Document:

<PAGE>   1
                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November 25,
1996, but effective as provided herein, is made and entered into by and between
Ultramar Corporation, a Delaware corporation (the "Company"), and Curtis
Anastasio (the "Executive").

         WHEREAS, the Executive has been serving as a senior executive officer
of Ultramar Corporation;

         WHEREAS, the Executive is a party to an Employment Agreement with
Ultramar Corporation, dated as of June 1, 1992 (the "Prior Agreement");

         WHEREAS, pursuant to the Agreement and Plan of Merger between Ultramar
Corporation, and Diamond Shamrock, Inc., a Delaware corporation ("Diamond
Shamrock, Inc."), dated as of September 22, 1996 (the "Merger Agreement"), as of
the effective time of the Merger (the "Effective Date"), Diamond Shamrock, Inc.
will be merged with and into Ultramar Corporation, with Ultramar Corporation as
the surviving entity (the "Merger");

         WHEREAS, pursuant to the Merger Agreement, the Company is authorized to
enter into this Agreement with Executive;

         WHEREAS, the Company considers it in the best interests of its
stockholders to foster the continuous employment of certain key management
personnel;

         WHEREAS, the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change in Control (as defined herein)
exists;

         WHEREAS, the Company wishes to assure itself of both present and future
continuation of management in light of the Merger and in the event of a Change
in Control subsequent to the Merger;

         WHEREAS, the Company wishes to continue to employ the Executive and the
Executive is willing to continue to render services, both on the terms and
subject to the conditions set forth in this Agreement;

         NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:

         1. Employment.

               1.1. The Company hereby agrees to continue to employ the
Executive and the Executive hereby agrees to undertake employment with the
Company upon the terms and conditions herein set forth.

               1.2. Employment will be for a term commencing on the Effective
Date and, subject to earlier expiration upon the Executive's termination under
Section 5, expiring two years from the Effective Date (the "Term").
Notwithstanding the previous sentence, this Agreement

                                      -1-

<PAGE>   2

and the employment of the Executive will be automatically renewed and the Term
extended, subject to Section 5, for the successive one-year periods upon the
terms and conditions set forth herein, commencing on the second anniversary of
the Effective Date, and on each anniversary date thereafter, unless either party
to this Agreement gives the other party written notice (in accordance with
Section 12.5) of such party's intention to terminate this Agreement at least
three months prior to the end of such initial or extended term. For purposes of
this Agreement, any reference to the "Term" of this Agreement will include the
original term and any extension thereof.

         2. Position and Duties.

               2.1. Position and Duties. During the Term, the Executive will
serve as Vice President and Deputy General Counsel of the Company, and will have
such duties, functions, responsibilities and authority as are (i) consistent
with the Executive's position as Vice President and Deputy General Counsel of
the Company; or (ii) assigned to his office in the Company's bylaws; or (iii)
reasonably assigned to him by the Company's Board of Directors (the "Board").

               2.2. Commitment. During the Term, the Executive will be the
Company's full-time employee and, except as may otherwise be approved in advance
in writing by the Board, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability, the
Executive will devote substantially all of his business time and attention to
the performance of his duties to the Company.

         3. Place of Performance. In connection with his employment during the
Term, unless otherwise agreed by the Executive, the Executive will be based at
such location as may be determined by the Board. The Executive will undertake
normal business travel on behalf of the Company.

         4. Compensation and Related Matters.

               4.1. Compensation and Benefits.

                     (i) Annual Base Salary. During the Term of this
Agreement, the Company will pay to the Executive an annual base salary of not
less than $200,000, which annual base salary may be modified from time to time
by the Board (or the Compensation Committee thereof) in its sole discretion,
payable at the times and in the manner consistent with the Company's general
policies regarding compensation of executive employees. The Board may from time
to time authorize such additional compensation to the Executive, in cash or in
property, as the Board may determine in its sole discretion to be appropriate.

                    (ii) Annual Incentive Compensation. If the Board (or the
Compensation Committee thereof) authorizes any cash incentive compensation or
approves any other management incentive program or arrangement, the Executive
will be eligible to participate in such plan, program or arrangement under the
general terms and conditions applicable to executive and management employees;
provided, however, that so long as the Executive remains employed by the Company
at the end of the applicable fiscal year, (a) the annual cash incentive
compensation paid by the Company to the Executive for the Company's fiscal year
that includes the Effective Date, aggregated with any other annual incentive

                                       -2-

<PAGE>   3

compensation earned by the Executive for calendar year 1996, will be in an
amount not less than 100% of the Executive's 1996 target bonus, and (b) the cash
incentive compensation paid to the Executive for the Company's next succeeding
fiscal year will be in an amount not less than 100% of the Executive's target
bonus for that year. Except as set forth in the proviso to the preceding
sentence, nothing in this Section 4.1(ii) will guarantee to the Executive any
specific amount of incentive compensation, or prevent the Board (or the
Compensation Committee thereof) from establishing performance goals and
compensation targets applicable only to the Executive.

