Document:

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                                                                   EXHIBIT 10.1
                                                                 Execution Copy

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                      AMENDED AND RESTATED CREDIT AGREEMENT

                          DATED AS OF DECEMBER 15, 2000

                         AS AMENDED AND RESTATED THROUGH
                                  MARCH 6, 2003

                                      AMONG

                        VALERO LOGISTICS OPERATIONS, L.P.

                            THE LENDERS PARTY HERETO

                                       AND

                              JPMORGAN CHASE BANK,
                             AS ADMINISTRATIVE AGENT

                              ROYAL BANK OF CANADA,
                              AS SYNDICATION AGENT

                  SUNTRUST BANK AND MIZUHO CORPORATE BANK LTD.,
                           AS CO-DOCUMENTATION AGENTS

                          J.P. MORGAN SECURITIES INC.,
                                   AS ARRANGER

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<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                            PAGE
                                                                            ----

                                    ARTICLE I
                                   Definitions

<S>           <C>                                                           <C>
SECTION 1.01. Defined Terms ..................................................1
SECTION 1.02. Classification of Loans and Borrowings ........................18
SECTION 1.03. Terms Generally ...............................................18
SECTION 1.04. Accounting Terms; GAAP ........................................18

                                   ARTICLE II
                                   The Credits

SECTION 2.01. Commitments ...................................................18
SECTION 2.02. Loans and Borrowings ..........................................19
SECTION 2.03. Requests for Borrowings .......................................20
SECTION 2.04. Letters of Credit .............................................21
SECTION 2.05. Funding of Borrowings .........................................24
SECTION 2.06. Interest Elections ............................................25
SECTION 2.07. Termination and Reduction of Commitments ......................26
SECTION 2.08. Repayment of Loans; Evidence of Debt ..........................27
SECTION 2.09. Prepayment of Loans ...........................................27
SECTION 2.10. Fees ..........................................................28
SECTION 2.11. Interest ......................................................29
SECTION 2.12. Alternate Rate of Interest ....................................30
SECTION 2.13. Increased Costs ...............................................30
SECTION 2.14. Break Funding Payments ........................................31
SECTION 2.15. Taxes .........................................................32
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs ...32
SECTION 2.17. Mitigation Obligations; Replacement of Lenders ................34
SECTION 2.18. Procedures Regarding Increases to the Commitments .............35

                                   ARTICLE III
                         Representations and Warranties

SECTION 3.01. Organization; Powers ..........................................37
SECTION 3.02. Authorization; Enforceability .................................37
SECTION 3.03. Governmental Approvals; No Conflicts ..........................37
SECTION 3.04. Financial Condition; No Material Adverse Change ...............38
SECTION 3.05. Properties ....................................................38
SECTION 3.06. Litigation and Environmental Matters ..........................38
SECTION 3.07. Compliance with Laws and Agreements ...........................39
SECTION 3.08. Investment and Holding Company Status .........................39
SECTION 3.09. Taxes .........................................................39
SECTION 3.10. ERISA .........................................................39
SECTION 3.11. Disclosure ....................................................39
SECTION 3.12. Investments and Guarantees ....................................39
</Table>

                                        i
<PAGE>

<Table>
<S>           <C>                                                           <C>
SECTION 3.13. Subsidiaries ..................................................40
SECTION 3.14. Casualties; Taking of Property ................................40

                                   ARTICLE IV
                                   Conditions

SECTION 4.01. Conditions to Restatement .....................................40
SECTION 4.02. Each Credit Event .............................................41

                                    ARTICLE V
                              Affirmative Covenants

SECTION 5.01. Financial Statements and Other Information ....................42
SECTION 5.02. Notices of Material Events ....................................44
SECTION 5.03. Existence; Conduct of Business ................................45
SECTION 5.04. Payment of Obligations ........................................45
SECTION 5.05. Maintenance of Properties; Insurance ..........................45
SECTION 5.06. Books and Records; Inspection Rights ..........................45
SECTION 5.07. Compliance with Laws ..........................................45
SECTION 5.08. Use of Proceeds and Letters of Credit .........................45
SECTION 5.09. Environmental Laws ............................................46
SECTION 5.10. Clean-Down ....................................................46
SECTION 5.11. Subsidiaries ..................................................46

                                   ARTICLE VI
                               Negative Covenants

SECTION 6.01. Indebtedness ..................................................47
SECTION 6.02. Liens .........................................................47
SECTION 6.03. Fundamental Changes ...........................................48
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions .....48
SECTION 6.05. Hedging Agreements ............................................49
SECTION 6.06. Restricted Payments ...........................................49
SECTION 6.07. Transactions with Affiliates ..................................49
SECTION 6.08. Restrictive Agreements ........................................49
SECTION 6.09. Limitation on Modifications of Other Agreements ...............50
SECTION 6.10. Creation of Subsidiaries ......................................50
SECTION 6.11. Financial Condition Covenants .................................50

                                   ARTICLE VII
                                Events of Default

                                  ARTICLE VIII
                            The Administrative Agent

                                   ARTICLE IX
                                  Miscellaneous

SECTION 9.01. Notices .......................................................55
SECTION 9.02. Waivers; Amendments ...........................................55
SECTION 9.03. Expenses; Indemnity; Damage Waiver ............................56
</Table>

                                       ii
<PAGE>

<Table>
<S>             <C>                                                         <C>
  SECTION 9.04. Successors and Assigns ......................................57
  SECTION 9.05. Survival ....................................................59
  SECTION 9.06. Counterparts; Integration; Effectiveness ....................60
  SECTION 9.07. Severability ................................................60
  SECTION 9.08. Right of Setoff .............................................60
  SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process ..60
  SECTION 9.10. WAIVER OF JURY TRIAL ........................................61
  SECTION 9.11. Headings ....................................................61
  SECTION 9.12. Confidentiality .............................................61
  SECTION 9.13. Interest Rate Limitation ....................................62
  SECTION 9.14. Limitation of Liability .....................................62
</Table>

SCHEDULES:

Schedule 2.01 -  Commitments
Schedule 3.06 -  Disclosed Matters
Schedule 6.07 -  Affiliate Agreements
Schedule 6.08 -  Existing Restrictions

EXHIBITS:

Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C-1 - Form of MLP Guaranty Agreement
Exhibit C-2 - Form of Subsidiary Guaranty Agreement
Exhibit D-1 - Form of Initial Notice of Commitment Increase
Exhibit D-2 - Form of Notice of Confirmation of Commitment Increase

                                      iii
<PAGE>

         CREDIT AGREEMENT dated as of December 15, 2000 as amended and restated
through March 6, 2003, among VALERO LOGISTICS OPERATIONS, L.P., a Delaware
limited partnership formerly known as Shamrock Logistics Operations, L.P., the
LENDERS party hereto, JP MORGAN CHASE BANK, formerly known as The Chase
Manhattan Bank, as Administrative Agent, ROYAL BANK OF CANADA, as Syndication
Agent (the "Syndication Agent"), and SUNTRUST BANK and MIZUHO CORPORATE BANK
LTD., as Co-Documentation Agents (the "Co-Documentation Agents").

         The parties hereto agree as follows:

                                    ARTICLE I
                                   Definitions

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

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

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

         "Administrative Agent" means JPMorgan Chase Bank, formerly known as The
Chase Manhattan Bank, in its capacity as administrative agent for the Lenders
hereunder.

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

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

         "Agreement" means this Credit Agreement, dated as of December 15, 2000,
as amended and restated through March 6, 2003 among the Borrower, the Lenders,
the Administrative Agent, the Syndication Agent, and the Co-Documentation
Agents, as the same may be amended, waived or otherwise modified from time to
time in accordance herewith.

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

         "Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated

<PAGE>

or expired, the Applicable Percentages shall be determined based upon the
Commitments most recently in effect, giving effect to any assignments.

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

<Table>
<Caption>
      INDEX DEBT RATINGS:          ABR SPREAD      EURODOLLAR SPREAD    FACILITY FEE RATE
      -------------------          ----------      -----------------    -----------------
<S>                                <C>             <C>                  <C>

             Tier 1

Greater than or equal to BBB/Baa2      0.00%              0.950%              0.300%

             Tier 2

Equal to BBB-/Baa3                     0.00%              1.125%              0.375%

             Tier 3

Less than BBB-/Baa3                   0.250%              1.250%              0.500%
</Table>

For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for the Index Debt (after having established such a rating and
other than by reason of the circumstances referred to in the last sentence of
this definition), then such rating agency shall be deemed to have established a
rating in Tier 3; (ii) if both Moody's and S&P have established a rating for the
Index Debt and such ratings established or deemed to have been established by
Moody's and S&P shall fall within different Tiers, the Applicable Rate shall be
based on the higher of the two ratings unless one of the two ratings is two or
more Tiers lower than the other, in which case the Applicable Rate shall be
determined by reference to the Tier next below that of the higher of the two
ratings; and (iii) if the ratings established or deemed to have been established
by Moody's and S&P for the Index Debt shall be changed (other than as a result
of a change in the rating system of Moody's or S&P), such change shall be
effective as of the date on which it is first announced by the applicable rating
agency. Each change in the Applicable Rate shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the rating
system of Moody's or S&P shall change, or if either such rating agency shall
cease to be in the business of rating corporate debt obligations, the Borrower
and the Lenders shall negotiate in good faith to amend this definition to
reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Rate shall be determined by reference to the rating most recently in
effect prior to such change or cessation.

         "Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and

                                       2
<PAGE>

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

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

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

         "Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

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

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

         "Borrower" means Valero Logistics Operations, L.P., a Delaware limited
partnership, formerly known as Shamrock Logistics Operations, L.P.

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

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

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

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

                                       3
<PAGE>

         "Change in Control" means any of the following events:

                  (a) (i) Valero shall cease, indirectly or directly, to own at
least 51% of the issued and outstanding Equity Interests of, or shall cease to
Control, the general partner(s) of the MLP, or (ii) 100% (and not less than
100%) of the issued and outstanding Equity Interest of the general partner(s) of
the Borrower shall cease to be owned, directly or indirectly, or the Borrower
shall cease to be Controlled, by Valero and/or the MLP;

                  (b) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), excluding Valero and its Wholly-Owned Subsidiaries, shall
become, or obtain rights (whether by means of warrants, options or otherwise) to
become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under
the Exchange Act), directly or indirectly, of twenty percent or more of the
outstanding voting Units; or

                  (c) 100% (and not less than 100%) of the limited partnership
interests of the Borrower shall cease to be owned in the aggregate, directly or
indirectly, by the MLP and/or Valero.

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

         "Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are General Revolving
Loans or Working Capital Revolving Loans.

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

         "Commitment" means, with respect to each Lender, such Lender's General
Revolving Commitment and Working Capital Revolving Sub-Commitment. As of the
Restatement Effective Date, the aggregate amount of the Lenders' Commitments is
$175,000,000. The Working Capital Revolving Sub-Commitments are a subset of the
General Revolving Commitments and the maximum amount of the Commitments is equal
to the maximum amount of the General Revolving Commitments.

         "Commitment Increase Effective Date" has the meaning assigned such term
in Section 2.18.

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

                                       4
<PAGE>

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

         "Consolidated EBITDA" means, without duplication, as to the Borrower
and its Subsidiaries, on a consolidated basis for each Rolling Period, the
amount equal to Consolidated Operating Income for such period plus (a)
depreciation and amortization for such period, and (b) cash distributions
received by the Borrower from Skelly-Belvieu Pipeline Company, and similar joint
ventures, during such period; provided that Consolidated EBITDA shall be
adjusted from time to time as necessary to give pro forma effect to permitted
acquisitions or Investments (other than Joint Venture Interests) or sales of
property by the Borrower and its Subsidiaries.

         "Consolidated Interest Coverage Ratio" means, for any day, the ratio of
(i) Consolidated EBITDA for the then most recent Rolling Period to (ii)
Consolidated Interest Expense for such Rolling Period.

         "Consolidated Interest Expense" means, for any Rolling Period, total
interest expense (including that attributable to Capital Lease Obligations) of
the Borrower and its Subsidiaries for such period with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and net
costs under any Hedging Agreements to the extent such net costs are allocable to
such period in accordance with GAAP).

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

         "Consolidated Tangible Net Worth" means, at any time, an amount equal
to (a) the consolidated partners' equity of the Borrower and its Subsidiaries,
plus (b) the aggregate amount of any non-cash write downs, on a consolidated
basis, of the Borrower and its Subsidiaries during the term hereof, less (c) the
sum of the amount of consolidated intangible assets of the Borrower and its
Subsidiaries as of the date of determination plus the aggregate amount of any
non-cash write ups, on a consolidated basis, of the Borrower and its
Subsidiaries during the term hereof.

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

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

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

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

                                       5
<PAGE>

         "Environmental Approvals" means any Governmental Approvals required
under applicable Environmental Laws.

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

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

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

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

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

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

                                       6
<PAGE>

or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan
from the Borrower or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

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

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

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

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

         "Financial Officer" means the chief accounting and financial officer,
treasurer or controller of the Borrower.

         "First Amendment" means that certain First Amendment to Credit
Agreement, dated as of February 23, 2001, by and among the Borrower, the Lenders
(as defined in the Original Agreement) party thereto, the Administrative Agent
(as defined in the Original Agreement), Royal Bank of Canada, as syndication
agent, and SunTrust Bank, as documentation agent.

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

                                       7
<PAGE>

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

         "General Partner" means Valero GP, Inc., a Delaware corporation.

         "General Partner Interest" means all general partner interests in the
Borrower.

         "General Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender to make General Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's General Revolving
Credit Exposure hereunder, as such commitment may be (a) reduced from time to
time pursuant to Section 2.07, (b) increased from time to time pursuant to
Section 2.18 and (c) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The amount of each
Lender's General Revolving Commitment as of the Restatement Effective Date is
set forth on Schedule 2.01, or the initial amount of each assignee Lender is set
forth in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its General Revolving Commitment, as applicable. The aggregate amount of
the Lenders' General Revolving Commitments as of the Restatement Effective Date
is $175,000,000.

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

         "General Revolving Loan" has the meaning assigned to such term in
Section 2.01(b).

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

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

         "Guarantor" means each of the MLP and each Person that from time to
time executes and delivers a Subsidiary Guaranty.

                                       8
<PAGE>

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

         "Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.

         "Increasing Lender" has the meaning assigned to such term in Section
2.18.

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

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Indenture" means the Indenture, dated as of July 15, 2002, between the
Borrower, as Issuer, the MLP, as Guarantor, and The Bank of New York, as
Trustee, relating to the issuance

                                       9
<PAGE>

of senior debt securities, as amended, modified and supplemented from time to
time in accordance herewith.

         "Index Debt" means senior, unsecured, long-term indebtedness for
borrowed money of the Borrower that is not guaranteed by any other Person or
subject to any other credit enhancement.

         "Information Memorandum" means the Confidential Information Memorandum
dated December 2002 relating to the Borrower and the Transactions.

         "Initial Notice of Commitment Increase" has the meaning assigned to
such term in Section 2.18.

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

         "Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.

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

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

         "Issuing Bank" means JPMorgan Chase Bank, in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity as provided
in Section 2.04(i). The Issuing

                                       10
<PAGE>

Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of the Issuing Bank, in which case the term "Issuing Bank"
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.

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

         "LC Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.

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

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

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

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

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

         "Loan" means each General Revolving Loan or each Working Capital
Revolving Loan.

                                       11
<PAGE>

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

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

         "Material Agreements" means the Partnership Agreement (Borrower), the
Transportation Agreement, the Omnibus Agreement, and the Indenture as each such
agreement may be amended, supplemented or otherwise modified from time to time
as permitted hereby.

         "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower and its Subsidiaries in an aggregate
principal amount exceeding $10,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of the Borrower or any
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.

         "Maturity Date" means January 15, 2006.

         "MLP" means Valero, L.P., a Delaware limited partnership formerly known
as Shamrock Logistics, L.P.

         "MLP Guaranty" means the Guarantee made by the MLP in favor of the
Administrative Agent for the benefit of the Lenders, substantially in the form
of Exhibit C-1 hereto, as the same may be amended, supplemented or otherwise
modified from time to time.

         "Moody's" means Moody's Investors Service, Inc. (or any successor
rating organization).

         "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

         "New Funds Amount" means the amount by which a New Lender's or an
Increasing Lender's outstanding Loans increase as of a Commitment Increase
Effective Date (without regard to any such increase as a result of Borrowings
made on such Commitment Increase Effective Date).

         "New Lender" has the meaning assigned to such term in Section 2.18.

         "Non-U.S. Subsidiary" means any Subsidiary organized under the laws of
any jurisdiction outside of the United States of America.

                                       12
<PAGE>

         "Notice of Confirmation of Commitment Increase" has the meaning
assigned to such term in Section 2.18.

         "Omnibus Agreement" means the Omnibus Agreement among Valero (as
successor by merger to UDS), the General Partner, the MLP and the Borrower in
the form previously provided to the Lenders, as amended, modified and
supplemented from time to time in accordance herewith.

         "Original Agreement" means the Credit Agreement, dated as of December
15, 2000, by and among Shamrock Logistics Operations, L.P., the Lenders (as
defined therein) party thereto, The Chase Manhattan Bank, as Administrative
Agent, Royal Bank of Canada, as syndication agent, and SunTrust Bank, as
documentation agent, as amended by the First Amendment and the Second Amendment.

         "Original Agreement Date" means December 15, 2000.

         "Original Effective Date" means the date on which the conditions
specified in Section 4.01 of the Original Agreement were satisfied (or waived in
accordance with Section 9.02).

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

         "Partially Increasing Lender" has the meaning assigned to such term in
Section 2.18.

         "Partnership Agreement (Borrower)" means the Agreement of Limited
Partnership of the Borrower among the General Partner and the MLP in the form
previously provided to the Lenders, as amended, modified and supplemented from
time to time in accordance herewith.

         "Partnership Agreement (MLP)" means the Amended and Restated Agreement
of Limited Partnership of the MLP among its general partner and Todd Walker, as
the organizational limited partner, together with any other Persons who become
partners in such partnership, as amended, modified and supplemented from time to
time in accordance herewith.

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

         "Permitted Encumbrances" means:

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

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

                                       13
<PAGE>

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

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

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

                  (f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Subsidiary;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

         "Permitted Investments" means:

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

                  (b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody's;

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

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

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

         "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were

                                       14
<PAGE>

terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.

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

         "Reducing Lender" has the meaning assigned to such term in Section
2.18.

         "Reduction Amount" means the amount by which a Reducing Lender's or a
Partially Increasing Lender's outstanding Loans decrease as of a Commitment
Increase Effective Date (without regard to any such increase as a result of
Borrowings made on such Commitment Increase Effective Date).

         "Refinery Assets" means the refineries and related assets of Valero or
its Affiliates commonly referred to as the McKee, Three Rivers and Ardmore
refineries.

         "Register" has the meaning set forth in Section 9.04.

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

         "Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing at least 66 2/3% of the sum of the
total Revolving Credit Exposures and unused Commitments at such time.

         "Restatement Agreement Date" means March 6, 2003.

         "Restatement Effective Date" means the date on which the conditions set
forth in Section 4.01 are first satisfied or waived, which shall occur on or
prior to March 6, 2003.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property, with the exception of a Unit split,
combination, or dividend, in each case so long as the only consideration paid in
connection therewith is an in-kind payment of additional Units) with respect to
any Equity Interest of the Borrower or any Subsidiary, or any payment (whether
in cash, securities or other property, with the exception of a Unit split,
combination, or dividend, in each case so long as the only consideration paid in
connection therewith is an in-kind payment of additional Units), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such Equity Interest
of the Borrower or any option, warrant or other right to acquire any such Equity
Interest of the Borrower.

         "Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Working
Capital Revolving Loans and its General Revolving Credit Exposure at such time.

                                       15
<PAGE>

         "Rolling Period" means any period of four consecutive fiscal quarters.

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

         "Second Amendment" means that certain Second Amendment to Credit
Agreement, dated as of May 21, 2002, by and among the Borrower, the Lenders (as
defined in the Original Agreement), the Administrative Agent, Royal Bank of
Canada, as syndication agent and SunTrust Bank, as documentation agent.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months, in
the case of the Base CD Rate, and (b) with respect to the Adjusted LIBO Rate,
for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

         "Subordinated Units" means the subordinated units of limited partner
interests in the MLP.

         "Subsidiary Guaranty" means any guaranty executed and delivered
pursuant to Section 5.11, as from time to time amended, modified, or
supplemented.

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

         "Subsidiary" means any subsidiary of the Borrower; provided that the
Skelly-Belvieu Pipeline Company shall not be a Subsidiary.

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

                                       16
<PAGE>

         "Transactions" means the execution, delivery and performance by the
Borrower of the Original Agreement, this Agreement, the borrowing of Loans, the
use of the proceeds thereof and the issuance of Letters of Credit hereunder, and
the execution, delivery and performance of the Subsidiary Guaranty (if any).

         "Transportation Agreement" means the Pipeline and Terminals Usage
Agreement by and among UDS and certain of its Affiliates and the Borrower dated
effective July 1, 2000.

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

         "UDS" means Ultramar Diamond Shamrock Corporation, a Delaware
corporation.

         "Units" means the collective reference to the Common Units and the
Subordinated Units.

         "Valero" means Valero Energy Corporation, a Delaware corporation.

         "Valero Asset Transaction" means a single aggregate transaction
consummated on or before the 60th day after the Restatement Effective Date,
whereby the Borrower will incur Loans and other Indebtedness some or all of the
proceeds of which will be used to make Restricted Payments to the MLP, the MLP
will raise cash through a public offering of Common Units, and the MLP will use
the proceeds of such Restricted Payments and such offering to redeem certain
Common Units and to enable the Borrower to have assets contributed to it by
Valero or its Affiliates. The Valero Asset Transaction must meet the following
criteria: (a) before and after such transaction, no Default shall have occurred
or be continuing or would result therefrom, (b) the transaction shall be at
prices and on terms and conditions no less favorable to the Borrower than could
be obtained on an arms length basis from unrelated third parties, (c) the Loans
incurred in connection with such transaction shall not exceed $100,000,000, (d)
the fair market value of assets contributed to the Borrower or its Subsidiaries
pursuant to such transaction must equal or exceed the amount of the Restricted
Payments made by the Borrower in connection with such transaction, and (e) the
public offering of Common Units pursuant to the transaction will be completed
prior to or simultaneously with the redemption of Common Units pursuant to the
transaction.

         "Wholly-Owned Subsidiary" means, in respect of any Person, any
subsidiary of such Person, all of the Equity Interests of which (other than
director's qualifying shares, as may be required by law) is owned by such
Person, either directly or indirectly through one or more Wholly-Owned
Subsidiaries of such Person.

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

         "Working Capital Revolving Sub-Commitment" means, with respect to each
Lender, the commitment of such Lender to make Working Capital Revolving Loans
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Working Capital Loans hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.07, (b) reduced or increased
from time to time pursuant to Section 2.18, and (c) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04. The initial aggregate amount of the Lenders' Working Capital Revolving
Sub-Commitments is $40,000,000. The Working Capital Revolving Sub-Commitments
are a subset of the General Revolving Commitments and the aggregate amount of
the Commitments is equal

                                       17
<PAGE>

to the aggregate amount of the total General Revolving Commitments. Each
Lender's Working Capital Revolving Sub-Commitment shall be pro rata to its
Applicable Percentage of the total Commitments.

         "Working Capital Revolving Loan" has the meaning assigned to such term
in Section 2.01.

         SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"General Revolving Loan") or by Type (e.g., a "Eurodollar Loan"). Borrowings
also may be classified and referred to by Class (e.g., a "General Revolving
Borrowing") or by Type (e.g., a "Eurodollar Borrowing").

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

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

                                   ARTICLE II
                                   The Credits

         SECTION 2.01. Commitments. (a) Subject to the terms and conditions set
forth herein, each Lender agrees to make revolving credit loans (the "General
Revolving Loans") to the

                                       18
<PAGE>

Borrower from time to time during the Availability Period, in an aggregate
principal amount that will not result in (i) such Lender's Revolving Credit
Exposure exceeding such Lender's General Revolving Commitment or (ii) the sum of
the total Revolving Credit Exposures exceeding the total General Revolving
Commitments.

