the equity
interests in the Borrower.
	 	 	 
	 	 
	 	 	 

	 	“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.
	 	 	 
	 	 
	Assignments & Participations:
	 	 

	 	The Lenders may at any time grant
participations in, or, with the consent of
the Borrower (so long as no default exists),
the Administrative Agent and the Issuing
Lender (in each case not to be unreasonably
withheld), sell, assign or otherwise
transfer loans, commitments and other rights
and duties to one or more other financial
institutions in a minimum amount of
$1,000,000. Participations shall be without
restrictions, and participants will have the
same benefits as the Lenders with respect to
yield protection and increased cost
provisions.
	 	 	 
	 	 
	Governing Law:
	 	 

	 	The 3-Year Facility will be subject to the
laws of the State of New York with the
Borrower submitting to the non-exclusive
jurisdiction of the courts of New York.
Waiver of trial by jury.
	 	 	 
	 	 
	Expense and Indemnification:
	 	 

	 	At closing of the 3-Year Facility, the
Borrower will pay all reasonable
out-of-pocket expense of the Co-Arrangers
and the Administrative Agent incurred in the
preparation, documentation, and syndication,
of the 3-Year Facility and all reasonable
out-of-pocket expense of the Lenders in
connection with the administration

8

 

	 	 	 	 	 
	 	 	 

	 	and enforcement of their rights under and
pursuant to the 3-Year Facility. Should the
3-Year Facility not close, the Borrower will pay
all reasonable legal fees incurred by the
Administrative Agent and the Co-Arrangers in
connection with the preparation, documentation,
and syndication of the 3-Year Facility.
	 	 	 
	 	 
	 	 	 

	 	The Borrower will indemnify, pay and hold
harmless the Administrative Agent and the Lenders
(and their respective directors, officers,
employees and agents) against any loss,
liability, cost or expense incurred in respect
of, relating to or in connection with the
financing contemplated hereby or the use or the
proposed use of proceeds thereof, except any such
liability arising out the gross negligence or
willful misconduct of the indemnified party.
	 	 	 
	 	 
	Required Lenders:
	 	 

	 	Lenders holding more than 50% of the
commitments under the 3-Year Facility.
	 	 	 
	 	 
	Administrative
Administrative Agent’s Counsel:
	 	 

	 	Vinson & Elkins L.L.P.

9

 

Annex I

Pricing Grid 

The 3-Year Facility

Margins and Fees are expressed as basis points

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Euro-Dollar Rate	 	All-in Draw	 	Utilization Fee	 	All-in Drawn
	Rating	 	Facility Fee	 	Margin	 	<50% usage	 	3 50% usage	 	3 50% usage
	>BBB/Baa2
	 	8.00
	 	27.00
	 	35.00
	 	10.00
	 	45.00
	BBB/Baa2
	 	10.00
	 	40.00
	 	50.00
	 	10.00
	 	60.00
	BBB-/Baa3
	 	12.50
	 	50.00
	 	62.50
	 	10.00
	 	72.50
	BB+/Ba1
	 	17.50
	 	57.50
	 	75.00
	 	10.00
	 	85.00
	<BB+/Ba1
	 	20.00
	 	70.00
	 	90.00
	 	10.00
	 	100.00

The Margin applicable to the Alternate Base Rate will be zero.

The applicable ratings level will correspond to the ratings issued from time to time by Moody’s and
S&P on the Borrower’s senior, unsecured, non-credit enhanced debt, or if the Borrower is unrated by
either of Moody’s or S&P, then the applicable ratings level will correspond to the ratings issued
from time to time by Moody’s and S&P on the on the senior, unsecured, non-credit enhanced debt of
Valero Logistics Operations, L.P.

In the event such ratings are split, (a) so long as either or both such ratings are investment
grade or better, the applicable ratings level will be the ratings level corresponding to the higher
of the two ratings and to the extent that there is a rating differential of more than one level,
the applicable ratings level shall be set at one level lower than the ratings level corresponding
to the higher rating and (b) if and so long as both such ratings are below investment grade, the
applicable ratings level will be the ratings level corresponding to the lower of the two ratings
and to the extent that there is a rating differential of more than one level, the applicable
ratings level shall be set at one level higher than the ratings level corresponding to the lower
rating. To the extent that neither the Borrower nor Valero Logistics Operations, L.P. has senior,
unsecured, non-credit enhanced debt, the pricing will be determined in accordance with the ratings
level set forth above for <BB+/Ba1.

10

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