               4.2. Executive Benefits. In addition to the compensation
described in Section 4.1, the Company will make available to the Executive and
his eligible dependents, subject to the terms and conditions of the applicable
plans, including without limitation the eligibility rules, participation in all
Company-sponsored employee benefit plans including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company), expense
reimbursement or other employee benefit policies, plans, programs or
arrangements or any equivalent successor policies, plans, programs or
arrangements that may now exist or be adopted hereafter by the Company.

               4.3. Expenses. The Company will promptly reimburse the Executive
for all travel and other business expenses the Executive incurs in order to
perform his duties to the Company under this Agreement in a manner commensurate
with the Executive's position and level of responsibility with the Company, and
in accordance with the Company's policy regarding substantiation of expenses.

         5. Termination. Notwithstanding the Term specified in Section 1.2, the
termination of the Executive's employment hereunder will be governed by the
following provisions:

               5.1. Death. In the event of the Executive's death during the
Term, the Company will pay to the Executive's beneficiaries or estate, as
appropriate, promptly after the Executive's death, (i) the unpaid annual base
salary to which the Executive is entitled, pursuant to Section 4.1, through the
date of the Executive's death, and (ii) for any accrued but unused vacation
days, to the extent and in the amounts, if any, provided under the Company's
usual policies and arrangements. This Section 5.1 will not limit the entitlement
of the Executive's estate or beneficiaries to any death or other benefits then
available to the Executive under any life insurance, stock ownership, stock
options, or other benefit plan or policy that is maintained by the Company for
the Executive's benefit.

               5.2. Disability.

                    (i) If the Company determines in good faith that the
Executive has incurred a Disability (as defined below) during the Term, the
Company may give the Executive written notice of its intention to terminate the
Executive's employment. In such event, the

                                      -3-

<PAGE>   4

Executive's employment with the Company will terminate effective on the 30th day
after receipt of such notice by the Executive, provided that within the 30 days
after such receipt, the Executive will not have returned to full-time
performance of his duties. The Executive will continue to receive his annual
base salary and benefits until the date of termination. In the event of the
Executive's Disability, the Company will pay the Executive, promptly after the
Executive's termination, (a) the unpaid annual base salary to which he is
entitled, pursuant to Section 4.1, through the date of the Executive's
termination, (b) for any accrued but unused vacation days, to the extent and in
the amounts, if any, provided under the Company's usual policies and
arrangements, and (c) a lump sum in cash in an amount equal to 50% of his annual
base salary at the time of termination. This Section 5.2 will not limit the
entitlement of the Executive, the Executive's estate or beneficiaries to any
disability or other benefits then available to the Executive under any
disability insurance or other benefit plan or policy that is maintained by the
Company for the Executive's benefit.

                    (ii) For purposes of this Agreement, "Disability" will mean
the Executive's incapacity due to physical or mental illness substantially to
perform his duties on a full-time basis for six consecutive months and within 30
days after a notice of termination is thereafter given by the Company the
Executive will not have returned to the full-time performance of the Executive's
duties; provided, however, if the Executive disagrees with a determination to
terminate him because of Disability, the question of the Executive's disability
will be subject to the certification of a qualified medical doctor agreed to by
the Company and the Executive or, in the event of the Executive's incapacity to
designate a doctor, the Executive's legal representative. In the absence of
agreement between the Company and the Executive, each party will nominate a
qualified medical doctor and the two doctors will select a third doctor, who
will make the determination as to Disability. In order to facilitate such
determination, the Executive will, as reasonably requested by the Company, (a)
make himself available for medical examinations by a doctor in accordance with
this Section 5.2(ii), and (b) grant the Company and any such doctor access to
all relevant medical information concerning him, arrange to furnish copies of
medical records to such doctor and use his best efforts to cause his own doctor
to be available to discuss his health with such doctor.

               5.3. Cause.

                    (i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below). In the event of the Executive's
termination for Cause, the Company will promptly pay to the Executive (or his
representative) the unpaid annual base salary to which he is entitled, pursuant
to Section 4.1, through the date the Executive is terminated and the Executive
will be entitled to no other compensation, except as otherwise due to him under
applicable law.