                  (b) Subject to the terms and conditions set forth herein,
including, without limitation, Section 5.08, each Lender agrees to make
revolving credit loans (the "Working Capital Revolving Loans") to the Borrower
from time to time during the Availability Period, in an aggregate principal
amount that will not result in (i) such Lender's Working Capital Revolving Loans
exceeding such Lender's Working Capital Revolving Sub-Commitment, (ii) the sum
of the total Working Capital Revolving Loans exceeding the total Working Capital
Revolving Sub-Commitments, or (iii) the sum of the total Revolving Credit
Exposure exceeding the total General Revolving Commitments.

                  (c) The Working Capital Revolving Sub-Commitment of each
Lender constitutes a subset of such Lender's General Revolving Commitment such
that the availability of (i) the General Revolving Commitment of such Lender
shall be reduced by the outstanding principal amount of such Lender's Working
Capital Revolving Loans as of the time of determination and (ii) the Working
Capital Revolving Sub-Commitment of each Lender shall be reduced by the amount,
if any, by which (A) the outstanding principal amount of such Lender's General
Revolving Credit Exposure as of the time of determination exceeds (B) the amount
equal to such Lender's General Revolving Commitment minus such Lender's Working
Capital Revolving Sub-Commitment. The sum of the total Revolving Credit
Exposures shall not exceed at any time the total General Revolving Commitments.

                  (d) Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans
during the Availability Period.

         SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part
of a Borrowing comprised entirely of General Revolving Loans or Working Capital
Revolving Loans as the Borrower may request in accordance herewith and made by
the Lenders ratably in accordance with their respective Commitments. The failure
of any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.

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

                  (c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000. At the time that
each ABR Borrowing is made, such

                                       19
<PAGE>

Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $1,000,000; provided that an ABR Borrowing may be in
an aggregate amount that is equal to (i) with respect to Working Capital
Revolving Borrowings, the entire unused and available balance of the Working
Capital Revolving Sub-Commitments, (ii) with respect to General Revolving
Borrowings, (A) the total General Revolving Commitments less total Revolving
Credit Exposure, or (B) the amount that is required to finance the reimbursement
of an LC Disbursement as contemplated by Section 2.04(e). Borrowings of more
than one Type and Class may be outstanding at the same time; provided that there
shall not at any time be more than a total of five Eurodollar Borrowings
outstanding.

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

         SECTION 2.03. Requests for Borrowings. To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before the date of the proposed Borrowing; provided that any such
notice of an ABR Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.04(e) may be given not later than 10:00 a.m., New York
City time, on the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:

                           (i) the aggregate amount of the requested Borrowing;

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

                           (iii) whether such Borrowing is to be comprised of
Working Capital Revolving Loans or General Revolving Loans;

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

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

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

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no election as to the Class of Borrowing
is specified, then the requested Borrowing shall be a General Revolving
Borrowing. If no Interest Period is specified with respect to any requested
Eurodollar Borrowing, then the Borrower shall be deemed to have

                                       20
<PAGE>

selected an Interest Period of one month's duration. Promptly following receipt
of a Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.

         SECTION 2.04. Letters of Credit.

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

                  (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. If requested by the Issuing Bank, the Borrower
also shall submit a letter of credit application on the Issuing Bank's standard
form in connection with any request for a Letter of Credit. A Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the LC Exposure shall not exceed $75,000,000
and (ii) the sum of the total Revolving Credit Exposures shall not exceed the
total General Revolving Commitments.

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

                  (d) Participations. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Lender, and each Lender hereby acquires from the
Issuing Bank, a participation in such Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage
of each LC Disbursement made by the Issuing Bank and not reimbursed by the
Borrower on the date due as provided in paragraph (e) of this Section,

                                       21
<PAGE>

or of any reimbursement payment required to be refunded to the Borrower for any
reason. Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

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

                  (f) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance

                                       22
<PAGE>

whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.

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

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

                  (i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced

                                       23
<PAGE>

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

                  (j) Cash Collateralization. If any Event of Default shall
occur and be continuing, on the Business Day that the Borrower receives notice
from the Administrative Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Lenders with LC Exposure representing greater
than 66 2/3% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in clause (h) or (i) of Article VII. Such deposit shall be
held by the Administrative Agent as collateral for the payment and performance
of the obligations of the Borrower under this Agreement. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Administrative Agent and at the Borrower's risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in such account. Moneys in such account shall
be applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 66 2/3% of the total LC Exposure), be applied to
satisfy other obligations of the Borrower under this Agreement. If the Borrower
is required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived.

         SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New

                                       24
<PAGE>

York City and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.04(e) shall be remitted by the Administrative Agent to
the Issuing Bank.

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

         SECTION 2.06. Interest Elections. (a) Each Borrowing initially shall be
of the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.

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

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

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

                                       25
<PAGE>

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

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

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

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

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

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

         SECTION 2.07. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.

                  (b) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $1,000,000 and
not less than $5,000,000, (ii) any such reduction shall apply only to the
General Revolving Commitments until such time that the amount of the General
Revolving Commitments equals the amount of the Working Capital Revolving
Sub-Commitments and, thereafter, shall reduce both the General Revolving
Commitments and the Working Capital Revolving Sub-Commitments, and (iii) the
Borrower shall not terminate or reduce the Commitments if, after giving effect
to any concurrent prepayment of the Loans in accordance with Section 2.09, the
sum of the Revolving Credit Exposures would exceed the total Commitments.

                  (c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments

                                       26
<PAGE>

delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments shall be permanent. Each reduction
of the Commitments shall be made ratably among the Lenders in accordance with
their respective Commitments.

         SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan on the
Maturity Date.

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

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

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

                  (e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
an increase in such Lender's Commitment pursuant to Section 2.18 or an increase
or reduction in such Lender's Commitment pursuant to an assignment pursuant to
Section 9.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).

         SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section.

                  (b) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days

                                       27
<PAGE>

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

         SECTION 2.10. Fees. (a) The Borrower agrees to pay the Administrative
Agent for the account of each Lender a facility fee which shall accrue at the
Applicable Rate on the daily amount of the Commitments of such Lender (whether
used or unused) during the period from and including the Restatement Effective
Date to but excluding the date on which such Commitment terminates; provided
that, if such Lender continues to have any Revolving Credit Exposure after its
Commitment terminates, then such facility fee shall continue to accrue on the
daily amount of such Lender's Revolving Credit Exposure from and including the
date on which its Commitment terminates to but excluding the date on which such
Lender ceases to have any Revolving Credit Exposure. Accrued facility fees shall
be payable in arrears on the last day of March, June, September and December of
each year and on the date on which the Commitments terminate, commencing on the
first such date to occur after the Original Agreement Date; provided that any
facility fees accruing after the date on which the Commitments terminate shall
be payable on demand. All facility fees shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

                  (b) The Borrower agrees to pay (i) to the Administrative Agent
for the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as that applicable to Eurodollar loans on the average daily amount of such
Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) during the period from and including the Restatement Effective
Date to but excluding the later of the date on which such Lender's Commitment
terminates and the date on which such Lender ceases to have any LC Exposure, and
(ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of
0.125% per annum on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Original Effective Date to but excluding the later of the
date of termination of the Commitments and the date on which there ceases to be
any LC Exposure, as well as the Issuing Bank's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Original Effective Date; provided that all
such fees shall be payable on the date on which the Commitments

                                       28
<PAGE>

terminate and any such fees accruing after the date on which the Commitments
terminate shall be payable on demand. Any other fees payable to the Issuing Bank
pursuant to this paragraph shall be payable within 10 days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).

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

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

         SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus the Applicable Rate.

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

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

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

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

                                       29
<PAGE>

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

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

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

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

         SECTION 2.13. Increased Costs. (a) If any Change in Law shall:

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

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

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

                  (b) If any Lender or the Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or the Issuing Bank's capital or on
the capital of such Lender's or the Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company could have achieved but for such
Change in Law (taking into consideration such Lender's or the Issuing Bank's
policies and the policies of such Lender's

                                       30
<PAGE>

or the Issuing Bank's holding company with respect to capital adequacy), then
from time to time the Borrower will pay to such Lender or the Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company for any such reduction suffered.

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

                  (d) Failure or delay on the part of any Lender or the Issuing
Bank to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender or the
Issuing Bank pursuant to this Section for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender or the Issuing
Bank, as the case may be, notifies the Borrower of the Change in Law giving rise
to such increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.

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

                                       31
<PAGE>

         SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.

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

                  (c) The Borrower shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrower
hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent manifest error.

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

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

         SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.13, 2.14 or 2.15, or
otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All

                                       32
<PAGE>

such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York, except payments to be made directly to the
Issuing Bank as expressly provided herein and except that payments pursuant to
Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.

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

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

                  (d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the

                                       33
<PAGE>

Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrower has not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

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

         SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

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

                                       34
<PAGE>

         SECTION 2.18. Procedures Regarding Increases to the Commitments. (a) So
long as no Default or Event of Default has occurred and is continuing, the
Borrower may request from time to time, subject to the terms and conditions
hereinafter set forth, that the aggregate amount of the Lenders' Commitments be
increased. Any such request shall be made by written notice to the
Administrative Agent; provided, however, that any such notice must be given no
later than 60 days prior to the Maturity Date. Each such notice (a "Initial
Notice of Commitment Increase") shall be in the form of Exhibit D-1 and specify
therein:

                           (i) the proposed effective date of such increase,
which date (the requested "Commitment Increase Effective Date") shall be no
earlier than forty-five days after receipt by the Administrative Agent of such
notice; and

                           (ii) the amount of the requested increase; provided,
however, that (A) such increase must be at least $10,000,000, (B) after giving
effect to such requested increase, the aggregate amount of the Lenders'
Commitments shall not exceed $225,000,000, (C) such increase shall be applied in
full to the General Revolving Commitments, and (D) the aggregate amount of the
Working Capital Revolving Sub-Commitments, which are a subset of the General
Revolving Commitments, shall not change (notwithstanding that the Working
Capital Revolving Sub-Commitment of a given Lender may change pursuant to the
last sentence of the definition of "Working Capital Revolving Sub-Commitment"
herein).

The Administrative Agent shall deliver a copy of such Initial Notice of
Commitment Increase to each Lender via facsimile transmission on or before the
third Business Day next succeeding the date the Administrative Agent receives
such Initial Notice of Commitment Increase. After receipt of the Initial Notice
of Commitment Increase, each Lender shall determine, in its sole discretion,
whether to participate, and to what extent, if any, in such Commitment increase
and shall communicate such decision in writing to the Administrative Agent and
the Borrower on or before the eleventh day prior to the proposed Commitment
Increase Effective Date.

                  (b) On the tenth day prior to the proposed Commitment Increase
Effective Date, so long as no Default or Event of Default has occurred and is
continuing, the Borrower shall deliver to the Administrative Agent a written
notice confirming the requested increase in the aggregate amount of the Lenders'
Commitments. Each such notice (a "Notice of Confirmation of Commitment
Increase") shall be in the form of Exhibit D-2 and specify therein:

                           (i) the proposed Commitment Increase Effective Date,
which date shall be no earlier than five Business Days after receipt by the
Administrative Agent of such Notice of Confirmation of Commitment Increase;

                           (ii) the amount of the requested increase; provided,
however, that (A) such increase must be at least $10,000,000, (B) after giving
effect to such requested increase, the aggregate amount of the Lenders'
Commitments shall not exceed $225,000,000, (C) such increase shall be applied in
full to the General Revolving Commitments, and (D) the aggregate amount of the
Working Capital Revolving Sub-Commitments, which are a subset of the General
Revolving Commitments, shall not change (notwithstanding that the Working
Capital Revolving Sub-Commitment of a given Lender may change pursuant to the
last sentence of the definition of "Working Capital Revolving Sub-Commitment"
herein);

                                       35
<PAGE>

                           (iii) the identity of each of the then Lenders, if
any, which has agreed with the Borrower to increase its Commitment in an amount
such that its Applicable Percentage after giving effect to such requested
increase will be the same or greater than its Applicable Percentage prior to
giving effect to such requested increase (each such Lender being an "Increasing
Lender"), each of the other then Lenders, if any, which has agreed to increase
its Commitment in an amount such that its Applicable Percentage after giving
effect to such a requested increase will be less than its Applicable Percentage
prior to giving effect to such requested increase (each such Lender being a
"Partially Increasing Lender") and the identity of each financial institution
not already a Lender, if any, which has agreed with the Borrower to become a
Lender to effect such requested increase in the aggregate amount of the Lenders'
Commitments (each such financial institution shall be reasonably acceptable to
the Administrative Agent and each such financial institution being a "New
Lender" and each of the other then Lenders, if any, which has not agreed to
increase its Commitment being a "Reducing Lender"); and

                           (iv) the amount of the respective Commitments of the
then existing Lenders, such Increasing Lenders, such Partially Increasing
Lenders, such Reducing Lenders and such New Lenders from and after the effective
date of such increase.

                  (c) On or before each Commitment Increase Effective Date:

                           (i) the Borrower, each Increasing Lender, each
Partially Increasing Lender and each then New Lender shall execute and deliver
to the Administrative Agent for its acceptance, as to form, documentation
embodying the provisions of the Notice of Commitment Increase relating to the
increase in the aggregate amount of the Lenders' Commitments to be effected on
such Commitment Increase Effective Date; and

                           (ii) upon acceptance of such documentation by the
Administrative Agent, which acceptance shall not be unreasonably withheld, and
so long as no Default or Event of Default has occurred and is continuing, (A)
the Administrative Agent shall give prompt notice of such acceptance to each
Lender, (B) it shall become effective, and each Increasing Lender's and
Partially Increasing Lender's Commitment shall be increased to the amount
specified therein, on such Commitment Increase Effective Date and (C) the
Administrative Agent shall record each New Lender's information in the Register.

                  (d) On each Commitment Increase Effective Date:

                           (i) each then New Lender and each then Increasing
Lender shall, by wire transfer of immediately available funds, deliver to the
Administrative Agent such Lenders' New Funds Amount for such Commitment Increase
Effective Date, which amount, for each such Lender, shall constitute Loans made
by such Lender to the Borrower pursuant to Section 2.01 on such Commitment
Increase Effective Date; and

                           (ii) the Administrative Agent shall, by wire transfer
of immediately available funds, pay to each then Reducing Lender and to each
Partially Increasing Lender its Reduction Amount for such Commitment Increase
Effective Date, which amount, for each such Lender, shall constitute a
prepayment by the Borrower pursuant to Section 2.09, ratably in

                                       36
<PAGE>

accordance with the respective principal amounts thereof, of the principal
amounts of all then outstanding Loans of such Lender.

The Administrative Agent shall record each then New Lender's, each then
Increasing Lender's and each then Partially Increasing Lender's information in
the Register. Also effective as of each Commitment Increase Effective Date, each
then New Lender and each then Increasing Lender shall be deemed to have
purchased and had transferred to it, and each then Reducing Lender and each
Partially Increasing Lender shall be deemed to have sold and transferred as
provided in Section 2.04(d) to such New Lenders and Increasing Lenders, such
undivided interest and participation in such Reducing Lender's and such
Partially Increasing Lender's interest and participation in all then outstanding
Letters of Credit, to the extent necessary so that such undivided interests and
participations of all Lenders (including each New Lender) shall accord with
their respective Applicable Percentages after giving effect to the increase in
the aggregate amount of the Lenders' Commitments on such Commitment Increase
Effective Date.

                                   ARTICLE III
                         Representations and Warranties

         The Borrower represents and warrants to the Lenders that:

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

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

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

                                       37
<PAGE>

         SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, partners equity and cash flows (i) as of and for the
fiscal year ended December 31, 2001, reported on by independent public
accountants, and (ii) as of and for the fiscal quarter and the portion of the
fiscal year ended September 30, 2002, certified by its chief financial officer.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.

                  (b) Since December 31, 2001, there has been no material
adverse change in the business, assets, operations, prospects or condition,
financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.

         SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business, free and clear of all Liens except Permitted
Encumbrances and Liens otherwise permitted or contemplated by this Agreement.

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

         SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.

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

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

                                       38
<PAGE>

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

         SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935. The Borrower is not subject to regulation
under any Federal or State statute or regulation which limits its ability to
incur Indebtedness.

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

         SECTION 3.10. ERISA. Each ERISA Affiliate has fulfilled its obligations
under the minimum funding standards of ERISA and the Code with respect to each
Plan and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code with respect to each Plan. No ERISA Affiliate
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Code in respect of any Plan, (ii) failed to make any contribution or payment to
any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or made
any amendment to any Plan or Benefit Arrangement, which has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting of a
bond or other security under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA.

         SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither the Information Memorandum nor any of the other
reports, financial statements, certificates or other information furnished by or
on behalf of the Borrower to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

         SECTION 3.12. Investments and Guarantees. As of the Restatement
Effective Date, neither the Borrower nor any Subsidiary has any Investments or
has outstanding any Guarantees,

                                       39
<PAGE>

except as permitted by this Agreement or reflected in the financial statements
described in Section 3.04(a).

         SECTION 3.13. Subsidiaries. As of the Restatement Effective Date, the
Borrower has no Subsidiaries.

         SECTION 3.14. Casualties; Taking of Property. Neither the business nor
the assets of the Borrower or any Subsidiary have been materially and adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of any assets or cancellation of contracts, permits or concessions by any
domestic or foreign government or any agency thereof, riot, activities of armed
forces or acts of God or of any public enemy.

                                   ARTICLE IV
                                   Conditions

         SECTION 4.01. Conditions to Restatement. The closing and effectiveness
of this Agreement is subject to the satisfaction, immediately prior to or
concurrently with such closing on the Restatement Effective Date, of the
following conditions precedent:

                  (a) The Administrative Agent (or its counsel) shall have
received (i) this Agreement, executed and delivered by a duly authorized officer
of the Borrower, by the Required Lenders under the Original Agreement, by each
Lender with a greater Commitment under this Agreement than under the Original
Agreement, and by each Lender on the Restatement Effective Date not a party to
the Original Agreement, and (ii) the MLP Guaranty, executed and delivered by a
duly authorized officer of the MLP and satisfactory in form and substance to the
Administrative Agent.

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

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

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

                                       40
<PAGE>

                  (e) The Administrative Agent shall have received (i)
counterpart originals of the Partnership Agreement (MLP) substantially in the
form filed as Exhibit 3.4 to the MLP's annual report on Form 10-K for the fiscal
year ended December 31, 2001, as amended by the First Amendment (filed as
Exhibit 3.5 to the 10-K) and the Reorganization Agreement, dated as of May 30,
2002, filed as Exhibit 99.1 to the MLP's current report on Form 8-K on June 6,
2002, the Omnibus Agreement, the Transportation Agreement, the Indenture and the
Partnership Agreement (Borrower) in form and substance acceptable to the
Lenders, in each case duly executed by each of the parties thereto and (ii)
evidence satisfactory to the Lenders that the Partnership Agreement (Borrower),
the Omnibus Agreement, the Transportation Agreement, the Indenture and the
Partnership Agreement (MLP) are in full force and effect and have not been
amended or modified except to the extent such amendments or modifications have
been delivered to the Administrative Agent, which evidence may be in the form of
a certificate of the President or a Vice President (or equivalent officer) of
the Borrower.

                  (f) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Restatement Effective Date
(including all fees due and payable on or prior to such time pursuant to Section
2.10 of the Original Agreement), including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder.

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

The Administrative Agent shall notify the Borrower and the Lenders of the
Restatement Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit under this Agreement shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on March
6, 2003.

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

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

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

                  (c) The Administrative Agent shall have received each
additional document, instrument, legal opinion or item of information reasonably
requested by the Administrative

                                       41
<PAGE>

Agent, including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which the Borrower or any Subsidiary may
be a party.

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

                                    ARTICLE V
                              Affirmative Covenants

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

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

                  (a) within 105 days after the end of each fiscal year of the
MLP:

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

                  (ii) the consolidating balance sheet and related statements of
         income, partners equity and cash flows of the MLP as of the end of and
         for such year, setting forth in each case in comparative form the
         figures from the previous fiscal year, all certified by one of the
         Borrower's Financial Officers as presenting fairly in all material
         respects the financial condition and results of operations of the
         Borrower in accordance with GAAP consistently applied, subject to the
         absence of footnotes; and

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

                                       42
<PAGE>

                  (b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, its consolidated balance
sheet and related statements of income, partners equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;

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

                  (d) promptly and in any event within ten (10) Business Days
after the existence of any of the following conditions, a certificate of the
President or a Vice President (or equivalent officer) of the Borrower, or of the
officer of the Borrower primarily responsible for monitoring compliance by the
Borrower and its Subsidiaries with Environmental Laws, specifying in detail the
nature of such condition and the Borrower's proposed response thereto, in each
case if the occurrence of such event could reasonably be expected to have a
Material Adverse Effect:

                           (i) the receipt by the Borrower or the General
Partner of any communication (written or oral), whether from a Governmental
Authority or other Person that alleges that the Borrower or any Subsidiary is
not in compliance with applicable Environmental Laws or Environmental Approvals,

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

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

The Borrower will also maintain and make available for inspection by the
Administrative Agent and the Lenders and their agents and employees accurate and
complete records of all investigations, studies, sampling and testing conducted,
and any and all remedial actions taken, by the Borrower, any Subsidiary or, to
its knowledge and to the extent obtained by the Borrower

                                       43
<PAGE>

and the General Partner, by any Governmental Authority or other Person in
respect to Hazardous Materials on or affecting the properties of Borrower and
its Subsidiaries.

                  (e) Prior to the end of each fiscal year, a copy of the
projections of the operating budget and cash flows for the next succeeding
fiscal year, such projections to be accompanied by a certificate of a Financial
Officer to the effect that the projections have been prepared on the basis of
sound financial planning practice and that such Financial Officer has no reason
to believe that such projections are incorrect or misleading in any material
respect; and

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

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

                  (a) the occurrence of any Default;

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

                  (c) if and when any ERISA Affiliate (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which could reasonably be expected to
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or contribution
to any Plan or Multi-Employer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has resulted or
could reasonably be expected to result in the imposition of a Lien or the
posting of a bond or other security, a certificate of a Financial Officer of the
Borrower setting forth details as to such occurrence and action, if any, which
the Borrower or applicable ERISA Affiliate is required or proposes to take.

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

                                       44
<PAGE>

                  (e) any material amendment to the Partnership Agreement (MLP),
the Partnership Agreement (Borrower) or any Material Agreement, together with a
certified copy of such amendment.

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

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

         SECTION 5.04. Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay its obligations, including Tax liabilities,
that, if not paid, could result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

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

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

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

         SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of
the Working Capital Revolving Loans will be used to finance the working capital
requirements of the

                                       45
<PAGE>

Borrower and its Subsidiaries, or to pay, in whole or in part, Restricted
Payments permitted pursuant to the terms hereof. The proceeds of the General
Revolving Loans that are not Working Capital Revolving Loans will be used to
finance the working capital requirements and general partnership purposes of the
Borrower and its Subsidiaries, but will not be used to make any Restricted
Payment permitted by Section 6.06(b) (except in connection with the Valero Asset
Transaction). The Letters of Credit shall be used for general business purposes
in the ordinary course of business or for such other purposes as may be approved
by the Administrative Agent. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations T, U and X.

         SECTION 5.09. Environmental Laws. The Borrower will, and will cause
each of its Subsidiaries to:

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

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

         SECTION 5.10. Clean-Down. The Borrower will cause the aggregate
outstanding principal balance of the Working Capital Revolving Loans, the
proceeds of which were used to pay Restricted Payments, to be zero for a period
of at least 15 consecutive days during each calendar year.

         SECTION 5.11. Subsidiaries. The Borrower will, substantially
contemporaneously with its formation or acquisition, cause each Subsidiary
(other than Non-U.S. Subsidiaries) to become a Guarantor with respect to, and
jointly and severally liable with all other Guarantors for, all obligations of
the Borrower under this Agreement by executing and delivering to the
Administrative Agent, for the benefit of the Lenders, a Subsidiary Guaranty,
substantially in the form of Exhibit C-2. The Borrower shall, or shall cause
such Subsidiary to, further deliver any and all instruments, documents,
approvals, consents or opinions of counsel reasonably requested by the
Administrative Agent or the Required Lenders in connection with any such
Subsidiary Guaranty.

                                   ARTICLE VI
                               Negative Covenants

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have

                                       46
<PAGE>

expired or terminated and all LC Disbursements shall have been reimbursed, the
Borrower covenants and agrees with the Lenders that:

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

                  (a) Indebtedness created under this Agreement;

                  (b) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;

                  (c) Guarantees by the Borrower of Indebtedness of any
Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any other
Subsidiary;

                  (d) other Indebtedness of the Borrower and any Subsidiary;
provided that, both before and after such Indebtedness is created, incurred or
assumed, no Default shall exist under this Agreement, including, without
limitation, a Default with respect to (i) the Consolidated Interest Coverage
Ratio set forth in Section 6.11(a) and (ii) the Consolidated Debt Coverage Ratio
set forth in Section 6.11(b).

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

                  (a) Permitted Encumbrances;

                  (b) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Borrower or any Subsidiary and
(iii) such Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as the case
may be;

                  (c) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (i) such security
interest secures Indebtedness permitted by clause (d) of Section 6.01, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of the
Borrower or any Subsidiary; and

                  (d) other Liens securing Indebtedness in an amount that does
not at any time exceed 10% of Consolidated Tangible Net Worth.

                                       47
<PAGE>

         SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will
not permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or any substantial part of its assets, or all or substantially
all of the stock of any of its Subsidiaries (in each case whether now owned or
hereafter acquired), or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation or the Borrower
may merge with another Person so long as (A) the surviving entity or purchaser,
if other than the Borrower, assumes, pursuant to the terms of such transaction,
each of the obligations of the Borrower hereunder and under any other documents
entered into in connection with the Loans and (B) each such assumption is
expressly evidenced by an agreement executed and delivered to the Lenders in a
form reasonably satisfactory to the Administrative Agent, (ii) any Subsidiary
may merge into any Subsidiary in a transaction in which the surviving entity is
a Subsidiary, and (iii) any Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders;
provided that any such merger involving a Person that is not a Wholly-Owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.

                  (a) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
Original Agreement Date and businesses reasonably related thereto.

         SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a Wholly-Owned Subsidiary prior to such merger) any Investment in
or Guarantee any obligations of, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:

                  (a) Permitted Investments;

                  (b) Investments by the Borrower in the Equity Interest of its
Subsidiaries, so long as each such Subsidiary has Guaranteed the Indebtedness of
the Borrower under this Agreement;

                  (c) loans or advances made by the Borrower to any Subsidiary
and made by any Subsidiary to the Borrower or any other Subsidiary, so long as
each such Subsidiary has Guaranteed the Indebtedness of the Borrower under this
Agreement;

                  (d) Guarantees constituting Indebtedness permitted by Section
6.01;

                  (e) the Borrower's interest in the Skelly-Belvieu Pipeline
Company, L.L.C.;

                  (f) Investments in Joint Venture Interests and the purchase or
other acquisition of the assets of another Person constituting a business unit;
provided, that, both

                                       48
<PAGE>

before and after giving effect to any such Investment, no Default shall exist,
including, without limitation, a Default with respect to (i) use of proceeds set
forth in Section 5.08, (ii) the Consolidated Interest Coverage Ratio set forth
in Section 6.11(a), or (iii) the Consolidated Debt Coverage Ratio set forth in
Section 6.11(b);

                  (g) Investments in Non-U.S. Subsidiaries; provided, however,
that, the aggregate amount of such Investments shall not exceed $15,000,000 at
any time; and

                  (h) Investments described in the definition of (and only if
made in connection with) the Valero Asset Transaction.

         SECTION 6.05. Hedging Agreements. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any Hedging Agreement, other than
Hedging Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct
of its business or the management of its liabilities.

         SECTION 6.06. Restricted Payments. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except (a) any Subsidiary may
declare and pay Restricted Payments to the Borrower and (b) as long as no
Default has occurred and is continuing or would result therefrom, the Borrower
may make Restricted Payments consisting of cash distributions in accordance with
the terms of the Partnership Agreement (Borrower); provided, however, that, for
the avoidance of doubt, the Lenders and the Borrower agree that the Borrower may
make the Restricted Payments described in the definition of (and in connection
with the) "Valero Asset Transaction" herein, provided that the making of such
Restricted Payments is not prohibited by the Partnership Agreement (Borrower).

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

         SECTION 6.08. Restrictive Agreements. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of the Borrower or any Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets,
or (b) the ability of any Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of
the Borrower or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by this

                                       49
<PAGE>

Agreement, (ii) the foregoing shall not apply to restrictions and conditions (x)
existing on the Restatement Agreement Date identified on Schedule 6.08 (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition so as to cause such
restriction or condition to be more restrictive than the restriction or
condition in existence on the Restatement Agreement Date) or (y) arising or
agreed to after the Restatement Agreement Date; provided that such restrictions
or conditions are not more restrictive than the restrictions and conditions
existing on the Restatement Agreement Date, (iii) the foregoing shall not apply
to customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.

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

         SECTION 6.10. Creation of Subsidiaries. The Borrower will not at any
time create or acquire any Subsidiary unless Borrower has caused such Subsidiary
to comply with the requirements of Section 5.11.

         SECTION 6.11. Financial Condition Covenants. The Borrower will not
permit at any time (a) its Consolidated Interest Coverage Ratio to be less than
3.50 to 1.00 or (b) its Consolidated Debt Coverage Ratio to be in excess of 4.00
to 1.00.

                                  ARTICLE VII
                                Events of Default

         If any of the following events ("Events of Default") shall occur:

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

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

                  (c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with the Loan Documents or any

                                       50
<PAGE>

amendment or modification hereof or waiver hereunder, shall prove to have been
incorrect when made or deemed made;

                  (d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the Borrower's existence), 5.08 or 5.10 or in Article VI;

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

                  (f) the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable;

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

                  (h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the General Partner, the Borrower or any Subsidiary
or its debts, or of a substantial part of its assets, under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the General Partner, the
Borrower or any Subsidiary or for a substantial part of its assets, and, in any
such case, such proceeding or petition shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall be entered;

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

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

                                       51
<PAGE>

                  (k) one or more judgments for the payment of money in an
aggregate amount in excess of $10,000,000 and that are not covered by insurance
shall be rendered against the Borrower, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets of the
Borrower or any Subsidiary to enforce any such judgment;

                  (l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding $10,000,000;

                  (m) the Borrower or any Subsidiary shall incur an
Environmental Liability requiring payment in any Rolling Period in excess of
$10,000,000;

                  (n) the MLP shall (i) conduct, transact or otherwise engage
in, or commit to conduct, transact or otherwise engage in, any business or
operations other than (X) those incidental to its ownership of the limited
partner interests in the Borrower or of Equity Interests in other Wholly-Owned
Subsidiaries and (Y) the incurrence and maintenance of Indebtedness or (ii) own,
lease, manage or otherwise operate any properties or assets (including cash and
cash equivalents), other than (A) the limited partner interests in the Borrower,
(B) ownership interests (not to exceed 1% in each such case) of a Subsidiary,
(C) ownership interests in other subsidiaries not Subsidiaries of the Borrower,
(D) cash received in connection with dividends made by the Borrower in
accordance with Section 6.06(b) pending application to the holders of the Units
and the General Partner Interest, (E) cash received in connection with the
incurrence of Indebtedness and (F) cash received in connection with dividends
made by other subsidiaries;

                  (o) a Change in Control shall occur; or

                  (p) the sale by Valero of a material portion of its Refinery
Assets unless each purchaser thereof has (i) a debt rating of its senior,
unsecured, long-term indebtedness for borrowed money that is not guaranteed by
any other Person or subject to any other credit enhancement of at least
BBB-/Baa3 and (ii) and has fully assumed, with respect to such purchased
Refinery Assets, the rights and obligations of Valero and its Affiliates under
the Transportation Agreement.

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times:(i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any

                                       52
<PAGE>

event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.

                                  ARTICLE VIII
                            The Administrative Agent

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

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

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

                                       53
<PAGE>

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

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

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

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

                                       54
<PAGE>

                                   ARTICLE IX
                                  Miscellaneous

         SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

                  (a) if to the Borrower, to it at One Valero Place, San
Antonio, Texas 78212, Attention of Senior Vice President and Chief Financial
Officer (Telecopy No. (210) 592-2010);

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

                  (c) if to the Issuing Bank, to it at JPMorgan Chase Bank,
Letter of Credit Group, Global Trade Services, 10420 Highland Manor Dr., Tampa,
FL 33610, Attention of James Alonzo (Telecopy No. (813) 432-5161);

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

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

         SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Bank and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.

                  (b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or by the Borrower
and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any

                                       55
<PAGE>

fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, or (v) change any of the provisions
of this Section or the definition of "Required Lenders" or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent or the Issuing Bank hereunder without the prior written
consent of the Administrative Agent or the Issuing Bank, as the case may be.

         SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any amendments, modifications or waivers
of the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Issuing Bank or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

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

                                       56
<PAGE>

indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.

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

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

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

         SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Issuing
Bank and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

                  (b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent (and, in the case of an
assignment of all or a portion of a Commitment or any Lender's obligations in
respect of its LC Exposure and the Issuing Bank) must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and

                                       57
<PAGE>

Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, (iii) each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement, (iv) the parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, and (v)
the assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire; and provided further that any consent of
the Borrower otherwise required under this paragraph shall not be required if an
Event of Default has occurred and is continuing. Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section. Any assignment of
a given percentage of a Lender's General Revolving Commitment shall cover the
same percentage of such Lender's Working Capital Revolving Commitment, and vice
versa.

                  (c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

                  (d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

                  (e) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a

                                       58
<PAGE>

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

                  (f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.15(e) as though it were a Lender.

                  (g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

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

                                       59
<PAGE>

the Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

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

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

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

         SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.

                  (b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions

                                       60
<PAGE>

by suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against the Borrower or its properties in the courts of any
jurisdiction.

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

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

         SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

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

         SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or

                                       61
<PAGE>

(ii) becomes available to the Administrative Agent, the Issuing Bank or any
Lender on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, "Information" means all information received from the
Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by the Borrower;
provided that, in the case of information received from the Borrower after the
Original Agreement Date, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

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

SECTION 9.14. Limitation of Liability. Neither the General Partner nor the
general partner(s) of the MLP shall be liable for (a) the obligations of the
Borrower under this Agreement or (b) the obligations of the MLP under the MLP
Guaranty, including in each case, without limitation, by reason of any payment
obligation imposed by governing state partnership statutes and any provision of
the applicable limited partnership agreement of the Borrower or the MLP that
requires such General Partner or general partner(s), as the case may be, to
restore a capital account deficit.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the Restatement
Agreement Date.

                                      VALERO LOGISTICS OPERATIONS, L.P.

                                      By: Valero GP, Inc., its General Partner

                                      By: /s/ Steven A. Blank
                                          --------------------------------------
                                          Name:  Steven A. Blank
                                          Title: Senior Vice President and Chief
                                                 Financial Officer

                                       62
<PAGE>

                                       JPMORGAN CHASE BANK, individually and as
                                       Administrative Agent

                                       By /s/ Robert C. Mertensotto
                                          --------------------------------------
                                          Name: Robert C. Mertensotto
                                          Title:  Managing Director

                                Signature Page to
                   Amended and Restated Credit Agreement - 2

<PAGE>

                                       ROYAL BANK OF CANADA

                                       By /s/ Linda M. Stephen
                                          --------------------------------------
                                          Name: Linda M. Stephen
                                          Title:  Senior Manager

                                Signature Page to
                   Amended and Restated Credit Agreement - 3
<PAGE>

                                       SUNTRUST BANK

                                       By /s/ David J. Edge
                                          --------------------------------------
                                          Name:  David J. Edge
                                          Title: Director

                                Signature Page to
                   Amended and Restated Credit Agreement - 4

<PAGE>

                                      MIZUHO CORPORATE BANK, LIMITED

                                      THE INDUSTRIAL BANK OF JAPAN TRUST COMPANY

                                      By /s/ Jacques Azagury
                                         ---------------------------------------
                                         Name: Jacques Azagury
                                         Title: Senior Vice President & Manager

                                Signature Page to
                   Amended and Restated Credit Agreement - 5
<PAGE>

                                BARCLAYS BANK PLC

                                By /s/ Nicholas A. Bell
                                   ---------------------------------------------
                                   Name: Nicholas A. Bell
                                   Title : Director, Loan Transaction Management

                                Signature Page to
                   Amended and Restated Credit Agreement - 6

<PAGE>

                                      SUMITOMO MITSUI BANKING CORPORATION

                                      By /s/ Leo E. Pagarigan
                                         -----------------------------------
                                         Name: Leo E. Pagarigan
                                         Title: Senior Vice President

                                Signature Page to
                   Amended and Restated Credit Agreement - 7

<PAGE>

                                         AUSTRALIA AND NEW ZEALAND BANKING
                                         GROUP LIMITED

                                         By /s/ R. Scott McInnis
                                            ------------------------------------
                                            Name:  R. Scott McInnis
                                            Title: Head, Global Structured
                                                   Finance-Americas

                                Signature Page to
                   Amended and Restated Credit Agreement - 8

<PAGE>

                                         THE BANK OF NOVA SCOTIA

                                         By /s/ N. Bell
                                            -------------
                                            Name:  N. Bell
                                            Title: Senior Manager

                                Signature Page to
                   Amended and Restated Credit Agreement - 9

<PAGE>

                                           COMPASS BANK

                                           By /s/ Collis Sanders
                                              --------------------------------
                                              Name:  Collis Sanders
                                              Title: Senior Vice President

                                           By /s/ Ed Jones
                                              --------------------------------
                                              Name:  Ed Jones
                                              Title: Executive Vice President

                                Signature Page to
                   Amended and Restated Credit Agreement - 10

<PAGE>

                                  SCHEDULE 2.01

<Table>
<Caption>
                    LENDER                                 COMMITMENT
                    ------                                 ----------
<S>                                                       <C>

JPMorgan Chase Bank                                       $20,000,000

Royal Bank of Canada                                      $20,000,000

SunTrust Bank                                             $20,000,000

Mizuho Corporate Bank, Limited.                           $20,000,000

Barclays Bank PLC                                         $20,000,000

Sumitomo Mitsui Banking Corporation                       $15,000,000

The Bank of Tokyo - Mitsubishi, Ltd.                      $15,000,000

Australia and New Zealand Banking Group Limited           $15,000,000

The Bank of Nova Scotia                                   $15,000,000

Compass Bank                                              $15,000,000
</Table>

                                  Schedule 2.01

<PAGE>

                                  SCHEDULE 3.06

                                Disclosed Matters

                                      None.

                                  Schedule 3.06

<PAGE>

                                  SCHEDULE 6.07

                              Affiliate Agreements

                                      None.

                                  Schedule 6.07
<PAGE>

                                  SCHEDULE 6.08

                              Existing Restrictions

The Indenture.

The First Supplemental Indenture to the Indenture, dated as of July 15, 2002.

                                  Schedule 6.08
<PAGE>

                                    EXHIBIT A

                                    [FORM OF]

                            ASSIGNMENT AND ACCEPTANCE

         Reference is made to the Credit Agreement dated as of December 15, 2000
as amended and restated through March 6, 2003 (as amended and in effect on the
date hereof, the "Credit Agreement"), among Valero Logistics Operations, L.P.,
the Lenders named therein and JPMorgan Chase Bank, as Administrative Agent for
the Lenders. Terms defined in the Credit Agreement are used herein with the same
meanings.

         The Assignor named on the reverse hereof hereby sells and assigns,
without recourse, to the Assignee named on the reverse hereof, and the Assignee
hereby purchases and assumes, without recourse, from the Assignor, effective as
of the Assignment Date set forth on the reverse hereof, the interests set forth
on the reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, together with the participations in Letters of Credit and LC
Disbursements held by the Assignor on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.

         This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 2.15(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The Assignee/Assignor shall pay the fee payable to the
Administrative Agent pursuant to Section 9.04(b) of the Credit Agreement.

         This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.

Date of Assignment:

Legal Name of Assignor:

Legal Name of Assignee:

Assignee's Address for Notices:

Effective Date of Assignment
("Assignment Date"):

                                   Exhibit A-1
<PAGE>

<Table>
<Caption>
                                                                Percentage Assigned of
                                                         Facility/Commitment (set forth, to at
                                                       least 8 decimals, as a percentage of the
                                                        Facility and the aggregate Commitments
      Facility           Principal Amount Assigned            of all Lenders thereunder)
--------------------     -------------------------     ----------------------------------------
<S>                      <C>                           <C>

Commitment Assigned:         $                                      %

Loans:
</Table>

The terms set forth above and on the reverse side hereof are hereby agreed to:

                                            [Name of Assignor]   , as Assignor

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

                                            [Name of Assignee]   , as Assignee

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

                                   Exhibit A-2

<PAGE>

The undersigned hereby consent to the within assignment:

Valero Logistics Operations, L.P.,          JPMorgan Chase Bank,
                                            as Administrative Agent,

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

                                            JPMorgan Chase Bank,
                                            as Issuing Bank

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

                                   Exhibit A-3

<PAGE>

                                    EXHIBIT B

                       OPINION OF COUNSEL FOR THE BORROWER

                                                                   March 6, 2003

To the Lenders and the Administrative
   Agent Referred to Below
c/o The Chase Manhattan Bank, as
   Administrative Agent
270 Park Avenue
New York, New York 10017

Dear Sirs:

         [I/We] have acted as counsel for Valero Logistics Operations, L.P. (the
"Borrower") and Valero, L.P. (the "MLP", and together with the Borrower, the
"Loan Parties"), in connection with the Credit Agreement dated as of December
15, 2000 as amended and restated through March 6, 2003 (the "Credit Agreement"),
among the Borrower, the banks and other financial institutions identified
therein as Lenders, and JPMorgan Chase Bank, as Administrative Agent and the
other Loan Documents identified below. This opinion is being furnished to you
pursuant to Section 4.01(b) of the Agreement. Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.

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

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

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

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

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

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

                                  Exhibit B - 1

<PAGE>

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

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

5.       The Borrower is not subject to, or is exempt from, regulation as a
         "holding company" under the Public Utility Holding Company Act of 1935,
         as amended.

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

7.       The MLP (a) is a limited partnership duly formed and validly existing
         under the laws of the State of Delaware and (b) has the limited
         partnership power and authority to (i) own property and conduct the
         business in which it is currently engaged and in which it proposes, as
         of the date hereof, to be engaged after the date hereof, and (ii) make,
         deliver and perform the MLP Guaranty in accordance with the terms and
         provisions thereof.

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

9.       The Loan Documents have been duly executed and delivered on behalf of
         the Loan Parties, as applicable.

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

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

12.      The partnership interests in the Borrower listed on Schedule A hereto
         constitute all the partnership interests of record in the Borrower and
         are owned of record by the Persons designated on Schedule A.

                                  Exhibit B - 2

<PAGE>

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

14.      To my knowledge (having made due inquiry with respect thereto), no
         litigation, investigation or proceeding of or before any arbitrator or
         governmental authority is pending or threatened by or against the MLP
         or the Borrower or against any of the properties or revenues of either
         (a) with respect to the Loan Documents or any of the transactions
         contemplated thereby or (b) which, if adversely determined, could
         reasonably be expected to have a Material Adverse Effect.

                                  Exhibit B - 3

<PAGE>

================================================================================

                                   EXHIBIT C-1

                                     FORM OF
                             MLP GUARANTY AGREEMENT

                                     MADE BY

                                  VALERO, L.P.

                                   IN FAVOR OF

                              JPMORGAN CHASE BANK,
                             AS ADMINISTRATIVE AGENT

                            DATED AS OF MARCH 6, 2003

================================================================================

                                   Exhibit C-1

<PAGE>

                                TABLE OF CONTENTS

<Table>
<S>        <C>                                                               <C>
SECTION 1. DEFINED TERMS .....................................................1
   1.1     Definitions .......................................................1
   1.2     Other Definitional Provisions .....................................2

SECTION 2. GUARANTEE .........................................................2
   2.1     Guarantee .........................................................2
   2.2     No Subrogation ....................................................3
   2.3     Amendments, etc. with respect to the Borrower Obligations .........3
   2.4     Guarantee Absolute and Unconditional ..............................4
   2.5     Reinstatement .....................................................5
   2.6     Payments ..........................................................5

SECTION 3. REPRESENTATIONS AND WARRANTIES ....................................5
   3.1     Organization; Powers ..............................................5
   3.2     Authorization; Enforceability .....................................6
   3.3     Governmental Approvals; No Conflicts ..............................6
   3.4     Investment and Holding Company Status .............................6

SECTION 4. INTENTIONALLY OMITTED .............................................6

SECTION 5. THE ADMINISTRATIVE AGENT ..........................................6
   5.1     Authority of Administrative Agent .................................6

SECTION 6. MISCELLANEOUS .....................................................6
   6.1     Amendments in Writing .............................................6
   6.2     Notices ...........................................................6
   6.3     No Waiver by Course of Conduct; Cumulative Remedies ...............7
   6.4     Enforcement Expenses; Indemnification .............................7
   6.5     Successors and Assigns ............................................7
   6.6     Counterparts ......................................................7
   6.7     Severability ......................................................7
   6.8     Integration .......................................................8
   6.9     GOVERNING LAW .....................................................8
   6.10    Submission To Jurisdiction; Waivers ...............................8
   6.11    Acknowledgments ...................................................8
   6.12    WAIVERS OF JURY TRIAL .............................................9
   6.13    Section Headings ..................................................9
</Table>

                                   Exhibit C-1

<PAGE>

         MLP GUARANTY AGREEMENT, dated as of March 6, 2003, made by Valero,
L.P., a Delaware limited partnership formerly known as Shamrock Logistics, L.P.
(the "Parent Guarantor") in favor of JPMorgan Chase Bank, formerly known as The
Chase Manhattan Bank, as Administrative Agent (in such capacity, the
"Administrative Agent") for the benefit of the banks and other financial
institutions or entities (the "Lenders") parties to the Credit Agreement, dated
as of December 15, 2000 as amended and restated through March 6, 2003, (the
"Credit Agreement"), among Valero Logistics Operations, L.P., a Delaware limited
partnership formerly known as Shamrock Logistics Operations, L.P. (the
"Borrower"), the Lenders, the Administrative Agent, Royal Bank of Canada, as
syndication agent and SunTrust Bank, as documentation agent.

                                   WITNESSETH:

         WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;

         WHEREAS, the Borrower is a member of an affiliated group of companies
that includes the Parent Guarantor;

         WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement may be or have been used in part to enable the Borrower to make
valuable transfers to the Parent Guarantor;

         WHEREAS, the Parent Guarantor will derive substantial direct and
indirect benefit from the making of the extensions of credit under the Credit
Agreement; and

         WHEREAS, it is a condition precedent to the Credit Agreement that the
Parent Guarantor shall have executed and delivered this Agreement to the
Administrative Agent for the ratable benefit of the Lenders;

         NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to agree to make their respective extensions of credit to the Borrower
under the Credit Agreement, the Parent Guarantor hereby agrees with the
Administrative Agent, for the ratable benefit of the Lenders, as follows:

                            SECTION 1. DEFINED TERMS

         1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.

         (b) The following terms shall have the following meanings:

         "Agreement": means this MLP Guaranty Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.

         "Borrower Obligations": means the collective reference to all
Indebtedness owing by the Borrower pursuant to the Credit Agreement, including,
without limitation, the unpaid principal

                                  Exhibit C-1-1
<PAGE>

of and interest on the Loans and LC Disbursements and all other obligations and
liabilities of the Borrower (including, without limitation, interest accruing at
the then applicable rate provided in the Credit Agreement after the maturity of
the Loans and LC Disbursements and interest accruing at the then applicable rate
provided in the Credit Agreement after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the Administrative
Agent or any Lender (or, in the case of any Hedging Agreement referred to below,
any Affiliate of a Lender), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreement, this Agreement, any
Letter of Credit, any Hedging Agreement entered into by the Borrower with any
Lender (or any Affiliate of a Lender) or the other Loan Documents or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements).

         "Parent Guarantor Obligations": means the collective reference to (i)
the Borrower Obligations and (ii) all obligations and liabilities of the Parent
Guarantor which may arise under or in connection with this Agreement, in each
case whether on account of guarantee obligations, reimbursement obligations,
loan obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Lenders that are required to be paid by the Parent Guarantor
pursuant to the terms of this Agreement or any other Loan Document).

         1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.

         (b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

         (c) A reference to any Person hereunder shall be deemed to include a
reference to such Person's successor's, endorsees, transferees and assigns.

                              SECTION 2. GUARANTEE

         2.1 Guarantee. (a) The Parent Guarantor, to the maximum extent
permitted by applicable law, (i) absolutely, unconditionally and irrevocably,
guarantees to the Administrative Agent for the ratable benefit of the Lenders
and their respective successors, endorsees, transferees and assigns, the prompt
and complete payment and performance by the Borrower when due (whether at the
stated maturity, by acceleration or otherwise) of the Borrower Obligations and
(ii) indemnifies and holds harmless the Administrative Agent and each Lender
from, and agrees to pay to the Administrative Agent and each Lender, all
reasonable costs and expenses (including reasonable counsel fees and expenses)
incurred by the Administrative Agent

                                  Exhibit C-1-2
<PAGE>

or such Lender in enforcing any of its rights under this Agreement. The Parent
Guarantor agrees that notwithstanding any stay, injunction or other prohibition
preventing the payment by the Borrower of all or any portion of the Borrower
Obligations and notwithstanding that all or any portion of the Borrower
Obligations may be unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower, to the
maximum extent permitted by applicable law, such Borrower Obligations shall
nevertheless be due and payable by the Parent Guarantor for the purposes of this
Agreement at the time such Borrower Obligations would by payable by the Borrower
under the provisions of the Credit Agreement. Notwithstanding the foregoing, any
enforcement of this Agreement with respect to the rights of any Lender shall be
accomplished by the Administrative Agent acting on behalf of such Lender.

         (b) The guarantee contained in this Section 2.1 is a continuing
guarantee and shall remain in full force and effect until all the Borrower
Obligations and the obligations of the Parent Guarantor under the guarantee
contained in this Section 2.1 shall have been satisfied by payment in full, no
Letter of Credit shall be outstanding and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Borrower Obligations.

         (c) No payment made by the Borrower, the Parent Guarantor, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from the Borrower, the Parent Guarantor, any other guarantor
or any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Borrower Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Parent Guarantor hereunder
which shall, notwithstanding any such payment (other than any payment made by
the Borrower or Parent Guarantor in respect of the Borrower Obligations or any
payment received or collected from the Borrower or Parent Guarantor in respect
of the Borrower Obligations), remain liable for the Borrower Obligations until,
subject to Section 2.5, the Borrower Obligations are paid in full, no Letter of
Credit shall be outstanding and the Commitments are terminated.

         2.2 Subrogation. The Parent Guarantor shall be subrogated to all the
rights of the Administrative Agent or any Lender against the Borrower in respect
of any amounts paid by the Parent Guarantor pursuant to the provisions of this
Agreement; provided, however, that the Parent Guarantor shall not be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation with respect to any of the Borrower Obligations until all of the
Borrower Obligations and the Guarantees thereof shall have been indefeasibly
paid in full or discharged. A director, officer, employee or stockholder, as
such, of the Parent Guarantor shall not have any liability for any obligations
of the Guarantor under this Agreement or any claim based on, in respect of or by
reason of such obligations or their creation.

         2.3 Amendments, etc. with respect to the Borrower Obligations. The
Parent Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against the Parent Guarantor and without notice to or
further assent by the Parent Guarantor, any demand for payment of any of the
Borrower Obligations made by the Administrative Agent or any Lender may be
rescinded by the Administrative Agent or such Lender and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security or
guarantee

                                  Exhibit C-1-3
<PAGE>

therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Lender, and the Credit Agreement and the other Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the Required Lenders or all Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any Lender for the
payment of the Borrower Obligations may be sold, exchanged, waived, surrendered
or released. Except as required by applicable law, neither the Administrative
Agent nor any Lender shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Borrower Obligations
or for the guarantee contained in this Section 2 or any property subject
thereto.

         2.4 Guarantee Absolute and Unconditional. To the fullest extent
permitted by applicable law, the Parent Guarantor hereby (i) waives diligence,
presentment, demand of payment, notice of acceptance, filing of claims with a
court in the event of the merger, insolvency or bankruptcy of the Borrower or
the Parent Guarantor, and all demands and notices whatsoever, (ii) acknowledges
that any agreement, instrument or document evidencing the Parent Guarantor
Obligations may be transferred and that the benefit of its obligations hereunder
shall extend to each holder of any agreement, instrument or document evidencing
the Parent Guarantor Obligations without notice to them and (iii) covenants that
the Parent Guarantor Obligations will not be discharged except by complete
performance thereof. The Parent Guarantor further agrees that to the fullest
extent permitted by applicable law, if at any time all or any part of any
payment theretofore applied by any Person to any of the Parent Guarantor
Obligations is, or must be, rescinded or returned for any reason whatsoever,
including without limitation, the insolvency, bankruptcy or reorganization of
the Parent Guarantor, such Parent Guarantor Obligations shall, to the extent
that such payment is or must be rescinded or returned, be deemed to have
continued in existence notwithstanding such application, and the Parent
Guarantor Obligations shall continue to be effective or be reinstated, as the
case may be, as though such application had not been made.

         To the fullest extent permitted by applicable law, the obligations of
the Parent Guarantor under this Agreement shall be as aforesaid full,
irrevocable, unconditional and absolute and shall not be impaired, modified,
discharged, released or limited by any occurrence or condition whatsoever,
including, without limitation, (i) any compromise, settlement, release, waiver,
renewal, extension, indulgence or modification of, or any change in, any of the
obligations and liabilities of the Borrower or the Parent Guarantor contained in
any of the Borrower Obligations or this Agreement, (ii) any impairment,
modification, release or limitation of the liability of the Borrower, the Parent
Guarantor or any of their estates in bankruptcy, or any remedy for the
enforcement thereof, resulting from the operation of any present or future
provision of any applicable bankruptcy law, as amended, or other statute or from
the decision of any court, (iii) the assertion or exercise by the Borrower or
the Parent Guarantor of any rights or remedies under any of the Borrower
Obligations or this Agreement or their delay in or failure to assert or exercise
any such rights or remedies, (iv) the assignment or the purported assignment of
any property as security for any of the Borrower Obligations, including all or
any part of the rights of the Borrower or the Parent Guarantor under this
Agreement, (v) the extension of the time for payment by the Borrower or the
Parent Guarantor of any payments or other sums or any part

                                  Exhibit C-1-4
<PAGE>

thereof owing or payable under any of the terms and provisions of any of the
Borrower Obligations or this Agreement or of the time for performance by the
Borrower or the Parent Guarantor of any other obligations under or arising out
of any such terms and provisions or the extension or the renewal of any thereof,
(vi) the modification or amendment (whether material or otherwise) of any duty,
agreement or obligation of the Borrower or the Parent Guarantor set forth in
this Agreement, (vii) the voluntary or involuntary liquidation, dissolution,
sale or other disposition of all or substantially all of the assets, marshaling
of assets and liabilities, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceeding affecting, the Borrower or any of
the Parent Guarantor or any of their respective assets, or the disaffirmance of
any of the Borrower Obligations, or this Agreement in any such proceeding,
(viii) the release or discharge of the Borrower or the Parent Guarantor from the
performance or observance of any agreement, covenant, term or condition
contained in any of such instruments by operation of law, (ix) the
unenforceability of any of the Borrower Obligations or this Agreement, (x) any
change in the name, business, capital structure, corporate existence, or
ownership of the Borrower or the Parent Guarantor, or (xi) any other
circumstance which might otherwise constitute a defense available to, or a legal
or equitable discharge of, a surety or the Parent Guarantor.

         2.5 Reinstatement. To the maximum extent permitted by applicable law,
the guarantee contained in this Section 2 shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Borrower Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or the
Parent Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or
the Parent Guarantor or any substantial part of its property, or otherwise, all
as though such payments had not been made.

         2.6 Payments. The Parent Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim and without deduction for any taxes and in immediately available
funds and in Dollars at the Administrative Agent 's payment office at the
address provided in Section 2.16 of the Credit Agreement.

                    SECTION 3. REPRESENTATIONS AND WARRANTIES

         To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower thereunder, the Parent Guarantor hereby represents and
warrants to the Administrative Agent and each Lender that:

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

                                  Exhibit C-1-5

<PAGE>

         3.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement are within the Parent Guarantor's partnership
powers and have been duly authorized by all necessary corporate, limited
liability company or partnership and, if required, limited partner action. This
Agreement has been duly executed and delivered on behalf of the Parent Guarantor
and constitutes a legal, valid and binding obligation of the Parent Guarantor,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

         3.3 Government Approvals; No Conflicts. The execution, delivery and
performance of this Agreement (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except such as have been obtained or made and are in full force and effect, (b)
will not violate any applicable law or regulation or the charter, bylaws or
other organizational documents of the Parent Guarantor or any order of any
Governmental Authority; (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Parent Guarantor or
its assets, or give rise to a right thereunder to require any payment to be made
by the Parent Guarantor, and (d) will not result in the creation or imposition
of any Lien on any asset of the Parent Guarantor.

         3.4 Investment and Holding Company Status. The Parent Guarantor is not
(a) an "investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.

                        SECTION 4. INTENTIONALLY OMITTED

                       SECTION 5. THE ADMINISTRATIVE AGENT

         5.1 Authority of Administrative Agent. The Parent Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Parent Guarantor, the Administrative
Agent shall be conclusively presumed to be acting as agent for the Lenders with
full and valid authority so to act or refrain from acting, and the Parent
Guarantor shall not be under any obligation, or entitlement, to make any inquiry
respecting such authority.

                            SECTION 6. MISCELLANEOUS

         6.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 9.02 of the Credit Agreement.

         6.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or the Parent Guarantor hereunder shall be effected in the
manner provided for in Section 9.01 of

                                  Exhibit C-1-6
<PAGE>

the Credit Agreement; provided that any such notice, request or demand to or
upon the Parent Guarantor shall be addressed to the Parent Guarantor at its
notice address set forth on Schedule 1.

         6.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 6.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

         6.4 Enforcement Expenses; Indemnification. (a) The Parent Guarantor
agrees to pay or reimburse each Lender and the Administrative Agent for all its
reasonable costs and expenses incurred in collecting against the Parent
Guarantor under the guarantee contained in Section 2 or otherwise enforcing or
preserving any rights under this Agreement and which the Parent Guarantor is a
party, including, without limitation, the reasonable fees and disbursements of
counsel to each Lender and of counsel to the Administrative Agent.

         (b) The agreements in this Section 6.4 shall survive repayment of the
Parent Guarantor Obligations and all other amounts payable under the Credit
Agreement and the other Loan Documents.

         6.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Parent Guarantor and shall inure to the benefit of
the Administrative Agent and the Lenders and their successors and assigns;
provided that the Parent Guarantor may not assign, transfer or delegate any of
its rights or obligations under this Agreement without the prior written consent
of the Administrative Agent.

         6.6 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent. Delivery of an executed counterpart of a signature page of
this Agreement by telecopy or facsimile shall be effective as delivery of a
manually executed counterpart of this Agreement.

         6.7 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any

                                  Exhibit C-1-7
<PAGE>

such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

         6.8 Integration. This Agreement and the other Loan Documents represent
the entire agreement of the Parent Guarantor, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein.

         6.9 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND TO THE EXTENT
CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA.

         6.10 Submission To Jurisdiction; Waivers. The Parent Guarantor hereby
irrevocably and unconditionally:

         (a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Supreme Court of New
York, sitting in New York County and of the United States District Court for the
Southern District of New York, and appellate courts from any thereof;

         (b) consents that any such action or proceeding may be brought in such
courts and waives, to the fullest extent it may legally and effectively do so,
any objection that it may now or hereafter have to the venue of any such action
or proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;

         (c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Parent Guarantor at
its address referred to in Section 6.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto; and

         (d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction.

         (e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section 6.10 any special, exemplary, punitive or consequential damages.

         6.11 Acknowledgments. The Parent Guarantor hereby acknowledges that:

         (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;

         (b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Parent Guarantor arising out of or in
connection with this Agreement or the

                                  Exhibit C-1-8

<PAGE>

relationship between the Administrative Agent and Lenders, on one hand, and the
Parent Guarantor, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and

         (c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Parent Guarantor and the Lenders.

         6.12 WAIVERS OF JURY TRIAL. THE PARENT GUARANTOR, AND THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

         6.13 Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

                                  Exhibit C-1-9

<PAGE>

         IN WITNESS WHEREOF, the undersigned has caused this MLP Guaranty
Agreement to be duly executed and delivered as of the date first above written.

                                   Valero, L.P.

                                   By:  Riverwalk Logistics, L.P.

                                        By:  Valero GP, LLC, its General Partner

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

                                 Exhibit C-1-10

<PAGE>

                                                                      Schedule 1

                       NOTICE ADDRESS OF PARENT GUARANTOR

<Table>
<Caption>
         Parent Guarantor                Address
         ----------------                -------
<S>                                     <C>

         Valero, L.P.                         One Valero Place
                                              San Antonio, Texas  78212
                                              Attention: Senior Vice President
                                                 and Chief Financial Officer
                                              Telecopy No.: (210) 592-2010
</Table>

                                 Exhibit C-1-11

<PAGE>

================================================================================

                                   EXHIBIT C-2

                                    [FORM OF]
                          SUBSIDIARY GUARANTY AGREEMENT

                                     MADE BY

                         [SUBSIDIARIES OF THE BORROWER]

                                   IN FAVOR OF

                              JPMORGAN CHASE BANK,
                             AS ADMINISTRATIVE AGENT

                        DATED AS OF [__________], [200_]

================================================================================

                                   Exhibit C-2

<PAGE>

                                TABLE OF CONTENTS

<Table>
<S>        <C>                                                              <C>
SECTION 1. DEFINED TERMS .....................................................1
   1.1      Definitions ......................................................1
   1.2      Other Definitional Provisions ....................................2

SECTION 2. GUARANTEE .........................................................3
   2.1      Guarantee ........................................................3
   2.2      Right of Contribution ............................................4
   2.3      No Subrogation ...................................................4
   2.4      Amendments, etc. with respect to the Borrower Obligations ........4
   2.5      Guarantee Absolute and Unconditional .............................5
   2.6      Reinstatement ....................................................7
   2.7      Payments .........................................................7

SECTION 3. REPRESENTATIONS AND WARRANTIES ....................................7
   3.1      Representations in Credit Agreement ..............................7

SECTION 4. COVENANTS .........................................................7

SECTION 5. THE ADMINISTRATIVE AGENT ..........................................8
   5.1      Authority of Administrative Agent ................................8

SECTION 6. MISCELLANEOUS .....................................................8
   6.1      Amendments in Writing ............................................8
   6.2      Notices ..........................................................8
   6.3      No Waiver by Course of Conduct; Cumulative Remedies ..............8
   6.4      Enforcement Expenses; Indemnification ............................8
   6.5      Successors and Assigns ...........................................9
   6.6      Counterparts .....................................................9
   6.7      Severability .....................................................9
   6.8      Integration ......................................................9
   6.9      GOVERNING LAW ....................................................9
   6.10     Submission To Jurisdiction; Waivers .............................10
   6.11     Acknowledgments .................................................10
   6.12     WAIVERS OF JURY TRIAL ...........................................10
   6.13     Section Headings ................................................11
   6.14     Additional Guarantors ...........................................11
</Table>

                                   Exhibit C-2

<PAGE>

         SUBSIDIARY GUARANTY AGREEMENT, dated as of [ __________], [200_], made
by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Guarantors"), in favor of
JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank, as
Administrative Agent (in such capacity, the "Administrative Agent") for the
benefit of the banks and other financial institutions or entities (the
"Lenders") parties to the Credit Agreement, dated as of December 15, 2000 as
amended and restated through March 6, 2003, (the "Credit Agreement"), among
Valero Logistics Operations, L.P., a Delaware limited partnership formerly known
as Shamrock Logistics Operations, L.P. (the "Borrower"), the Lenders, the
Administrative Agent, Royal Bank of Canada, as syndication agent and SunTrust
Bank, as documentation agent.

                                   WITNESSETH:

         WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;

         WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each Guarantor;

         WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement may be or have been used in part to enable the Borrower to make
valuable transfers to one or more of the Guarantors in connection with the
operation of their respective businesses;

         WHEREAS, the Borrower and the Guarantors are engaged in related
businesses, and each Guarantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;
and

         WHEREAS, it is a condition subsequent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Guarantors, when and as created or acquired by the Borrower,
shall execute and deliver this Agreement to the Administrative Agent for the
ratable benefit of the Lenders;

         NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to continue their respective extensions of credit to the Borrower under
the Credit Agreement, each Guarantor hereby agrees with the Administrative
Agent, for the ratable benefit of the Lenders, as follows:

                            SECTION 1. DEFINED TERMS

         1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.

         (b) The following terms shall have the following meanings:

         "Agreement": means this Subsidiary Guaranty Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.

                                  Exhibit C-2-1
<PAGE>

         "Borrower Obligations": means the collective reference to all
Indebtedness owing by the Borrower pursuant to the Credit Agreement, including,
without limitation, the unpaid principal of and interest on the Loans and LC
Disbursements and all other obligations and liabilities of the Borrower
(including, without limitation, interest accruing at the then applicable rate
provided in the Credit Agreement after the maturity of the Loans and LC
Disbursements and interest accruing at the then applicable rate provided in the
Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to the Administrative Agent or any Lender (or, in
the case of any Hedging Agreement referred to below, any Affiliate of a Lender),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, this Agreement, any Letter of Credit, any Hedging
Agreement entered into by the Borrower with any Lender (or any Affiliate of a
Lender) or the other Loan Documents or any other document made, delivered or
given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by
the Borrower pursuant to the terms of any of the foregoing agreements).

         "Guarantor Obligations": means with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and (ii) all obligations
and liabilities of such Guarantor which may arise under or in connection with
this Agreement, in each case whether on account of guarantee obligations,
reimbursement obligations, loan obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Lenders that are required to be
paid by such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).

         "Guarantors": means the collective reference to each Guarantor party to
this Agreement.

         "Obligations": means in the case of each Guarantor, its Guarantor
Obligations.

         "Solvent": means with respect to each Guarantor as of any date, that
(a) the value of the assets of such Guarantor (both at fair value and present
fair saleable value) is, on the date of determination, greater than the total
amount of liabilities (including contingent and unliquidated liabilities) of
such Guarantor as of such date, (b) as of such date, such Guarantor is able to
pay all of its liabilities as such liabilities mature and (c) as of such date,
such Guarantor does not have unreasonably small capital given the nature of its
business. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities shall be computed at the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.

         1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.

                                  Exhibit C-2-2
<PAGE>

         (b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

         (c) A reference to any Person hereunder shall be deemed to include a
reference to such Person's successor's, endorsees, transferees and assigns.

                              SECTION 2. GUARANTEE

         2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, (i) absolutely, unconditionally and irrevocably, guarantees to the
Administrative Agent for the ratable benefit of the Lenders and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations and (ii) indemnifies and
holds harmless the Administrative Agent and each Lender from, and agrees to pay
to the Administrative Agent and each Lender, all reasonable costs and expenses
(including reasonable counsel fees and expenses) incurred by the Administrative
Agent or such Lender in enforcing any of its rights under this Agreement. The
guarantee in this Section 2.1 is a continuing guarantee, and shall apply to all
Obligations owing at any time whenever arising or incurred and shall remain in
full force and effect until the Obligations have been indefeasibly paid in full.
Each Guarantor agrees that notwithstanding any stay, injunction or other
prohibition preventing the payment by the Borrower of all or any portion of the
Borrower Obligations and notwithstanding that all or any portion of the Borrower
Obligations may be unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower, such
Borrower Obligations shall nevertheless be due and payable by such Guarantor for
the purposes of this Agreement at the time such Borrower Obligations would by
payable by the Borrower under the provisions of the Credit Agreement.
Notwithstanding the foregoing, any enforcement of this Agreement with respect to
the rights of any Lender may be accomplished by the Administrative Agent acting
on behalf of such Lender.

         (b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder shall in no
event exceed the amount which can be guaranteed by such Guarantor under
applicable federal and state laws relating to the insolvency of debtors (after
giving effect to the right of contribution established in Section 2.2).

         (c) Each Guarantor agrees that the Borrower Obligations may at any time
and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.

         (d) The guarantee contained in this Section 2.1 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2.1 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.

                                  Exhibit C-2-3
<PAGE>

         (e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until, subject to Section 2.6, the
Borrower Obligations are paid in full, no Letter of Credit shall be outstanding
and the Commitments are terminated.

         2.2 Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guaranteed by such Guarantor hereunder.

         2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower on
account of the Borrower Obligations are indefeasibly paid in full, no Letter of
Credit shall be outstanding and the Commitments are terminated. If any amount
shall be paid to any Guarantor on account of such subrogation rights at any time
when all of the Borrower Obligations shall not have been paid in full, such
amount shall be held by such Guarantor in trust for the Administrative Agent and
the Lenders, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.

         2.4 Amendments, etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part

                                  Exhibit C-2-4
<PAGE>

thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and the Credit Agreement and
the other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Required Lenders or all
Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of the Borrower Obligations
may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.

         2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the Lenders,
on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees that
the guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Administrative Agent or any Lender, (c) any extension, other indulgence,
renewal, settlement, discharge, compromise, waiver, subordination or release in
respect of any Borrower Obligation, security, Person or otherwise, (d) any
modification or amendment of or supplement to the Borrower Obligations,
including any increase or decrease in the principal, the rates of interest or
other amounts payable thereunder, (e) any release, non-perfection or invalidity
of any direct or indirect security for any Borrower Obligation, (f) any change
in the existence, structure, constitution, name, objects, powers, business,
control or ownership of the Borrower or any other Person, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the Borrower or
any other Person or its assets, (g) any limitation, postponement, prohibition,
subordination or other restriction on the rights of the Administrative Agent or
the Lenders to payment of the Borrower Obligations, (h) any release,
substitution or addition of any cosigner, endorser or other guarantor of the
Borrower Obligations, (i) any defense arising by reason of any failure of the
Borrower to make any presentment, demand for performance, notice of
non-performance, protest, and any other notice, including notice of all of the
following: acceptance of this Agreement, partial payment or non-payment of all
or any part of the Borrower Obligations and the existence,

                                  Exhibit C-2-5
<PAGE>

creation, or incurring of new or additional Borrower Obligations, (j) any
defense arising by reason of any failure of the Administrative Agent to proceed
against the Borrower or any other Person, to proceed against, apply or exhaust
any security held from the Borrower or any other Person for the Borrower
Obligations, to proceed against, apply or exhaust any security held from any
Guarantor or any other Person for this Agreement or to pursue any other remedy
in the power of the Administrative Agent or the Lenders whatsoever, (k) any law
which provides that the obligation of a guarantor must neither be larger in
amount nor in other respects more burdensome than that of the principal
obligation or which reduces a guarantor's obligation in proportion to the
principal obligation, (l) any defense arising by reason of any incapacity, lack
of authority, or other defense of the Borrower or any other Person, or by reason
of any limitation, postponement, prohibition on the Administrative Agent's or
the Lenders' right to payment of the Borrower Obligations or any part thereof,
or by reason of the cessation from any cause whatsoever of the liability of the
Borrower or any other Person with respect to all or any part of the Borrower
Obligations, or by reason of any act or omission of the Administrative Agent or
the Lenders which directly or indirectly results in the discharge or release of
the Borrower or any other Person of all or any part of the Borrower Obligations
or any security or guarantee therefore, whether by contract, operation of law or
otherwise, (m) any defense arising by failure by the Administrative Agent or the
Lenders to obtain, perfect or maintain a perfected or prior (or any) security
interest in or lien or encumbrance upon any property of the Borrower or any
other Person, or by reason of any interest of the Borrower in any property,
whether as owner thereof or the holder of a security interest therein or lien or
encumbrance thereon, being invalidated, voided, declared fraudulent or
preferential or otherwise set aside, or by reason of any impairment by the
Borrower of any right to recourse or collateral, (n) any defense arising by
reason of the failure of the Borrower to marshal any assets, (o) any defense
based upon any failure of the Administrative Agent or any Lender to give to the
Borrower or any Guarantor notice of any sale or other disposition of any
property securing any or all of the Obligations, or any defect in any notice
that may be given in connection with any sale or other disposition of any such
property, or any failure of the Administrative Agent or any Lender to comply
with any provision of applicable law in enforcing any security interest in or
lien upon any such property, including any failure of the Administrative Agent
or any Lender to dispose of any such property in a commercially reasonable
manner, (p) any dealing whatsoever with the Borrower or other Person or any
security, whether negligently or not, or any failure to do so, (q) any defense
based upon or arising out any bankruptcy, insolvency, reorganization,
moratorium, arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against the Borrower or any other Person, including
any discharge of, or bar against collecting, any of the Borrower Obligations, in
or as a result of any such proceeding, (r) or any other act or omission to act
or delay of any kind by the Borrower, the Administrative Agent, any Lender, any
Guarantor or any other Person or any other circumstance whatsoever, whether
similar or dissimilar to the foregoing, which might, but for the provisions of
this Section 2.5, constitute a legal or equitable discharge, limitation or
reduction of such Guarantor's obligations hereunder (other than the payment in
full of all of the Borrower Obligations). The foregoing provisions apply (and
the foregoing waivers will be effective) even if the effect of any action (or
failure to take any action) by the Administrative Agent or any Lender is to
destroy or diminish a Guarantor's subrogation rights, such Guarantor's right to
proceed against the Borrower for reimbursement, such Guarantor's right to
recover contribution from any other Guarantor or any other right or remedy. When
making any demand hereunder or otherwise pursuing its rights and remedies
hereunder

                                  Exhibit C-2-6

<PAGE>

against any Guarantor, the Administrative Agent or any Lender may, but shall be
under no obligation to, make a similar demand on or otherwise pursue such rights
and remedies as it may have against the Borrower, any other Guarantor or any
other Person or against any collateral security or guarantee for the Borrower
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Borrower, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against any Guarantor. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.

         2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.

         2.7 Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim and
without deduction for any taxes and in immediately available funds and in
Dollars at the Administrative Agent 's payment office at the address provided in
Section 2.16 of the Credit Agreement.

                    SECTION 3. REPRESENTATIONS AND WARRANTIES

         To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower thereunder, each Guarantor hereby represents and
warrants to the Administrative Agent and each Lender that:

         3.1 Representations in Credit Agreement. In the case of each Guarantor,
the representations and warranties set forth in Article 3 of the Credit
Agreement as they relate to such Guarantor or to which such Guarantor is a
party, each of which is hereby incorporated herein by reference, are true and
correct, and the Administrative Agent and each Lender shall be entitled to rely
on each of them as if they were fully set forth herein. Each Guarantor also
represents and warrants that it is Solvent.

                              SECTION 4. COVENANTS

         Each Guarantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated, in the case

                                  Exhibit C-2-7
<PAGE>

of each Guarantor, such Guarantor shall take, or shall refrain from taking, as
the case may be, each action that is necessary to be taken or not taken, as the
case may be, so that no Default or Event of Default is caused by the failure to
take such action or to refrain from taking such action by such Guarantor or any
of its Subsidiaries.

                       SECTION 5. THE ADMINISTRATIVE AGENT

         5.1 Authority of Administrative Agent. Each Guarantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Guarantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and no Guarantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.

                            SECTION 6. MISCELLANEOUS

         6.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 9.02 of the Credit Agreement.

         6.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Guarantor hereunder shall be effected in the manner
provided for in Section 9.01 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.

         6.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 6.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

         6.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise

                                  Exhibit C-2-8

<PAGE>

enforcing or preserving any rights under this Agreement and which such Guarantor
is a party, including, without limitation, the reasonable fees and disbursements
of counsel (including the allocated fees and expenses of in-house counsel) to
each Lender and of counsel to the Administrative Agent.

         (b) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the same extent
the Borrower would be required to do so pursuant to Section 9.03 of the Credit
Agreement.

         (c) The agreements in this Section 6.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.

         6.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
that no Guarantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.

         6.6 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent. Delivery of an executed counterpart of a signature page of
this Agreement by telecopy or facsimile shall be effective as delivery of a
manually executed counterpart of this Agreement.

         6.7 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         6.8 Integration. This Agreement and the other Loan Documents represent
the entire agreement of the Guarantors, the Administrative Agent and the Lenders
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein.

         6.9 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND TO THE EXTENT
CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA.

                                  Exhibit C-2-9

<PAGE>

         6.10 Submission To Jurisdiction; Waivers. Each Guarantor hereby
irrevocably and unconditionally:

         (a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;

         (b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

         (c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Guarantor at its
address referred to in Section 6.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

         (d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction; and

         (e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section 6.10 any special, exemplary, punitive or consequential damages.

         6.11 Acknowledgments. Each Guarantor hereby acknowledges that:

         (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;

neither the Administrative Agent nor any Lender has any fiduciary relationship
with or duty to any Guarantor arising out of or in connection with this
Agreement or the relationship between the Administrative Agent and Lenders, on
one hand, and the Guarantors, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and

         (b) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Guarantors and the Lenders.

         6.12 WAIVERS OF JURY TRIAL. EACH GUARANTOR, AND THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

                                 Exhibit C-2-10
<PAGE>

         6.13 Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

         6.14 Additional Guarantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 5.11 of the
Credit Agreement shall become a Guarantor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of an Assumption Agreement in the
form of Annex I hereto.

                                 Exhibit C-2-11
<PAGE>

IN WITNESS WHEREOF, each of the undersigned has caused this Subsidiary Guaranty
Agreement to be duly executed and delivered as of the date first above written.

                                    Guarantor

                           By: [                                              ]
                                -----------------------------------------------
                           Title:

                           [Guarantor]

                           By: [                                              ]
                                -----------------------------------------------
                           Title:

                                 Exhibit C-2-12
<PAGE>

                                                                      Schedule 1

                         NOTICE ADDRESSES OF GUARANTORS

                  Guarantors                                  Address

                                 Exhibit C-2-13
<PAGE>

                           ACKNOWLEDGMENT AND CONSENT

         The undersigned hereby acknowledges receipt of a copy of the Subsidiary
Guaranty Agreement dated as of [__________], [200_], (the "Subsidiary Guaranty
Agreement"), made by the Guarantors parties thereto for the benefit of JPMorgan
Chase Bank, formerly known as The Chase Manhattan Bank, as Administrative Agent.
The undersigned agrees for the benefit of the Administrative Agent and the
Lenders the undersigned will be bound by the terms of the Subsidiary Guaranty
Agreement and will comply with such terms insofar as such terms are applicable
to the undersigned.

                               [                                              ]
                                -----------------------------------------------

                           By: [                                              ]
                                -----------------------------------------------
                           Title:

                           Address for Notices:

                                 Exhibit C-2-14
<PAGE>

                                                                      Annex 1 to
                                                   Subsidiary Guaranty Agreement

         ASSUMPTION AGREEMENT, dated as of [________________], [200_], by
[_________________________________________], a [______________________]
corporation (the "Additional Guarantor"), in favor of JPMorgan Chase Bank,
formerly known as The Chase Manhattan Bank, as Administrative Agent (in such
capacity, the "Administrative Agent ") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.

                                   WITNESSETH:

         WHEREAS, Valero Logistics Operations, L.P., (the "Borrower"), the
Lenders and the Administrative Agent have entered into a Credit Agreement, dated
as of December 15, 2000 as amended and restated through March 6, 2003, (the
"Credit Agreement");

         WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its affiliates (other than the Additional Guarantor) have entered
into the Subsidiary Guaranty Agreement, dated as of [_________], [200_] (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guaranty Agreement") in favor of the Administrative Agent for the benefit of the
Lenders:

         WHEREAS, the Credit Agreement requires the Additional Guarantor to
become a party to the Subsidiary Guaranty Agreement; and

         WHEREAS, the Additional Guarantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Subsidiary Guaranty
Agreement;

         NOW, THEREFORE, IT IS AGREED:

1.       Subsidiary Guaranty Agreement. By executing and delivering this
         Assumption Agreement, the Additional Guarantor, as provided in Section
         6.14 of the Subsidiary Guaranty Agreement, hereby becomes a party to
         the Subsidiary Guaranty Agreement as a Guarantor thereunder with the
         same force and effect as if originally named therein as a Guarantor
         and, without limiting the generality of the foregoing, hereby expressly
         assumes all obligations and liabilities of a Guarantor thereunder. The
         information set forth in Annex l-A hereto is hereby added to the
         information set forth in Schedule 1 to the Subsidiary Guaranty
         Agreement. The Additional Guarantor hereby represents and warrants that
         each of the representations and warranties contained in Section 3 of
         the Subsidiary Guaranty Agreement is true and correct on and as the
         date hereof (after giving effect to this Assumption Agreement) as if
         made on and as of such date.

2.       GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
         PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
         INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK

                                Exhibit C-2-15
<PAGE>

         AND TO THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA.

                                 Exhibit C-2-16
<PAGE>

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.

                             [ADDITIONAL GUARANTOR]

                             By:      [                                       ]
                                       ---------------------------------------
                                       Name:
                                       Title:

                                 Exhibit C-2-17
<PAGE>

                                   EXHIBIT D-1

                  FORM OF INITIAL NOTICE OF COMMITMENT INCREASE

                                     [Date]

JPMorgan Chase Bank,
  as Administrative Agent
1111 Fannin, 8th Floor
Houston, TX  77002

Attention:  __________________

Ladies and Gentlemen:

         The undersigned, Valero Logistics Operations, L.P., refers to the
Credit Agreement dated as of December 15, 2000, as amended and restated through
March 6, 2003 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement", with terms defined in the Credit Agreement and not
otherwise defined herein being used herein as therein defined) among Valero
Logistics Operations, L.P., a Delaware limited partnership (the "Borrower"), the
Lenders party thereto, JPMorgan Chase Bank, as Administrative Agent, Royal Bank
of Canada, as Syndication Agent and SunTrust Bank and Mizuho Corporate Bank
Ltd., as Co-Documentation Agents and hereby gives you notice, pursuant to
Section 2.18 of the Credit Agreement that the undersigned hereby requests that
(x) the Lenders agree to increase their respective Commitments and/or (y) the
New Lenders agree to provide Commitments under the Credit Agreement, and in that
connection sets forth below the information relating to such proposed Commitment
increase as required by Section 2.18 of the Credit Agreement:

                  (i) the effective date of such increase of aggregate amount of
         the Lenders' Commitments is _______________; and

                  (ii) the amount of the requested increase (and/or provision,
         as applicable) of the aggregate Lenders' Commitments is
         $________________ [$10,000,000 minimum];

                                 Exhibit D-1-1
<PAGE>

         Delivery of an executed counterpart of this Initial Notice of
Commitment Increase by telecopier shall be effective as delivery of an original
executed counterpart of this Initial Notice of Commitment Increase.

                       Very truly yours,

                       VALERO LOGISTICS OPERATIONS, L.P.

                              By:   Valero GP, Inc., its General Partner

                                    By:
                                       ----------------------------------------
                                    Name:    Steven A. Blank
                                    Title:   Senior Vice President and Chief
                                             Financial Officer

                                 Exhibit D-1-2
<PAGE>

                                   EXHIBIT D-2

              FORM OF NOTICE OF CONFIRMATION OF COMMITMENT INCREASE

                                     [Date]

JPMorgan Chase Bank,
  as Administrative Agent
1111 Fannin, 8th Floor
Houston, TX  77002

Attention:  __________________

Ladies and Gentlemen:

         The undersigned, Valero Logistics Operations, L.P., refers to the
Credit Agreement dated as of December 15, 2000, as amended and restated through
March 6, 2003 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement", with terms defined in the Credit Agreement and not
otherwise defined herein being used herein as therein defined) among Valero
Logistics Operations, L.P., a Delaware limited partnership (the "Borrower"), the
Lenders party thereto, JPMorgan Chase Bank, as Administrative Agent, Royal Bank
of Canada, as Syndication Agent and SunTrust Bank and Mizuho Corporate Bank
Ltd., as Co-Documentation Agents and hereby gives you notice, irrevocably,
pursuant to Section 2.18 of the Credit Agreement that the undersigned hereby
requests that (x) the Lenders agree to increase their respective Commitments
and/or (y) the New Lenders agree to provide Commitments under the Credit
Agreement, and in that connection sets forth below the information relating to
such proposed Commitment increase as required by Section 2.18 of the Credit
Agreement:

                  (i) the effective date of such increase of aggregate amount of
         the Lenders' Commitments is _________________;

                  (ii) the amount of the requested increase (and/or provision,
         as applicable) of the aggregate Lenders' Commitments is________________
         [$10,000,000 minimum];

                  (iii) the Increasing Lenders, the Partially Increasing Lenders
         or the New Lenders, if any, which have agreed with the Borrower to
         increase (and/or provide, as applicable) their respective Commitments
         or to provide Commitments, as the case may be, are: [INSERT NAMES OF
         THE INCREASING LENDERS, THE PARTIALLY INCREASING LENDERS AND/OR NEW
         LENDERS];

                  (iv) the Reducing Lenders, if any, which have not agreed to
         increase their respective Commitments are: [INSERT THE NAMES OF THE
         REDUCING LENDERS]; and

                  (v) set forth on Schedule I hereto is the amount of the
         respective Commitments of all Increasing Lenders, Partially Increasing
         Lenders, Reducing Lenders and New Lenders after the effective date of
         such increase.

                                 Exhibit D-1-3
<PAGE>

         Delivery of an executed counterpart of this Notice of Confirmation of
Commitment Increase by telecopier shall be effective as delivery of an original
executed counterpart of this Notice of Confirmation of Commitment Increase.

                         Very truly yours,

                         VALERO LOGISTICS OPERATIONS, L.P.

                                By:   Valero GP, Inc., its General Partner

                                      By:
                                         --------------------------------------
                                      Name:    Steven A. Blank
                                      Title:   Senior Vice President and Chief
                                               Financial Officer

                                 Exhibit D-1-4<PAGE>
                                                                   EXHIBIT 10.13

================================================================================

                             CONTRIBUTION AGREEMENT

================================================================================

                                  By and Among

                      VALERO REFINING COMPANY - CALIFORNIA,

                        UDS LOGISTICS, LLC, VALERO L.P.,

                                 VALERO GP, INC.

                                       and

                        VALERO LOGISTICS OPERATIONS, L.P.

================================================================================

                                  March 6, 2003

<PAGE>

                             EXHIBITS AND SCHEDULES

           Exhibit A:                Description of Tank Assets
           Exhibit A-1:              Description of Land
           Exhibit B:                Form of Throughput Agreement
           Exhibit C:                Form of Services Agreement
           Exhibit D:                Form of Lease Agreement
           Exhibit E:                Form of Assignment
           Exhibit F:                Form of Closing Tax Certificate

           Schedule 1(b)             Permitted Encumbrances
           Schedule 3(a)(ii)         Consents (VRC)
           Schedule 3(b)(ii)         Consents (The MLP Parties)
           Schedule 4(a)             Noncontravention (the Tank Assets)
           Schedule 4(b)(ii)         Condition of Tank Assets
           Schedule 4(c)             Material Changes
           Schedule 4(e)(ii)         Rights of Way
           Schedule 4(g)             Environmental Matters
           Schedule 4(g)(ii)         Environmental Permits
           Schedule 5(c)             Operation of Tank Assets

<PAGE>

                             CONTRIBUTION AGREEMENT

         This Contribution Agreement (this "Agreement") dated as of March 6,
2003 (the "Effective Date") is by and among Valero Refining Company -
California, a Delaware corporation ("VRC"), UDS Logistics, LLC, a Delaware
limited liability company ("UDS Logistics"), Valero L.P., a Delaware limited
partnership (the "MLP"), Valero Logistics Operations, L.P., a Delaware limited
partnership (the "OLP") and Valero GP, Inc., a Delaware corporation and the
general partner of the OLP ("OLP-GP"). VRC, UDS Logistics, the MLP, the OLP and
the OLP-GP are sometimes referred to collectively herein as the "Parties" and
individually as a "Party."

                                    RECITALS

         WHEREAS, VRC owns all of the tank shells, foundations, tank valves,
tank gauges, pressure equipment, temperature equipment, cathodic protection,
leak detection, and tank lighting associated with the crude and intermediate
feedstock tanks listed on Exhibit A, along with the other assets described on
Exhibit A hereto (collectively, the "Tank Assets");

         WHEREAS, VRC desires to contribute the Tank Assets to the OLP in
exchange for a limited partner interest in the OLP representing $95.8 million
(the "OLP Limited Partner Interest"), and the OLP desires to accept the
contribution of the Tank Assets, subject to the terms and conditions set forth
below;

         WHEREAS, immediately upon receipt of the OLP Limited Partner Interest,
VRC desires to contribute the OLP Limited Partner Interest to UDS Logistics in
exchange for a membership interest in UDS Logistics representing $95.8 million
(the "UDS Membership Interest"), and UDS Logistics desires to accept the
contribution of the OLP Limited Partner Interest, subject to the terms and
conditions set forth below; and

         WHEREAS, at the Closing, among other things, (i) the OLP and Valero
Marketing and Supply Company, a Delaware corporation ("VMSC"), will enter into a
Handling and Throughput Agreement in the form of Exhibit B (the "Throughput
Agreement") setting forth the rights and obligations of such parties with
respect to the handling and delivery of Specified Feedstocks (as such term is
defined in the Throughput Agreement) for the Benicia, Corpus Christi West and
Texas City refineries (the "Refineries") that are owned by affiliates of VMSC,
(ii) the OLP and VRC will enter into a Services and Secondment Agreement in the
form of Exhibit C (the "Services Agreement") whereby VRC agrees to second VRC
personnel to OLP to provide certain operational and maintenance services to the
OLP in connection with the Tank Assets, and (iii) VRC, as lessor, and the OLP,
as lessee, will enter into a lease of the land in the form of Exhibit D (the
"Lease Agreement") located in Solano County, California, upon which the Tank
Assets are situated (the "Land") and as more particularly described on Exhibit
A-1 hereto.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:

                                       1
<PAGE>

         1. Definitions.

         "Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses, but excluding
punitive (except as provided in SECTION 8), exemplary, special or consequential
damages.

         "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended from time to
time; provided, however, that (i) with respect to any of the MLP Parties, the
term "Affiliate" shall exclude each member of the Valero Group and (ii) with
respect to VRC, the term "Affiliate" shall exclude each member of the MLP Group.

         "Agreement" has the meaning set forth in the preface.

         "Assignment" means the assignment and assumption agreement in the form
of Exhibit E pursuant to which all of the Tank Assets will be assigned.

         "Basis" means any past or current fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction about which the relevant Person has
Knowledge that forms or could form the basis for any specified consequence.

         "Best Efforts" means the efforts, time, and costs that a prudent Person
desirous of achieving a result would use, expend, or incur in similar
circumstances to ensure that such result is achieved as expeditiously as
possible; provided, however, that no such use, expenditure, or incurrence shall
be required if it could reasonably be expected to have a material adverse effect
on such Person or to require an expense of such Person in excess of $1,000,000.

         "Cash Amount" means $98,500,000.

         "Casualty" has the meaning set forth in SECTION 11(b).

         "CERCLA" has the meaning set forth in SECTION 4(g)(i).

         "Closing" has the meaning set forth in SECTION 2(b).

         "Closing Date" has the meaning set forth in SECTION 2(b).

         "Code" means the Internal Revenue Code of 1986, as amended, or any
successor Law.

         "Commitment" means (a) options, warrants, convertible securities,
exchangeable securities, subscription rights, conversion rights, exchange rights
or other contracts that could require a Person to issue any of its Equity
Interests or to sell any Equity Interest it owns in another Person; (b) any
other securities convertible into, exchangeable or exercisable for, or
representing the right to subscribe for any Equity Interest of a Person or owned
by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted
under a Person's Organizational

                                       2
<PAGE>

Documents; and (d) stock appreciation rights, phantom stock, profit
participation, or other similar rights with respect to a Person.

         "Common Units" has the meaning set forth in the Amended and Restated
Agreement of Limited Partnership of Valero L.P.

         "Conflicts Committee" means the conflicts committee of the board of
directors of Valero GP.

         "Contributed OLP Interest" has the meaning set forth in SECTION
2(a)(VIII).

         "Crude Oil" means crude petroleum oil and all other hydrocarbons,
regardless of gravity, produced at the well in liquid form by ordinary
production methods and which are not the result of condensation of gas.

         "Effective Date" has the meaning set forth in the preface.

         "Encumbrance" means any mortgage, pledge, lien, encumbrance, charge,
security interest, Preferential Right or other defect in title.

         "Environmental Law" and "Environmental Laws" have the meanings set
forth in SECTION 4(g)(i).

         "Equity Interest" means (a) with respect to a corporation, any and all
shares of capital stock and any Commitments with respect thereto, (b) with
respect to a partnership, limited liability company, trust or similar Person,
any and all units, interests or other partnership, limited liability company,
trust or similar interests, and any Commitments with respect thereto, and (c)
any other direct equity ownership or participation in a Person.

         "GAAP" means accounting principles generally accepted in the United
States consistently applied.

         "Governmental Authority" means the United States or any agency thereof
and any state, county, city or other political subdivision, agency, court or
instrumentality.

         "Hazardous Substances" means all materials, substances, chemicals, gas
and wastes which are regulated under any Environmental Law or which may form the
basis for liability under any Environmental Law.

         "Indemnified Party" has the meaning set forth in SECTION 8(d).

         "Indemnifying Party" has the meaning set forth in SECTION 8(d)

         "Knowledge": an individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is consciously aware of such
fact or other matter at the time of determination. A Person other than a natural
person shall be deemed to have "Knowledge" of a particular fact or other matter
if (i) any natural person who is serving as a director, senior executive
officer, partner, member, executor, or trustee of such Person (or in any similar

                                       3
<PAGE>

capacity) or (ii) any employee (or any natural person serving in a similar
capacity) who is charged with the ultimate responsibility for a particular area
of such Person's operations (e.g., the manager of the environmental section with
respect to knowledge of environmental matters), at the time of determination
had, Knowledge of such fact or other matter.

         "Land" has the meaning set forth in the recitals.

         "Law" or "Laws" means any statute, code, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any applicable
Governmental Authority.

         "Lease Agreement" has the meaning set forth in the recitals.

         "Material Adverse Effect" means any change or effect relating to the
operations relating to the Tank Assets, taken as a whole, that, individually or
in the aggregate with other changes or effects, materially and adversely affects
the value of the Tank Assets taken as a whole, provided that in determining
whether a Material Adverse Effect has occurred, changes or effects relating to
(i) the Crude Oil transportation and refining industry generally (including the
price of Crude Oil and the costs associated with the storage and/or
transportation of Crude Oil), (ii) United States or global economic conditions
or hostilities or financial markets in general, or (iii) the transactions
contemplated by this Agreement, shall not be considered.

         "MLP" has the meaning set forth in the preface.

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

         "MLP Group" means (i) each of the MLP Parties, (ii) MLP-GP, (iii)
Valero GP, (iv) each Affiliate of each of the MLP Parties in which such MLP
Party owns (directly or indirectly) an Equity Interest and (v) each natural
person that is an Affiliate of any MLP Party solely because of such natural
person's position as an officer (or person performing similar functions),
director (or person performing similar functions) or other representative of any
Person described in (i) - (iv) above, but only to the extent that such natural
person is in its capacity as an officer, director or representative of such
Person.

         "MLP Parties" means each of (i) the MLP, (ii) OLP-GP, (iii) the OLP and
(iv) each Affiliate of the entities in (i) - (iii) which is a party to any
Transaction Agreement.

         "MLP Party Indemnitees" means, collectively, the MLP Parties and their
Affiliates and each of their respective officers (or Persons performing similar
functions), directors (or Persons performing similar functions), employees,
agents and representatives to the extent acting in such capacity.

         "NonAffiliate Purchaser" has the meaning set forth in SECTION 2(d).

         "Obligations" means duties, liabilities and obligations, whether
vested, absolute or contingent, known or unknown, asserted or unasserted,
accrued or unaccrued, liquidated or unliquidated, due or to become due, and
whether contractual, statutory or otherwise.

                                       4
<PAGE>

         "Offer" has the meaning set forth in SECTION 2(d)(i).

         "Offered Assets" has the meaning set forth in SECTION 2(d).

         "OLP" has the meaning set forth in the preface.

         "OLP-GP" has the meaning set forth in the preface.

         "OLP Limited Partner Interest" has the meaning set forth in the
recitals.

         "Ordinary Course" means the ordinary course of business consistent with
the applicable Person's past custom and practice (including with respect to
quantity and frequency).

         "Organizational Documents" means the articles of incorporation,
certificate of incorporation, charter, bylaws, articles or certificate of
formation, regulations, operating agreement, certificate of limited partnership,
partnership agreement, and all other similar documents, instruments or
certificates executed, adopted, or filed in connection with the creation,
formation, or organization of a Person, including any amendments thereto.

         "Party" and "Parties" have the meanings set forth in the preface.

         "Permitted Encumbrances" means any of the following: (i) any liens for
Taxes and assessments not yet delinquent or, if delinquent, that are being
contested in good faith in the Ordinary Course and the Party contesting such
assessments indemnifies the Party taking the property subject to such lien from
such lien and such contest; (ii) any inchoate liens or other encumbrances (other
than mechanic's, materialmen's and similar liens) and any other defect in title
created pursuant to any operating, farmout, construction, operation and
maintenance, co-owners, cotenancy, lease or similar agreements listed on
SCHEDULE 1(b) for which amounts are not due; and (iii) easements, rights-of-way,
restrictions and other similar Encumbrances incurred in the Ordinary Course
which, in the aggregate, are not substantial in amount and which do not in any
case materially detract from the value of the property subject thereto as it is
currently being used or materially interfere with the Ordinary Course conducted
thereon.

         "Person" means an individual or entity, including any partnership,
corporation, association, joint stock company, trust, joint venture, limited
liability company, unincorporated organization, or Governmental Authority (or
any department, agency or political subdivision thereof).

         "Post-Closing Tax Period" means any Tax period beginning after the
Closing Date.

         "Post-Closing Tax Return" means any Tax Return that is required to be
filed for any of the Tank Assets with respect to a Post-Closing Tax Period.

         "Pre-Closing Tax Period" means any Tax periods or portions thereof
ending on or before the Closing Date.

         "Pre-Closing Tax Return" means any Tax Return that is required to be
filed for any of the Tank Assets with respect to a Pre-Closing Tax Period.

                                       5
<PAGE>

         "Preferential Rights" has the meaning set forth in SECTION 4(h).

         "Prime Rate" means the prime rate reported in the Wall Street Journal
at the time such rate must be determined under the terms of this Agreement.

         "Private Placement" has the meaning set forth in SECTION 2(a)(i).

         "Records" has the meaning set forth in SECTION 6(c).

         "Redemption" has the meaning set forth in SECTION 2(a)(III).

         "Refineries" has the meaning set forth in the recitals.

         "Required Permits" has the meaning set forth in SECTION 4(g)(II).

         "Rights of Way" has the meaning set forth in SECTION 4(e).

         "Services Agreement" has the meaning set forth in the recitals.

         "Specified Feedstocks" has the meaning set forth in the recitals.

         "Straddle Period" means a Tax period or year commencing before and
ending after the Closing Date.

         "Straddle Return" means a Tax Return for a Straddle Period.

         "Subject Insurance Policies" means those material policies of insurance
that VRC or any of its Affiliates maintain covering any Tank Assets.

         "Taking" has the meaning set forth in SECTION 11(b)(C).

         "Tank Assets" has the meaning set forth in the recitals.

         "Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), custom duties, capital stock, franchise, profits, withholding,
social security (or similar excises), unemployment, disability, ad valorem, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.

         "Tax Records" means all Tax Returns and Tax-related work papers
relating to the Tank Assets and the Land.

         "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

         "Third Party Claim" has the meaning set forth in SECTION 8(d)(i).

                                       6
<PAGE>

         "Third Party Offer" has the meaning set forth in SECTION 2(d).

         "Throughput Agreement" has the meaning set forth in the recitals.

         "Transaction" has the meaning set forth in SECTION 5(b).

          "Transaction Agreements" means this Agreement, the Assignment, the
Lease and Access Agreement(s), the Throughput Agreement, the Services Agreement
and all other agreements, documents, certificates or instruments executed and
delivered in connection with the transactions contemplated herein and therein.

         "Transfer Taxes" has the meaning set forth in SECTION 9(e).

         "UDS Logistics" has the meaning set forth in the preface.

         "UDS Membership Interests" has the meaning set forth in the recitals.

         "Underwriting Agreement" has the meaning set forth in SECTION 7(a)(vi).

         "Unit Offering" has the meaning set forth in SECTION 2(a)(ii).

         "Valero GP" means Valero GP, LLC, a Delaware limited liability company
and the general partner of MLP-GP.

         "Valero Group" means, excluding members of the MLP Group, (i) each
Affiliate of Valero Energy Corporation in which Valero Energy Corporation owns
(directly or indirectly) an Equity Interest and (ii) each natural person that is
an Affiliate of any Person described in (i) above solely because of such natural
person's position as an officer (or person performing similar functions),
director (or person performing similar functions) or other representative of any
Person described in (i) above, but only to the extent that such natural person
is acting in its capacity as an officer, director or representative of such
Person.

         "VRC" has the meaning set forth in the preface.

         "VRC Indemnitees" means, collectively, VRC and its Affiliates and each
of their respective officers (or Persons performing similar functions),
directors (or Persons performing similar functions), employees, agents, and
representatives.

         "VRC Parties" means each of (i) VRC, (ii) UDS Logistics, (iii) Valero
Energy Corporation and (iv) each Affiliate of VRC in which Valero Energy
Corporation owns (directly or indirectly) an Equity Interest and which is a
party to any Transaction Agreement (but excluding any MLP Parties).

         "VMSC" has the meaning set forth in the recitals.

         2. Concurrent Transactions.

            (a) Contribution of Tank Assets. Subject to the terms and conditions
of this Agreement, the Parties agree that the following transactions will occur
in the following order:

                                       7
<PAGE>

                  (i) the MLP will cause the OLP to borrow from its credit
         facility and the MLP proposes to cause the OLP to issue long-term debt
         (the "Private Placement") to institutional investors pursuant to Rule
         144A promulgated under the Securities Act of 1933 (which indebtedness
         shall be guaranteed by the MLP);

                  (ii) the MLP proposes to issue additional Common Units,
         representing limited partner interests in the MLP, to the public in
         exchange for cash (the "Unit Offering");

                  (iii) using a portion of the net proceeds from the Private
         Placement, the MLP will redeem (the "Redemption") a sufficient number
         of Common Units owned by UDS Logistics to reduce, in conjunction with
         the Unit Offering, the aggregate, combined ownership interest of UDS
         Logistics and Valero GP in the MLP to 49.5% or less;

                  (iv) except as provided in SECTION 11(d), VRC will contribute
         to the OLP, in exchange for the OLP Limited Partner Interest, the Tank
         Assets free and clear of any Encumbrances other than Permitted
         Encumbrances;

                  (v) VRC will contribute to UDS Logistics, in exchange for the
         UDS Membership Interest (or in the alternative, as provided in SECTION
         11(d), for cash) the OLP Limited Partner Interest, free and clear of
         any Encumbrances;

                  (vi) the OLP, on behalf of the MLP, will pay the Cash Amount
         to UDS Logistics in exchange for the right to be assigned the OLP
         Limited Partner Interest from UDS Logistics;

                  (vii) UDS Logistics will contribute to the MLP, in exchange
         for the payment of the Cash Amount from the OLP, on behalf of the MLP,
         the OLP Limited Partner Interest, free and clear of any Encumbrances;

                  (viii) the MLP will contribute to OLP-GP such portion of the
         OLP Limited Partner Interest (the "Contributed OLP Interest") as is
         necessary for OLP-GP to maintain its 0.01% general partner interest in
         the OLP; and

                  (ix) the Contributed OLP Interest will be immediately
         converted into a general partner interest in the OLP.

            (b) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at One Valero Place, San
Antonio, Texas, 78212, commencing at 10:00 a.m., local time, on the fifth
business day following the date as of which the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby has occurred (other than conditions with respect to actions
each Party shall take at the Closing itself) or such other date as the Parties
may mutually determine (the "Closing Date").

            (c) Deliveries at the Closing. At the Closing, (i) VRC shall deliver
to the MLP Parties the various certificates, instruments, and documents referred
to in SECTIONS 7(a) AND 9(g); (ii) the MLP Parties shall deliver to VRC the
various certificates, instruments, and documents referred to in SECTION 7(b);
(c) the applicable Parties shall execute and deliver each of (A) the

                                       8
<PAGE>

Assignment; (B) the Throughput Agreement; (C) the Services Agreement; and (D)
the Lease Agreement; (iii) UDS Logistics shall issue to VRC the UDS Membership
Interest; (iv) the OLP, on behalf of the MLP, shall pay to UDS Logistics the
Cash Amount; (v) the applicable Parties shall execute and/or deliver, or cause
to be executed and/or delivered, such other consideration, documents, assets and
interests as set forth in SECTION 2(a) above; and (vi) the applicable Parties
shall execute and/or deliver, or cause to be executed and/or delivered, each
other Transaction Agreement not listed above.

            (d) Right of First Offer. Should the board of directors of Valero GP
determine at any time after the Closing Date (either through an unsolicited bona
fide offer from a Person that is not an Affiliate of the Valero Group (a "Third
Party Offer") or through an offer solicited by any of the MLP Parties) that it
is in the best interests of the MLP Parties to divest any or all of the Tank
Assets (the "Offered Assets"), Valero GP shall promptly notify VRC of such
determination and deliver to VRC all information prepared by or on behalf of
Valero GP relating to the potential divestiture. As soon as practicable but in
any event within 30 days after receipt of such notification and information, VRC
shall notify Valero GP that either (a) VRC has elected not to pursue the
opportunity to acquire the Offered Assets, in which case the MLP shall be free
to offer and divest the Offered Assets to (1) the Person that initiated the
Third Party Offer (the "Third Party Offeror") or (2) a Person that is not an
Affiliate of the Valero Group (a "NonAffiliate Purchaser"), or (b) VRC has
elected to pursue the opportunity to acquire the Offered Assets, in which event
the following procedures shall be followed:

                  (i) VRC shall submit a good faith offer to Valero GP to
         acquire the Offered Assets (the "Offer") on the terms and for the
         consideration stated in the Offer;

                  (ii) VRC and Valero GP shall negotiate in good faith for 90
         days after receipt of such Offer by Valero GP, the terms on which the
         Offered Assets will be acquired by VRC. Valero GP shall provide all
         information concerning the operations and finances of the Offered
         Assets as may be reasonably requested by VRC.

                           (A) If VRC and Valero GP agree on such terms within
                  90 days after the receipt by Valero GP of the Offer, VRC shall
                  acquire the Offered Assets on such terms after such agreement
                  has been reached; provided, however, that the acquisition
                  consideration to be paid by VRC may not be less than the
                  acquisition consideration offered in the Third Party Offer.

                           (B) If VRC and Valero GP are unable to agree on the
                  terms of an acquisition during such 90-day period, the MLP is
                  free to divest the Offered Assets to (1) the Third Party
                  Offeror within 180 days of the termination of such 90-day
                  period; provided that such Third Party Offer is not less than
                  95% of the acquisition consideration last offered by VRC or
                  (2) a NonAffiliate Purchaser; provided that any such
                  divestiture to a NonAffiliate Purchaser must be for an
                  acquisition consideration of not less than 95% of the
                  acquisition consideration last offered by VRC and on the same
                  material terms and conditions as last offered by VRC;
                  provided, further, that if such NonAffiliate Purchaser shall
                  offer less than 95% of the acquisition consideration last
                  offered by VRC or offer to purchase the

                                       9
<PAGE>

                  Tank Assets on terms and conditions materially less favorable
                  to the MLP than those last offered by VRC, the MLP must first
                  give VRC notice and a right to match the offer from the
                  NonAffiliate Purchaser during a 15-day period after
                  notification of same from MLP to VRC.

                           (C) During such 90-day period Valero GP shall be free
                  to make capital expenditures to maintain the Offered Assets.

                  (iii) If, after the expiration of the 180-day period referred
         to in clause (ii)(B) above, no NonAffiliate Purchaser or Third Party
         Offeror has acquired the Offered Assets and Valero GP confirms its
         determination that it is in the best interests of the MLP Parties to
         divest the Offered Assets, Valero GP shall comply with the provisions
         of this SECTION 2(d) once again; provided that if Valero GP and VRC are
         unable to reach agreement during the 90-day period referenced in clause
         (ii)(B) above, the parties will engage an independent investment
         banking firm of national reputation to determine the value of the
         Offered Assets and shall furnish VRC and Valero GP with its opinion of
         such value within 30 days of its engagement. VRC and Valero GP shall
         share equally the fees and expenses of such investment banking firm.
         Upon receipt of such opinion, Valero GP will have the option to

                           (A) cause the MLP to divest the Offered Assets for an
                  amount equal to the value as determined by such investment
                  banking firm on terms substantially similar to the relevant
                  terms of this Agreement or

                           (B) decline to divest the Offered Assets.

         3. Representations and Warranties Concerning the Transaction.

            (a) Representations and Warranties of VRC. VRC hereby represents and
warrants to the MLP Parties as follows as of the Effective Date:

                  (i) Organization and Good Standing. VRC is a corporation duly
         incorporated, validly existing, and in good standing under the Laws of
         the state of Delaware. VRC is in good standing under the Laws of the
         state of California and each other jurisdiction which requires such
         qualification, except where the lack of such qualification would not
         have a Material Adverse Effect.

                  (ii) Authorization of Transaction. Each VRC Party has full
         power and authority (including full entity power and authority) to
         execute and deliver each Transaction Agreement to which such VRC Party
         is a party and to perform its obligations thereunder. Each Transaction
         Agreement to which any VRC Party is a party constitutes the valid and
         legally binding obligation of such VRC Party, enforceable against such
         VRC Party in accordance with its terms and conditions, subject,
         however, to the effects of bankruptcy, insolvency, reorganization,
         moratorium or similar Laws affecting creditors' rights generally, and
         to general principles of equity (regardless of whether such
         enforceability is considered in a proceeding in equity or at law).
         Except as set forth on SCHEDULE 3(A)(II), no VRC Party need give any
         notice to, make any filing with, or obtain any authorization, consent,
         or approval of any Governmental Authority or any other

                                       10
<PAGE>

         Person in order to consummate the transactions contemplated by this
         Agreement or any other Transaction Agreement to which such VRC Party is
         a party.

                  (iii) Noncontravention. Except for filings specified in
         SCHEDULE 3(a)(ii) and filings and notifications required under the
         Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended, the
         "HSR Act"), neither the execution and delivery of any Transaction
         Agreement, nor the consummation of any of the transactions contemplated
         thereby, shall (A) violate any Laws to which any VRC Party is subject
         or any provision of the Organizational Documents of any VRC Party or
         (B) result in a breach of, constitute a default under, result in the
         acceleration of, create in any Person the right to accelerate,
         terminate, modify, or cancel, or require any notice under any
         agreement, contract, lease, license, instrument, or other arrangement
         to which any VRC Party is a party or by which it is bound or to which
         any of its assets or any of the Tank Assets are subject, except for
         such violations, defaults, breaches, or other occurrences that do not,
         individually or in the aggregate, have a material adverse effect on the
         ability of VRC or any other VRC Party to consummate the transactions
         contemplated by such Transaction Agreement.

                  (iv) Brokers' Fees. No VRC Party has any liability or
         obligation to pay any fees or commissions to any broker, finder, or
         agent with respect to the transactions contemplated by this Agreement
         for which any of the MLP Parties could become liable or obligated.

            (b) Representations and Warranties of the MLP Parties. Each of the
MLP Parties hereby represents and warrants to VRC as follows as of the Effective
Date:

                  (i) Organization of the MLP Parties. Each of the MLP Parties
         is a limited liability company, limited partnership or corporation duly
         organized, validly existing, and in good standing under the Laws of the
         state of Delaware. Each of the MLP Parties is in good standing under
         the Laws of the state of California, or will be qualified to do
         business in California prior to the Closing, and each other
         jurisdiction which requires such qualification, except where the lack
         of such qualification in each instance would not have a Material
         Adverse Effect.

                  (ii) Authorization of Transaction. Each of the MLP Parties has
         full power and authority (including full entity power and authority) to
         execute and deliver each Transaction Agreement to which it is a party
         and to perform its obligations thereunder. Each Transaction Agreement
         to which such MLP Party is a party constitutes the valid and legally
         binding obligation of such MLP Party, enforceable against such MLP
         Party in accordance with its terms and conditions, subject, however, to
         the effects of bankruptcy, insolvency, reorganization, moratorium or
         similar Laws affecting creditors' rights generally, and to general
         principles of equity (regardless of whether such enforceability is
         considered in a proceeding in equity or at law). Except for approval by
         the Conflicts Committee and as set forth on SCHEDULE 3(b)(ii) and any
         filings under the HSR Act, no MLP Party needs to give any notice to,
         make any filing with, or obtain any authorization, consent, or approval
         of any Governmental Authority or any other Person in

                                       11
<PAGE>

         order to consummate the transactions contemplated by this Agreement or
         any other Transaction Agreement.

                  (iii) Noncontravention. Except for the filings specified in
         SCHEDULE 3(b)(ii), neither the execution and delivery of any
         Transaction Agreement to which any MLP Party is a party, nor the
         consummation of any of the transactions contemplated thereby, shall (A)
         violate any Laws to which such MLP Party is subject or any provision of
         its Organizational Documents or (B) result in a breach of, constitute a
         default under, result in the acceleration of, create in any Person the
         right to accelerate, terminate, modify, or cancel, or require any
         notice, approval or consent under any agreement, contract, lease,
         license, instrument, or other arrangement to which any MLP Party is a
         party or by which it is bound or to which any of its assets is subject,
         except for such violations, defaults, breaches, or other occurrences
         that do not, individually or in the aggregate, have a material adverse
         effect on the ability of any MLP Party to consummate the transactions
         contemplated by such Transaction Agreement.

                  (iv) Brokers' Fees. Other than a customary fee paid to A.G.
         Edwards & Sons in connection with its assessment of the fairness of the
         Transaction to the MLP and to the holders of the Common Units (other
         than any of the Valero Group), no MLP Party has any liability or
         obligation to pay any fees or commissions to any broker, finder, or
         agent with respect to the transactions contemplated by this Agreement
         for which VRC could become liable or obligated.

                  (v) Investment. Each of the MLP Parties is familiar with
         investments of the nature of the Tank Assets, understands that this
         investment involves substantial risks, has investigated the Tank
         Assets, and has substantial knowledge and experience in financial and
         business matters such that it is capable of evaluating, and has
         evaluated, the merits and risks inherent in purchasing the Tank Assets,
         and is able to bear the economic risks of such investment. Each of the
         MLP Parties has had the opportunity to visit with VRC and its
         applicable Affiliates and meet with their representative officers and
         other representatives to discuss the operations, assets, liabilities
         and financial condition of the Tank Assets, has received materials,
         documents and other information that such MLP Party deems necessary or
         advisable to evaluate the Tank Assets. Each of the MLP Parties has made
         its own independent examination, investigation, analysis and evaluation
         of the Tank Assets, including its own estimate of the value of the Tank
         Assets. Each of the MLP Parties has undertaken such due diligence
         (including a review of the assets, properties, liabilities, books,
         records and contracts constituting part of the Tank Assets) as such MLP
         Party deems adequate. Notwithstanding the other provisions of this
         subsection (v), the MLP Parties have relied on the truth and accuracy
         of the representations and warranties made by VRC in SECTION 4(l) in
         making the representations and warranties in this subsection (v) and
         the MLP Parties shall not be considered to have breached any
         representation or warranty contained in this subsection (v) if any of
         the representations and warranties made by VRC in SECTION 4(l) are not
         true or are inaccurate.

                                       12
<PAGE>

         4. Representations and Warranties Concerning the Tank Assets. VRC
hereby represents and warrants to the MLP Parties as follows as of the Effective
Date:

            (a) Noncontravention. Except as set forth in SCHEDULE 4(a), neither
the execution and delivery of any Transaction Agreement to which any VRC Party
is a party, nor the consummation of any of the transactions contemplated
thereby, shall (i) violate any Laws to which any of the Tank Assets is subject
or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, require any notice or trigger any rights to payment or other
compensation, or result in the imposition of any Encumbrance on any of the Tank
Assets under, any agreement, contract, lease, license, instrument, or other
arrangement to which any of the Tank Assets is subject, except where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, right to payment or other compensation, or
Encumbrance would not have a Material Adverse Effect, or would not materially
adversely affect the ability of any VRC Party to consummate the transactions
contemplated by such Transaction Agreement.

            (b) Title to and Condition of Tank Assets and Land.

                  (i) VRC has good and marketable title to all of the Tank
         Assets in each case free and clear of all Encumbrances, except for
         Permitted Encumbrances. VRC has good and indefeasible title (fee and
         leasehold, as applicable) to all of the Land.

                  (ii) To VRC's Knowledge, except as disclosed in SCHEDULE
         4(b)(ii), the Tank Assets are in good operating condition and repair
         (normal wear and tear excepted), are free from patent and latent
         defects, are suitable for the purposes for which they are currently
         used and are not in need of maintenance or repairs except for ordinary
         routine maintenance and repairs that, in the aggregate, do not exceed
         $250,000.

                  (iii) There are no borrowings, loan agreements, promissory
         notes, pledges, mortgages, guaranties, liens and similar liabilities
         (direct and indirect), or Encumbrances which are secured by or
         constitute an Encumbrance on the Tank Assets and/or the Land.

                  (iv) VRC has not caused any work or improvements to be
         performed upon or made to any of the Tank Assets for which there
         remains outstanding any payment obligation that would or might serve as
         the basis for any claim, lien, charge or Encumbrance in favor of the
         Person which performed the work.

                  (v) VRC has not leased or subleased any parcel or any portion
         of the Land to any other Person.

            (c) Material Change. Except as set forth in SCHEDULE 4(c), since
December 31, 2001:

                  (i) there has not been any Material Adverse Effect;

                                       13
<PAGE>

                  (ii) the Tank Assets have been operated and maintained in the
         Ordinary Course;

                  (iii) to VRC's Knowledge, there has not been any material
         damage, destruction or loss to any material portion of the Tank Assets,
         whether or not covered by insurance;

                  (iv) there has been no purchase, sale or lease of any material
         asset included in the Tank Assets;

                  (v) there is no contract, commitment or agreement to do any of
         the foregoing, except as expressly permitted hereby.

            (d) Legal Compliance. Each VRC Party, with respect to the Tank
Assets, has complied with all applicable Laws, except where the failure to
comply would not have a Material Adverse Effect. VRC makes no representations or
warranties in this SECTION 4(d) with respect to Environmental Laws, for which
the sole representations and warranties of VRC are set forth in SECTION 4(g).

            (e) Rights of Way. SCHEDULE 4(e) contains a list of all
rights-of-way constituting part of or affecting the Tank Assets (the "Rights of
Way"). The Rights of Way (together with the Required Permits and the Transaction
Documents) constitute all of the agreements, rights of way, licenses, permits,
and other documents and instruments necessary for the operation of the Tank
Assets consistent with applicable Laws and prior operation. The VRC Parties have
performed and are in compliance with all obligations required to be performed by
them to date under the Rights of Way, and are not in default under any
obligation of any such Right of Way, except when such default would not have a
Material Adverse Effect. VRC has not received any notice of cancellation or
termination of any Right of Way. VRC has not assigned its interest under any
Right of Way to any third party.

            (f) Litigation.

                  (i) VRC is not, with respect to the Tank Assets, (i) subject
         to any outstanding injunction, judgment, order, decree, ruling, or
         charge or (ii) the subject of any action, suit, proceeding, hearing, or
         investigation of, in, or before any court or quasi-judicial or
         administrative agency of any federal, state, local, or foreign
         jurisdiction, or is the subject of any pending or, to VRC's Knowledge,
         threatened claim, demand, or notice of violation or liability from any
         Person, except where any of the foregoing would not have a Material
         Adverse Effect.

                  (ii) No VRC Party has Knowledge of any Basis for any present
         or future injunction, judgment, order, decree, ruling, or charge or
         action, suit, proceeding, hearing, or investigation of, in, or before
         any court or quasi-judicial or administrative agency of any federal,
         state, local, or foreign jurisdiction, against any of them giving rise
         to any Obligation to which any of the Tank Assets and/or the Land would
         be subject.

            (g) Environmental Matters. Except as set forth in SCHEDULE 4(g):

                                       14
<PAGE>

                  (i) VRC, with respect to the Tank Assets and the Land, has
         been in compliance with all applicable local, state, and federal laws,
         rules, regulations, and orders regulating or otherwise pertaining to
         (a) the use, generation, migration, storage, removal, treatment,
         remedy, discharge, release, transportation, disposal, or cleanup of
         pollutants, contamination, hazardous wastes, hazardous substances,
         hazardous materials, toxic substances or toxic pollutants, (b) surface
         waters, ground waters, ambient air and any other environmental medium
         on or off any lease or (c) the environment or health and safety-related
         matters; including the following as from time to time amended and all
         others whether similar or dissimilar: the Comprehensive Environmental
         Response, Compensation, and Liability Act of 1980 (as amended by the
         Superfund Amendments and Reauthorization Act of 1986 "CERCLA"), the
         Resource Conservation and Recovery Act of 1976, as amended by the Used
         Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of
         1980, and the Hazardous and Solid Waste Amendments of 1984, the
         Hazardous Materials Transportation Act, as amended, the Toxic Substance
         Control Act, as amended, the Clean Air Act, as amended, the Clean Water
         Act, as amended, and all regulations promulgated pursuant thereto, and
         common law principles, including nuisance, trespass and negligence as
         applicable to environmental matters described above (collectively, the
         "Environmental Laws," and, individually, an "Environmental Law"),
         except for such instances of noncompliance that individually or in the
         aggregate do not have a Material Adverse Effect.

                  (ii) VRC has obtained all permits, licenses, franchises,
         authorities, consents, registrations, orders, certificates, waivers,
         exceptions, variances and approvals, and have made all filings, paid
         all fees, and maintained all material information, documentation, and
         records, as necessary under applicable Environmental Laws for operating
         the Tank Assets and/or the Land as they are presently operated, and all
         such permits, licenses, franchises, authorities, consents, approvals,
         and filings remain in full force and effect, except for such matters
         that individually or in the aggregate do not have a Material Adverse
         Effect. SCHEDULE 4(g)(II) sets forth a complete list of all permits,
         licenses, franchises, authorities, consents, and approvals, as
         necessary under applicable Environmental Laws for operating the Tank
         Assets and/or the Land as they are presently operated (the "Required
         Permits"), each of which is held in the name of the appropriate VRC
         Party as indicated on such schedule.

                  (iii) Except as would not have a Material Adverse Effect, (x)
         there are no pending or, to the knowledge of any VRC Party, threatened
         claims, demands, actions, administrative proceedings or lawsuits
         against VRC with respect to the Tank Assets and/or the Land and VRC has
         not received notice of any of the foregoing and (y) none of the Tank
         Assets, and none of the Land is, subject to any outstanding injunction,
         judgment, order, decree or ruling under any Environmental Laws.

                  (iv) VRC has not received any written notice that VRC, with
         respect to the Tank Assets and/or the Land, is or may be a potentially
         responsible party under CERCLA or any analogous state law in connection
         with any site actually or allegedly containing or used for the
         treatment, storage or disposal of Hazardous Substances.

                                       15
<PAGE>

                  (v) All Hazardous Substances or solid wastes generated,
         transported, handled, stored, treated or disposed by, in connection
         with or as a result of the operation or possession of VRC or the
         conduct of VRC, have been transported only by carriers maintaining
         valid authorizations under applicable Environmental Laws and treated,
         stored, disposed of or otherwise handled only at facilities maintaining
         valid authorizations under applicable Environmental Laws and such
         carriers and facilities have been and are operating in compliance with
         such authorizations and are not the subject of any existing, pending or
         threatened action, investigation or inquiry by any Governmental
         Authority or other Person in connection with any of the Environmental
         Laws, except for such matters that individually or in the aggregate do
         not have a Material Adverse Effect.

VRC makes no representation or warranty regarding any compliance or failure to
comply with, or any actual or contingent liability under, any Environmental Law,
except as expressly set forth in this SECTION 4(g). For purposes of this SECTION
4(g), each reference to VRC or VRC Parties shall be deemed to include VRC
Parties and their Affiliates.

            (h) Preferential Purchase Rights. Except for the Right of First
Offer and the Right of First Refusal set forth in SECTION 2(d), there are no
preferential purchase rights, rights of refusal to purchase, purchase options or
other rights held by any Person not a party to this Agreement to purchase or
acquire any or all of the Tank Assets, in whole or in part, or any or all of the
Land, in whole or in part, that would be triggered or otherwise affected as a
result of the transactions contemplated by this Agreement ("Preferential
Rights").

            (i) Prohibited Events. None of the matters described in SECTION 5(c)
have occurred since December 31, 2002.

            (j) Regulatory Matters No VRC Party is (i) a "holding company," a
"subsidiary company" of a "holding company," an "affiliate" of a "holding
company," or a "public utility," as each such term is defined in the Public
Utility Holding Company Act of 1935, as amended, or (ii) an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder. None of the Tank Assets are subject to regulation by the
Federal Energy Regulatory Commission or rate regulation or comprehensive
nondiscriminatory access regulation under any federal laws or the laws of any
state or other local jurisdiction.

            (k) Intercompany Transactions. There are no outstanding receivables,
payables and other intercompany agreements between VRC and any of its Affiliates
that relate to the Tank Assets. -

            (l) Material Information. VRC has provided to the MLP Parties all
material information concerning the operations and finances of the Tank Assets
as has been requested by any of the MLP Parties to date and such information is
complete and correct in all material respects and does not omit to state a
material fact necessary to make the statements and information contained therein
not misleading in light of the circumstances in which they are made. To VRC's
knowledge, there is not any fact that has not been disclosed to the MLP Parties
pertaining particularly to any of the Tank Assets (as opposed to public
information concerning general industry or economic conditions or governmental
policies) which materially and

                                       16
<PAGE>

adversely affect any of the Tank Assets or the use, ownership, financing,
operation, maintenance or repair of any of the Tank Assets at any time after the
Closing.

            (m) Disclaimer of Representations and Warranties Concerning Personal
Property, Equipment and Fixtures. Each of the MLP Parties acknowledges that (i)
it has had and pursuant to this Agreement shall have before Closing access to
the Tank Assets and the Land and the officers and employees of VRC and (ii) in
making the decision to enter into this Agreement and consummate the transactions
contemplated hereby, each of the MLP Parties has relied solely on the basis of
its own independent investigation and upon the express representations,
warranties, covenants, and agreements set forth in this Agreement and the other
Transaction Agreements. Accordingly, each of the MLP Parties acknowledges that,
except as expressly set forth in this Agreement, VRC has not made, and VRC MAKES
NO AND DISCLAIMS ANY, REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS OR IMPLIED,
AND WHETHER BY COMMON LAW, STATUTE, OR OTHERWISE, REGARDING (i) THE QUALITY,
CONDITION, OR OPERABILITY OF ANY PERSONAL PROPERTY, EQUIPMENT, OR FIXTURES, (ii)
THEIR MERCHANTABILITY, (iii) THEIR FITNESS FOR ANY PARTICULAR PURPOSE, OR (iv)
THEIR CONFORMITY TO MODELS, SAMPLES OF MATERIALS OR MANUFACTURER DESIGN, AND ALL
PERSONAL PROPERTY AND EQUIPMENT IS DELIVERED "AS IS, WHERE IS" IN THE CONDITION
IN WHICH THE SAME EXISTS.

         5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the date of this Agreement and the Closing:

            (a) General. Each of the MLP Parties shall use its Best Efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement,
including causing the occurrence of VRC's conditions to Closing in SECTION 7(b).
VRC shall use its Best Efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement, including causing the occurrence of
the MLP Parties' conditions to Closing in SECTION 7(a).

            (b) Notices and Consents. Each of the Parties shall give any notices
to, make any filings with, and use its Best Efforts to obtain any
authorizations, consents, and approvals of Governmental Authorities and third
parties it is required to obtain in connection with the transaction contemplated
by this Agreement (the "Transaction"), so as to permit the Closing to occur not
later than 9:00 a.m. (San Antonio time) on March 31, 2003.

            (c) Operation of Tank Assets. VRC shall not, without the written
consent of the OLP (which consent shall not be unreasonably withheld or
delayed), except as expressly contemplated by this Agreement or as contemplated
by SCHEDULE 5(c), engage in any practice, take any action, omit to take any
action or enter into any transaction outside the Ordinary Course that could
reasonably be expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, without the written consent of the MLP (which
consent shall not be unreasonably withheld or delayed), except as expressly
contemplated by this Agreement or SCHEDULE 5(c), prior to the Closing VRC shall
not do any of the following:

                                       17
<PAGE>

                  (i) sell, lease or otherwise dispose of any Tank Assets and/or
         any portion of the Land or cause or allow any part of the Tank Assets
         and/or the Land to become subject to an Encumbrance, except for
         Permitted Encumbrances;

                  (ii) initiate or settle any litigation, complaint, rate filing
         or administration proceeding relating to the Tank Assets and/or the
         Land.

            (d) Full Access. VRC shall permit, and shall cause its Affiliates to
permit, representatives of the MLP Parties to have full access at all reasonable
times, and in a manner so as not to unreasonably interfere with the normal
business operations of VRC and its Affiliates, to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents
pertaining to any of the Tank Assets and/or the Land.

            (e) Required Permits. Each of the VRC Parties and the MLP Parties
shall use its Best Efforts to take all action and to do all things necessary,
proper, or advisable in order to transfer the Required Permits to the OLP or
otherwise to assist the OLP in obtaining such Required Permits in its own right.

         6. Post-Closing Covenants. The Parties agree as follows:

            (a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties shall take such further action (including the execution and delivery of
such further instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under SECTION 8).

            (b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or before
the Closing Date involving the Tank Assets, the other Party shall cooperate with
the contesting or defending Party and its counsel in the defense or contest,
make available its personnel, and provide such testimony and access to its books
and records (other than books and records which are subject to privilege or to
confidentiality restrictions) as shall be necessary in connection with the
defense or contest, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under SECTION 8).

            (c) Intentionally Omitted.

            (d) Delivery and Retention of Records. On the Closing Date, VRC
shall deliver or cause to be delivered to the MLP Parties, copies of Tax Records
and all other files, books, records, information and data relating to the Tank
Assets (other than Tax Records) that are in the possession or control of VRC
(the "Records"). The MLP Parties agree to (i) hold the Records and not to
destroy or dispose of any thereof for a period of seven years from the Closing
Date or such longer time as may be required by Law, provided that, if it desires
to destroy or dispose of such Records during such period, it shall first offer
in writing at least 60 days before such destruction or disposition to surrender
them to VRC and if VRC does not accept such offer

                                       18
<PAGE>

within 20 days after receipt of such offer, such MLP Party may take such action
and (ii) afford VRC, its accountants, and counsel, during normal business hours,
upon reasonable request, at any time, full access to the Records to the extent
that such access may be requested for any legitimate purpose at no cost to VRC
(other than for reasonable out-of-pocket expenses); provided that such access
shall not be construed to require the disclosure of Records that would cause the
waiver of any attorney-client, work product, or like privilege; provided,
further that in the event of any litigation nothing herein shall limit any
Party's rights of discovery under applicable Law.

            (e) Required Permits. Each of the VRC Parties and the MLP Parties
shall use its Best Efforts to take all action and to do all things necessary,
proper, or advisable in order to transfer the Required Permits to the OLP or
otherwise to assist the OLP in obtaining such Required Permits in its own right.

         7. Conditions to Obligation to Close.

            (a) Conditions to Obligation of the MLP Parties. The obligation of
each of the MLP Parties to consummate the transactions to be performed by such
MLP Party in connection with the Closing is subject to satisfaction of the
following conditions:

                  (i) the representations and warranties of VRC contained in
         SECTIONS 3(a) and 4 must be true and correct in all material respects
         (without, for purposes of determining whether or not this condition is
         satisfied as of the Closing, giving effect to any supplement to the
         Schedules, any qualification as to materiality, Material Adverse
         Effect, Knowledge, awareness or concepts of similar import, or any
         qualification or limitation as to monetary amount or value, except with
         respect to (A) the representations and warranties in SECTION 4(b)(II)
         and (B) the representations and warranties in SECTION 4(c)(III), for
         which in each such case qualifications as to Knowledge shall be given
         effect) as of the date of this Agreement and at Closing (except for
         those which refer to a specific date, which must be true and correct as
         of such date);

                  (ii) VRC must have performed and complied in all material
         respects with its covenants hereunder through the Closing (without, for
         purposes of determining whether or not this condition is satisfied as
         of the Closing, giving effect to any supplement to the Schedules, any
         qualification as to materiality, Material Adverse Effect, Knowledge,
         awareness or concepts of similar import, or any qualification or
         limitation as to monetary amount or value);

                  (iii) there must not be any injunction, judgment, order,
         decree, ruling, or charge in effect preventing consummation of any of
         the transactions contemplated by this Agreement or any suit or action
         pending by a Governmental Authority to enjoin the consummation of any
         of the transactions contemplated by this Agreement;

                  (iv) the MLP Parties must have obtained all material
         Governmental Authority and third party consents, including any material
         consents specified in SECTION 3(b)(ii) and including the consents
         required by the corresponding Schedule and the 30-day waiting period
         under the HSR Act shall have expired or been terminated prior to the

                                       19
<PAGE>

         expiration thereof and all other approvals required under the HSR Act
         shall have been issued;

                  (v) VRC must have delivered to the MLP Parties a certificate
         to the effect that each of the conditions specified in SECTIONS 7(a)(i)
         - (iv) is satisfied in all respects;

                  (vi) the MLP and a group of underwriters must have executed
         and delivered an Underwriting Agreement (the "Underwriting Agreement")
         with respect to a public offering of common units representing limited
         partner interests in the MLP with an aggregate offering amount of up to
         $200 million (not including the underwriters' over-allotment option)
         and the closing of the transactions contemplated therein must have
         occurred;

                  (vii) one or more of the MLP Parties and a group of note
         purchasers must have executed and delivered a Note Purchase Agreement
         with respect to the Private Placement with an aggregate principal
         amount of up to $250 million (the "Note Purchase Agreement") and the
         closing of the transactions contemplated thereby must have occurred;

                  (viii) one or more of the MLP Parties shall have entered into
         arrangements under the OLP's revolving credit facility to borrow such
         additional amount as is necessary for the MLP and OLP to fund the
         aggregate amount of the Cash Amount, the cash amount required under the
         Contribution Agreements entered into as the date hereof by the MLP
         Parties with Valero Refining-Texas, L.P. for the contribution of
         specified feedstock storage tanks as identified therein and with Valero
         Pipeline Company for the contribution of the pipeline and terminal
         assets as identified therein, the Redemption as well as the aggregate
         transaction costs (expected to be approximately $2 million), and the
         closing of the borrowing transaction must have occurred;

                  (ix) the MLP Parties must have duly and validly authorized the
         terms of the Underwriting Agreement, the Note Purchase Agreement and
         the borrowing by the OLP as contemplated in clauses (vi), (vii) and
         (viii) above;

                  (x) the proceeds of the equity and debt financing for the
         transactions contemplated hereby as outlined in clauses (vi), (vii) and
         (viii) above must have been received by the MLP Parties on terms
         substantially the same as authorized by the MLP Parties; and

                  (xi) the MLP's public offering of its common units and the
         Redemption, on an aggregate basis, must have caused the aggregate
         ownership interest of Valero Energy in the MLP to be 49.5% or less.

The MLP Parties may waive any condition specified in this SECTION 7(a) if Valero
GP, on behalf of all of the MLP Parties, executes a writing so stating at or
before the Closing.

                                       20
<PAGE>

            (b) Conditions to Obligation of VRC. The obligation of VRC to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

                  (i) the representations and warranties of the MLP Parties
         contained in SECTION 3(b) must be true and correct in all material
         respects (without, for purposes of determining whether or not this
         condition is satisfied as of the Closing, giving effect to any
         supplement to the Schedules, any qualification as to materiality,
         Material Adverse Effect, Knowledge, awareness or concepts of similar
         import, or any qualification or limitation as to monetary amount or
         value) as of the date of this Agreement and at Closing (except for
         those which refer to a specific date, which must be true and correct as
         of such date);

                  (ii) each of the MLP Parties must have performed and complied
         in all material respects with each of its covenants hereunder through
         the Closing (without, for purposes of determining whether or not this
         condition is satisfied as of the Closing, giving effect to any
         supplement to the Schedules, any qualification as to materiality,
         Material Adverse Effect, Knowledge, awareness or concepts of similar
         import, or any qualification or limitation as to monetary amount or
         value);

                  (iii) there must not be any injunction, judgment, order,
         decree, ruling, or charge in effect preventing consummation of any of
         the transactions contemplated by this Agreement or any suit or action
         pending by a Governmental Authority to enjoin the consummation of any
         of the transactions contemplated by this Agreement;

                  (iv) VRC must have obtained all material Governmental
         Authority and third party consents, including material consents
         specified in SECTIONS 3(a)(ii) and 4(a) and including the consents
         required by the corresponding Schedules and the 30-day waiting period
         under the HSR Act shall have expired or been terminated prior to the
         expiration thereof and all other approvals required under the HSR Act
         shall have been issued; and

                  (v) Valero GP, on behalf of the MLP Parties, must have
         delivered to VRC a certificate to the effect that each of the
         conditions specified in SECTIONS 7(b)(i) - (iv) is satisfied in all
         respects.

VRC may waive any condition specified in this SECTION 7(b) if it executes a
writing so stating at or before the Closing.

         8. Remedies for Breaches of this Agreement.

            (a) Survival. (i) All of the representations and warranties of VRC
contained in SECTIONS 3(a) and 4 (other than SECTIONS 3(a)(i), 3(a)(ii),
4(b)(i), and 4(f)(ii)) shall survive the Closing hereunder for a period of three
years after the Closing Date; (ii) the representations and warranties of VRC
contained in SECTIONS 3(a)(i), 3(a)(i), and 4(b)(i) shall survive the Closing
forever, and (iii) the representations and warranties of VRC contained in
SECTION 4(f)(ii) shall survive the Closing for a period of one year after the
Closing Date. The representations and warranties of the MLP Parties contained in
SECTION 3(b) (other than in SECTIONS 3(b)(i) and

                                       21
<PAGE>

3(b)(ii)) shall survive the Closing for a period of three years after the
Closing Date. The representations and warranties of the MLP Parties contained in
SECTIONS 3(b)(i) and 3(b)(ii) shall survive the Closing forever. The covenants
and obligations contained in SECTIONS 2 and 6 and all other covenants and
obligations contained in this Agreement (including, but not limited to, those
contained in SECTIONS 8(b)(iii), 8(b)(iv) and 8(b)(v)) shall survive the Closing
forever, unless a shorter period is expressly identified in this Agreement with
respect thereto.

            (b) Indemnification Provisions for Benefit of the MLP Parties.

                  (i) VRC agrees to release and indemnify the MLP Party
         Indemnitees from and against any Adverse Consequences suffered by the
         MLP Party Indemnitees arising out of, in connection with or relating to
         any breach of the representations and warranties made by VRC in this
         Agreement to the extent that (x) such representations and warranties
         survive the Closing pursuant to SECTION 8(a) and (y) any MLP Party
         makes a written claim for indemnification against VRC pursuant to
         SECTION 11(g) within such period of survival. However, VRC shall not
         have any obligation to release and indemnify the MLP Party Indemnitees
         from and against any such Adverse Consequences (A) until the MLP Party
         Indemnitees, in the aggregate, have suffered Adverse Consequences by
         reason of all such breaches in excess of an aggregate amount equal to
         1% of the Cash Amount (the "1% Threshold") (after which point VRC shall
         be obligated to release and indemnify the MLP Party Indemnitees from
         and against all Adverse Consequences by reason of all such breaches,
         including those Adverse Consequences included in the calculation of
         whether or not the 1% Threshold had been met), (B) to the extent the
         Adverse Consequences the MLP Party Indemnitees, in the aggregate,
         exceeds an aggregate ceiling amount equal to 50% of the Cash Amount
         (after which point VRC shall have no obligation to release and
         indemnify the MLP Party Indemnitees from and against further such
         Adverse Consequences); provided, however, that the threshold amount
         with respect to breaches of SECTION 4(b)(ii) shall be $250,000 and not
         the 1% Threshold. For purposes of calculating any Adverse Consequences
         in connection with this SECTION 8(b)(i), any supplement to the
         Schedules, any qualification as to materiality, Material Adverse
         Effect, Knowledge, or any qualification or limitation as to monetary
         amount or value set forth in SECTIONS 3(a) OR 4 shall be disregarded.

                  (ii) In the event: (x) VRC breaches any of its covenants or
         obligations in SECTIONS 2 or 6 or any other covenants or obligations in
         this Agreement (other than SECTIONS 3, 4 AND 8(b)(i)) (in each case
         above without giving effect to any supplement to the Schedules, any
         qualification as to materiality, Material Adverse Effect, Knowledge,
         awareness or concepts of similar import, or any qualification or
         limitation as to monetary amount or value); (y) there is an applicable
         survival period pursuant to SECTION 8(a); and (z) any MLP Party makes a
         written claim for indemnification against VRC pursuant to SECTION 11(g)
         within such survival period, then VRC agrees to release and indemnify
         the MLP Party Indemnitees from and against any Adverse Consequences
         suffered by the MLP Party Indemnitees.

                  (iii) VRC shall release, defend, indemnify and hold harmless
         the MLP Party Indemnitees against any Adverse Consequences resulting by
         reason of joint and several liability with VRC arising by reason of
         having been required to be aggregated

                                       22
<PAGE>

         with VRC under section 414(o) of the Code, or having been under "common
         control" with VRC, within the meaning of Section 4001(a)(14) of ERISA.

                  (iv) VRC shall release, defend and indemnify the MLP Party
         Indemnitees from and against any Adverse Consequences suffered by the
         MLP Party Indemnitees with respect to any environmental condition,
         claim or loss with respect to (a) any of the Tank Assets arising as a
         result of events occurring or conditions existing on or prior to the
         Closing Date, including the matters disclosed in SCHEDULE 4(g) and (b)
         any real or personal property on which the Tank Assets are or, prior to
         the Effective Date, have been located, arising prior to or as of the
         date of this Agreement.

                  (v) VRC shall release, defend, indemnify and hold harmless the
         MLP Party Indemnitees against any Adverse Consequences suffered by the
         MLP Party Indemnitees with respect to, any outstanding injunction,
         judgment, order, decree, ruling, or charge, or any pending or
         threatened action, suit, proceeding, hearing, or investigation of, in,
         or before any court or quasi-judicial or administrative agency of any
         federal, state, local, or foreign jurisdiction, or any other Adverse
         Consequences suffered by the MLP Party Indemnitees as a result of
         third-party claims relating to the Tank Assets on or before the Closing
         Date.

                  (vi) Notwithstanding anything to the contrary contained in
         SECTIONS 8(b)(i) and (ii), VRC shall not have any obligation to
         indemnify any MLP Party Indemnitee to the extent that the payment
         thereof would cause VRC's aggregate indemnity payments under SECTION
         8(b) (but excluding SECTIONS 8(b)(iii), 8(b)(iv) and 8(b)(v)) to exceed
         100% of the Cash Amount.

                  (vii) To the extent any MLP Party Indemnitee becomes liable
         to, and is ordered to and does pay to any third party, punitive,
         exemplary, special or consequential damages caused by a breach by VRC
         of any representation, warranty or covenant contained in this
         Agreement, then such punitive, exemplary, special or consequential
         damages shall be deemed actual damages to such MLP Party Indemnitee and
         included within the definition of Adverse Consequences for purposes of
         this SECTION 8.

                  (viii) Except for the rights of indemnification provided in
         this SECTION 8 and SECTION 9, each of the MLP Parties hereby waives any
         claim or cause of action pursuant to common or statutory law or
         otherwise against VRC arising from any breach by VRC of any of its
         representations, warranties or covenants under this Agreement or the
         transactions contemplated hereby.

            (c) Indemnification Provisions for Benefit of VRC.

                  (i) In the event: (x) any of the MLP Parties breaches any of
         its representations, warranties or covenants contained herein; (y)
         there is an applicable survival period pursuant to SECTION 8(a); and
         (z) VRC makes a written claim for indemnification against such MLP
         Party pursuant to SECTION 11(g) within such survival period, then each
         of the MLP Parties agrees to release and indemnify the VRC

                                       23
<PAGE>

         Indemnitees from and against the entirety of any Adverse Consequences
         suffered by such VRC Indemnitees.

                  (ii) To the extent any VRC Indemnitee becomes liable to, and
         is ordered to and does pay to any third party, punitive, exemplary,
         special or consequential damages caused by a breach by any of the MLP
         Parties of any representation, warranty or covenant contained in this
         Agreement, then such punitive, exemplary, special or consequential
         damages shall be deemed actual damages to such VRC Indemnitee and
         included within the definition of Adverse Consequences for purposes of
         this SECTION 8.

                  (iii) Except for the rights of indemnification provided in
         this SECTION 8, VRC hereby waives any claim or cause of action pursuant
         to common or statutory law or otherwise against the MLP Parties arising
         from any breach by any of the MLP Parties of any of its
         representations, warranties or covenants under this Agreement or the
         transactions contemplated hereby.

            (d) Matters Involving Third Parties.

                  (i) If any third party shall notify any Party (the
         "Indemnified Party") with respect to any matter (a "Third Party Claim")
         that may give rise to a claim for indemnification against any other
         Party (the "Indemnifying Party") under this SECTION 8, then the
         Indemnified Party shall promptly (and in any event within fifteen
         business days after receiving notice of the Third Party Claim) notify
         the Indemnifying Party thereof in writing.

                  (ii) The Indemnifying Party shall have the right to assume and
         thereafter conduct the defense of the Third Party Claim with counsel of
         its choice reasonably satisfactory to the Indemnified Party; provided,
         however, that the Indemnifying Party shall not consent to the entry of
         any judgment or enter into any settlement with respect to the Third
         Party Claim without the prior written consent of the Indemnified Party
         (not to be withheld or delayed unreasonably) unless the judgment or
         proposed settlement involves only the payment of money damages and does
         not impose an injunction or other equitable relief upon the Indemnified
         Party.

                  (iii) Unless and until the Indemnifying Party assumes the
         defense of the Third Party Claim as provided in SECTION 8(d)(ii), the
         Indemnified Party may defend against the Third Party Claim in any
         manner it reasonably may deem appropriate.

                  (iv) The Indemnified Party may not consent to the entry of any
         judgment or enter into any settlement with respect to the Third Party
         Claim without the prior written consent of the Indemnifying Party which
         consent shall not be withheld unreasonably; provided that no such
         consent will be required if the Indemnifying Party has denied in
         writing its obligations to indemnify the Indemnified Party hereunder or
         if the Indemnifying Party has not responded to the Indemnified Party's
         written request for consent within 10 business days of the Indemnifying
         Party's receipt thereof.

            (e) Determination of Amount of Adverse Consequences. The Adverse
Consequences giving rise to any indemnification obligation hereunder shall be
limited to the

                                       24
<PAGE>

actual loss suffered by the Indemnified Party (i.e. reduced by any insurance
proceeds or other payment or recoupment received, realized or retained by the
Indemnified Party as a result of the events giving rise to the claim for
indemnification net of any expenses related to the receipt of such proceeds,
payment or recoupment, including retrospective premium adjustments, if any), as
such actual loss is reduced by any reduction in Taxes of the Indemnified Party
(or the affiliated group of which it is a member) occasioned by such loss or
damage. The amount of the actual loss and the amount of the indemnity payment
shall be computed by taking into account the timing of the loss or payment, as
applicable, using a Prime Rate plus 2% interest or discount rate, as
appropriate. Upon the request of the Indemnifying Party, the Indemnified Party
shall provide the Indemnifying Party with information sufficient to allow the
Indemnifying Party to calculate the amount of the indemnity payment in
accordance with this SECTION 8(e). An Indemnified Party shall take all
reasonable steps to mitigate damages in respect of any claim for which it is
seeking indemnification and shall use reasonable efforts to avoid any costs or
expenses associated with such claim and, if such costs and expenses cannot be
avoided, to minimize the amount thereof.

            (f) Tax Treatment of Indemnity Payments. All indemnification
payments made under this Agreement, including any payment made under SECTION 9,
shall be treated as increases or decreases to the Cash Amount for Tax purposes.

         9. Tax Matters.

            (a) Tax Returns. VRC shall prepare or cause to be prepared and file
or cause to be filed when due all Pre-Closing Tax Returns with respect to the
Tank Assets. VRC shall timely pay or cause to be timely paid any Taxes due with
respect to such Pre-Closing Tax Returns. The MLP Parties shall prepare or cause
to be prepared and file or cause to be filed when due any Post-Closing Tax
Returns with respect to the Tank Assets. The MLP Parties shall timely pay (or
cause to be timely paid) any Taxes due with respect to such Post-Closing Tax
Returns.

            (b) Straddle Periods. The MLP Parties shall be responsible for Taxes
with respect to the Tank Assets related to the portion of any Straddle Period
occurring after the Closing Date. VRC shall be responsible for such Taxes
relating to the portion of any Straddle Period occurring before and on the
Closing Date. If applicable Law shall not permit the Closing Date to be the last
day of a period, then (i) real or personal property Taxes with respect to the
Tank Assets shall be allocated based on the number of days in the partial period
before and after the Closing Date and (ii) all other Taxes shall be allocated on
the basis of the actual activities or attributes of the Tank Assets for each
partial period as determined from the books and records of VRC and its
Affiliates.

            (c) Straddle Returns. The MLP Parties shall prepare any Straddle
Returns and deliver same to VRC for review and comment at least 45 days prior to
the due date (including any extension) for filing each such Straddle Return,
together with a statement setting forth the allocation of taxable income and
Taxes under SECTION 9(b) and the amount of Tax that VRC owes. VRC and the MLP
Parties agree to consult with each other to attempt to resolve in good faith any
issue arising as a result of VRC's review of such Straddle Return and mutually
to consent to the filing thereof as promptly as possible. Not later than five
days before the due date

                                       25
<PAGE>

for the payment of Taxes with respect to any such Straddle Return, VRC shall pay
or cause to be paid to the MLP Parties either (i) if the MLP Parties and VRC are
in agreement as to the amount of Taxes owed by VRC, that amount, or (ii) if the
MLP Parties and VRC cannot agree on the amount of Taxes owed by VRC, the maximum
amount of Taxes reasonably determined by VRC to be owed by it, in which case (A)
VRC and the MLP Parties shall refer the dispute to an independent "Big-Four"
accounting firm agreed to by the MLP Parties and VRC to arbitrate the dispute
within ten days following the payment of the undisputed amount, (B) the
determination of such accounting firm as to the amount of Taxes owing by VRC
with respect to a Straddle Return shall be binding on both VRC and the MLP
Parties, (C) VRC and the MLP Parties shall equally share the fees and expenses
of the accounting firm, and (D) within five days after the determination by such
accounting firm, if necessary, the appropriate Party shall pay the other Party
any amount which is determined by such accounting firm to be owed. VRC shall be
entitled to reduce its obligation to pay Taxes with respect to a Straddle Return
by the amount of any estimated Taxes paid with respect to such Taxes on or
before the Closing Date.

            (d) Tax Indemnification. VRC agrees to indemnify the MLP Party
Indemnitees from and against any Adverse Consequences with respect to (i) Taxes
with respect to the Tank Assets for any Pre-Closing Tax Period and the portion
of any Straddle Period occurring on or before the Closing Date and (ii) Transfer
Taxes. The MLP Parties agree to indemnify VRC from and against any Adverse
Consequences with respect to Taxes with respect to the Tank Assets for any
Post-Closing Tax Period and the portion of any Straddle Period occurring after
the Closing Date. Notwithstanding anything to the contrary in this Agreement,
the covenants and obligations of the Parties sets forth in this SECTION 9 shall
be unconditional and absolute and shall remain in effect until thirty days after
the expiration of all statutes of limitation applicable to such covenants and
obligations. The limitation on the indemnity obligations of VRC pursuant to
SECTION 8(b) shall not apply to the indemnity obligations of VRC for Adverse
Consequences related to Taxes under this SECTION 9(d).

            (e) Transfer Taxes. VRC shall file all necessary Tax Returns and
other documentation with respect to all transfer, documentary, sales, use,
stamp, registration and other similar Taxes and fees arising out of or in
connection with the transactions effected pursuant to this Agreement (the
"Transfer Taxes") and shall be liable for and shall timely pay such Transfer
Taxes. If required by applicable Law, the MLP Parties shall, and shall cause
their Affiliates to, join in the execution of any such Tax Returns and other
documentation.

            (f) Tax Refunds. If any of the MLP Parties or any Affiliate of the
MLP Parties receives a refund of any Taxes that VRC is responsible for
hereunder, or if VRC or any Affiliate of VRC receives a refund of any Taxes that
any of the MLP Parties is responsible for hereunder, the party receiving such
refund shall, within 30 days after receipt of such refund, remit it to the party
who has responsibility for such Taxes hereunder. For the purpose of this SECTION
9(f), the term "refund" shall include a reduction in Tax and the use of an
overpayment as a credit or other tax offset, and receipt of a refund in respect
thereof shall be deemed to occur upon the filing of a return or an adjustment
thereto claiming the benefit of such reduction, overpayment or offset.

            (g) Closing Tax Certificate. On the Closing Date, VRC shall deliver
to the MLP Parties a certificate (in the form attached hereto as Exhibit F)
signed under penalties of perjury (i) stating it is not a foreign corporation,
foreign partnership, foreign trust or foreign estate, (ii)

                                       26
<PAGE>

providing its U.S. Employer Identification Number, and (iii) providing its
address, all pursuant to Section 1445 of the Code.

         10. Termination.

            (a) Termination of Agreement. The Parties may terminate this
Agreement, as provided below:

                  (i) the MLP Parties and VRC may terminate this Agreement by
         mutual written consent at any time before the Closing;

                  (ii) the MLP Parties may terminate this Agreement by giving
         written notice to VRC at any time before Closing (A) in the event VRC
         has breached any representation, warranty or covenant contained in this
         Agreement in any material respect, the MLP Parties have notified VRC of
         the breach, the breach has continued without cure for a period of 10
         days after the notice of breach and such breach would result in a
         failure to satisfy a condition to the MLP Parties' obligation to
         consummate the transactions contemplated hereby; or (B) if the Closing
         shall not have occurred on or before 9:00 a.m. (San Antonio time) on
         April 30, 2003 (unless the failure results primarily from the MLP
         Parties itself breaching any representation, warranty or covenant
         contained in this Agreement);

                  (iii) VRC may terminate this Agreement by giving written
         notice to the MLP Parties at any time before the Closing (A) in the
         event any of the MLP Parties has breached any representation, warranty
         or covenant contained in this Agreement in any material respect, VRC
         has notified such MLP Party of the breach, the breach has continued
         without cure for a period of 10 days after the notice of breach and
         such breach would result in a failure to satisfy a condition to VRC's
         obligation to consummate the transactions contemplated hereby; or (B)
         if the Closing shall not have occurred on or before 9:00 a.m. (San
         Antonio time) on April 30, 2003 (unless the failure results primarily
         from VRC breaching any representation, warranty or covenant contained
         in this Agreement);

                  (iv) the MLP Parties or VRC may terminate this Agreement if
         any court of competent jurisdiction or any governmental, administrative
         or regulatory authority, agency or body shall have issued an order,
         decree or ruling or shall have taken any other action permanently
         enjoining, restraining or otherwise prohibiting the transactions
         contemplated hereby and such order, decree, ruling or other action
         shall have become final and nonappealable; and

                  (v) the MLP Parties or VRC may terminate this Agreement if the
         Underwriting Agreement is terminated for any reason.

            (b) Effect of Termination. Except as provided in SECTION 8 and
except for the obligations under SECTION 10 and SECTION 11, if any Party
terminates this Agreement pursuant to SECTION 10(a), all rights and obligations
of the Parties hereunder shall terminate without any liability of any Party to
any other Party (except for any liability of any Party then in breach).

                                       27
<PAGE>

         11. Miscellaneous.

            (a) Public Announcements. Any Party is permitted to issue a press
release or make a public announcement concerning this Agreement without the
other Parties' consents, in which case the disclosing Party shall provide an
advance copy of the proposed public disclosure to the non-disclosing Parties and
permit the non-disclosing Parties the opportunity to reasonably comment on such
proposed disclosure. The Parties agree to cooperate in good faith to issue
separate and simultaneous press releases promptly following the execution of
this Agreement by all Parties.

            (b) Insurance; Casualty; Condemnation. (i) The MLP Parties
acknowledge and agree that, following the Closing, any Subject Insurance
Policies shall be terminated or modified to exclude coverage of all or any
portion of the Tank Assets by VRC or any of its Affiliates, and, as a result,
the MLP Parties shall be obligated at or before Closing to obtain at their sole
cost and expense replacement insurance, including insurance required by any
third party to be maintained for or by the Tank Assets. Notwithstanding the
foregoing, VRC acknowledges that initially such insurance described in the
preceding sentence may be maintained under an umbrella policy of Valero Energy
Corporation with OLP as a named insured (and for which OLP shall reimburse
Valero Energy Corporation for its proportionate cost), but the OLP agrees that
it will endeavor in good faith to obtain insurance in its own name if
commercially and economically practicable. Each of the MLP Parties further
acknowledges and agrees that the MLP Parties may need to provide to certain
Governmental Authorities and third parties evidence of such replacement or
substitute insurance coverage for the continued operations of the Tank Assets.
If any claims are made or losses occur prior to the Closing Date that relate
solely to the Tank Assets and such claims, or the claims associated with such
losses, properly may be made against the policies retained by VRC or its
Affiliates after the Closing, then VRC shall use its Best Efforts so that the
MLP Parties can file, notice, and otherwise continue to pursue these claims
pursuant to the terms of such policies; provided, however, nothing in this
Agreement shall require VRC to maintain or to refrain from asserting claims
against or exhausting any retained policies.

                  (ii) (A) VRC shall give the MLP Parties prompt notice of (i)
         any fire or other casualty affecting the Tank Assets (a "Casualty")
         between the Effective Date and the Closing Date and (ii) any actual,
         pending or proposed Taking of all or any portion of the Tank Assets.

                  (B) In the event the Tank Assets (or any material portion
         thereof) suffers a Casualty subsequent to the Effective Date, but prior
         to the Closing Date, VRC shall elect either (i) to repair or make
         adequate provision for the repair of such Tank Assets prior to Closing
         or (ii) to provide the MLP Parties with a credit against the Cash
         Amount in an amount agreed upon by VRC and the MLP Parties to represent
         the reduction in the value of the Tank Assets by reason of the
         Casualty, taking into account any repairs actually made by VRC to such
         Tank Assets prior to the Closing Date. If the reduction in the value of
         the Tank Assets by reason of the Casualty exceeds 25% of the Cash
         Amount, the MLP Parties shall have the option to terminate this
         Agreement without any further obligation of any of the Parties or their
         Affiliates pursuant hereto.

                  (C) If after the Effective Date and prior to the Closing Date,
         all or any portion of the Tank Assets is taken by condemnation or
         eminent domain or by agreement in lieu thereof with any person or
         entity authorized to exercise such rights (a "Taking"), and the
         mutually-agreed value of the Tank Assets subject to such Taking, when
         aggregated with all other Takings occurring during such time period,
         equal:

                                       28
<PAGE>

                           i.       less than 25% of the Cash Amount, the
                                    Closing shall take place as provided herein
                                    without abatement of the Cash Amount, and
                                    there shall be assigned to the MLP Parties
                                    at the Closing all interest of VRC in any
                                    award which may be payable to VRC on account
                                    of such Taking; or

                           ii.      25% or more of the Cash Amount, the MLP
                                    Parties shall have the option to terminate
                                    this Agreement without any further
                                    obligation of any of the parties or their
                                    affiliates pursuant hereto; provided that if
                                    the MLP Parties elects to proceed with the
                                    Closing, the Closing shall take place as
                                    provided herein without abatement of the
                                    Cash Amount, and there shall be assigned to
                                    the MLP Parties at the Closing all interest
                                    of VRC in any award which may be payable to
                                    VRC on account of such Taking.

            (D) In the event condemnation proceedings for a Taking of all or any
portion of the Tank Assets are commenced prior to the Closing Date, the MLP
Parties and VRC shall have joint control of such proceedings and shall cooperate
in their efforts in response to such proceedings.

            (c) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties, the VRC Parties,
the MLP Parties and their respective successors and permitted assigns.

            (d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. Prior to the Closing the MLP Parties may not
assign this Agreement or any of its rights, interests or obligations hereunder
without the prior written approval of VRC; provided, however, without the prior
written approval of VRC, the MLP Parties and its permitted successors and
assigns may assign any or all of its rights, interests or obligations under this
Agreement to an Affiliate of any of the MLP Parties, including designating one
or more Affiliates of any of the MLP Parties to be the assignee of some or any
portion of the Tank Assets. Notwithstanding the foregoing, VRC may assign its
right under SECTION 2(a)(iv) to receive the OLP Limited Partner Interest to a
person described in Treasury Regulation Section 1.1031(k)-1(g)(4) (a "Qualified
Intermediary"). The Qualified Intermediary will be obligated to, and will,
assign such right to receive the OLP Limited Partner Interest to UDS Logistics.
Such assignment shall be deemed to fulfill VRC's obligations under SECTION
2(a)(v) hereof. If VRC elects to assign its right to receive the OLP Limited
Partner Interest as provided in the preceding sentence, then the Qualified
Intermediary shall assign its right to receive the OLP Limited Partner Interest
to UDS Logistics and UDS Logistics, in lieu of issuing the UDS Membership
Interest to VRC, shall assign its right to received the Cash Amount as set forth
in SECTION 2(a)(vi) hereof to the Qualified Intermediary, in exchange for the
assignment by the Qualified Intermediary of the right to receive the OLP Limited
Partner Interest.

            (e) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but which together shall constitute
one and the same instrument.

                                       29
<PAGE>

            (f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

            (g) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given two business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:

        If to VRC:                    One Valero Place
                                      San Antonio, Texas 78212
                                      Attn: Mike Ciskowski
                                      Telecopy:210-370-2270

        If to the MLP Parties:        Valero Logistics Operations, L.P.
                                      6000 North Loop 1604 West
                                      San Antonio, TX 78249
                                      Attn:      Curt Anastasio
                                      Telecopy:  210-370-2304

Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the addresses set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.

            (h) Governing Law and Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS. VENUE FOR ANY ACTION
ARISING UNDER THIS AGREEMENT SHALL LIE EXCLUSIVELY IN ANY STATE OR FEDERAL COURT
IN BEXAR COUNTY, TEXAS.

            (i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
MLP Parties and VRC. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.

            (j) Severability. Any term or provision of this Agreement that is
held to be invalid or unenforceable in any situation in any court of competent
jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or

                                       30
<PAGE>

enforceability of the offending term or provision in any other situation or in
any other jurisdiction.

            (k) Transaction Expenses. Each of the MLP Parties and VRC shall bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.

            (l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. All personal pronouns
used in this Agreement, whether used in the masculine, feminine or neuter
gender, shall include all other genders; the singular shall include the plural,
and vice versa. All references herein to Exhibits, Schedules, Articles, Sections
or subdivisions thereof shall refer to the corresponding Exhibits, Schedules,
Article, Section or subdivision thereof of this Agreement unless specific
reference is made to such exhibits, articles, sections or subdivisions of
another document or instrument. The terms "herein," "hereby," "hereunder,"
"hereof," "hereinafter," and other equivalent words refer to this Agreement in
its entirety and not solely to the particular portion of the Agreement in which
such word is used. Each certificate delivered pursuant to this Agreement shall
be deemed a part hereof, and any representation, warranty or covenant herein
referenced or affirmed in such certificate shall be treated as a representation,
warranty or covenant given in the correlated Section hereof on the date of such
certificate. Additionally, any representation, warranty or covenant made in any
such certificate shall be deemed to be made herein.

            (m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.

            (n) Entire Agreement. THIS AGREEMENT (INCLUDING THE TRANSACTION
AGREEMENTS AND OTHER DOCUMENTS REFERRED TO HEREIN) CONSTITUTES THE ENTIRE
AGREEMENT AMONG THE PARTIES AND SUPERSEDES ANY PRIOR UNDERSTANDINGS, AGREEMENTS,
OR REPRESENTATIONS BY OR AMONG THE PARTIES, WRITTEN OR ORAL, TO THE EXTENT THEY
HAVE RELATED IN ANY WAY TO THE SUBJECT MATTER HEREOF. The rights and obligations
created by this Agreement are separate and independent from any rights and
obligations created by any Assignment. Accordingly, none of the representations,
warranties, covenants or indemnities included in any Assignment shall be merged
into this Agreement or otherwise restrict or limit the effect of this Agreement,
but each shall survive as provided in each such agreement. To the extent that
there is a conflict between the express terms of this Agreement and any
Assignment, this Agreement shall control.

            (o) Further Assurances. The Parties agree to execute such additional
instruments, agreements and documents, and to take such other actions, as may be
reasonably necessary to effect the purposes of this Agreement.

                                       31
<PAGE>

                                      *****

                                       32
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the preamble.

                                VALERO REFINING COMPANY--CALIFORNIA

                                Name:  /s/ Michael S. Ciskowski
                                     -------------------------------------------
                                Title:   Senior Vice President
                                      ------------------------------------------

                                UDS LOGISTICS, LLC

                                Name:  /s/ Raymond F. Gaddy
                                     -------------------------------------------
                                Title:   President
                                      ------------------------------------------

                                VALERO L.P.

                                By: Riverwalk Logistics, L.P.
                                     its General Partner

                                By:  Valero GP, LLC
                                     its General Partner

                                Name:  /s/ Curtis V. Anastasio
                                     -------------------------------------------
                                Title:   Chief Executive Officer and President
                                      ------------------------------------------

                                VALERO GP, INC.

                                Name:  /s/ Curtis V. Anastasio
                                     -------------------------------------------
                                Title:   Chief Executive Officer and President
                                      ------------------------------------------

                                VALERO LOGISTICS OPERATIONS, L.P.
                                By:  Valero GP, Inc.
                                     its General Partner

                                Name:  /s/ Curtis V. Anastasio
                                     -------------------------------------------
                                Title:   Chief Executive Officer and President
                                      ------------------------------------------

                                       33

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