                    (ii) For purposes of this Agreement, the Company will have
"Cause" to terminate the Executive's employment hereunder upon a finding by the
Board that (a) the Executive committed an illegal act or acts that were intended
to and did defraud the Company, (b) the Executive engaged in gross negligence or
gross misconduct against the Company or another employee, or in carrying out his
duties and responsibilities, or (c) the Executive materially breached any of the
express covenants set forth in Section 9.1, 9.2 or 9.3. The Company will not
have Cause unless and until the Company provides the Executive with written

                                      -4-

<PAGE>   5

notice that the Company intends to terminate his employment for Cause. Such
written notice will specify the particular act or acts, or failure to act, that
is or are the basis for the decision to so terminate the Executive's employment
for Cause. The Employee will be given the opportunity within 30 calendar days of
the receipt of such notice to meet with the Board to defend such act or acts, or
failure to act. The Executive's employment by the Company automatically will be
terminated under this Section 5.3 for Cause as of the receipt of the written
notice from the Company or, if later, the date specified in such notice. A
notice given under this Section 5.3 must set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment for Cause, and if the termination date is other than the
date of receipt of such notice, specify the date on which the Executive's
employment is to be terminated (which date will not be earlier than the date on
which such notice is given in accordance with Section 13.5). Such notice must be
given no later than 180 business days after a director of the Company (excluding
the Executive, if applicable) first has actual knowledge of the events
justifying the purported termination.

               5.4. Termination.

                    (i) Involuntary Termination. The Executive's employment
hereunder may be terminated by the Company for any reason by written notice as
provided in Section 12.5. The Executive will be treated for purposes of this
Agreement as having been involuntarily terminated by the Company other than for
Cause if the Executive terminates his employment with the Company for any of the
following reasons (each, a "Good Reason"): without the Executive's written
consent, (a) the Company has breached any material provision of this Agreement
and within 30 days after notice thereof from the Executive, the Company fails to
cure such breach; (b) a successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company fails to assume liability under the
Agreement; (c) at any time after the Company has notified the Executive pursuant
to Section 1.2 that the Company does not intend to renew the Agreement and the
Executive's employment at the end of the Term (including any previous renewals)
(rather than to allow the Agreement automatically to renew); (d) a material
reduction in the aggregate benefits described by Section 4.2 (other than
stock-based compensation) provided to the Executive, unless such decrease is
required by law or is applicable to all employees of the Company eligible to
participate in any employee benefit arrangement affected by such reduction; (e)
a significant reduction in the Executive's duties or the addition of duties,
which in either case are materially inconsistent with the Executive's title or
position; or (f) a reduction in the Executive's annual base salary.

                    (ii) Voluntary Termination. The Executive may voluntarily
terminate the Agreement at any time by notice to the Company as provided in
Section 12.5. The Executive's death or Disability (as defined in Section
5.2(ii)) during the term of the Agreement will constitute a voluntary
termination of employment for purposes of eligibility for termination payments
and benefits as provided in Section 5.5, but for no other purpose.

               5.5. Termination Payments and Benefits.

                    (i) Form and Amount. Upon the Executive's involuntary
termination, other than for Cause, (a) subject to Section 5.5(iii), the Company
will pay or provide to the

                                      -5-

<PAGE>   6

Executive (1) his annual base salary and benefits until the date of termination,
(2) within five business days after termination of his employment, a lump sum
cash payment equal in amount to two times the sum of (x) the Executive's highest
annual base salary in effect during the two years prior to his date of
termination, and (y) the highest annual incentive compensation earned by the
Executive during the same two-year period, (3) two additional years of age and
service credit under the qualified and nonqualified defined benefit retirement
plans of the Company in which the Executive participates at the time of
termination; provided, however, that in the case of a qualified defined benefit
pension plan, the present value of the additional benefit the Executive would
have accrued if he had been credited for all purposes with the additional years
of age and service under such plan as of the Executive's date of termination
with the Company will be paid in a lump sum in cash within five business days
after termination of the Executive's employment, and (4) for a period of one
year after termination of his employment, the continuation of the employee
welfare benefits set forth in Section 4.2 except as offset by benefits paid by
other sources as set forth in Section 8, or as prohibited by law or as a
condition of maintaining the tax-favored status of any such benefits to the
Company or its employees; (b) the Executive's benefit under the applicable
supplemental executive retirement plan will be not less than the benefit the
Executive would have received under the terms of the corresponding plan
(including any individual modifications thereof) applicable to the Executive as
in effect immediately prior to the Effective Date determined as if the Executive
had continued employment under the terms of such corresponding plan (and
modifications) until his actual termination of employment; and (c) if the
Executive had theretofore relocated to San Antonio and his employment has been
terminated within two years after the Effective Date, Executive will be
reimbursed the costs of relocation from San Antonio to any other location in the
continental United States under the same policies and procedures applicable to
Executive's reimbursement for relocation to San Antonio.

                    (ii) Maintenance of Benefits. During the period set forth in
Section 5.5(i)(a)(4), the Company will use its best efforts to maintain in full
force and effect for the continued benefit of the Executive all referenced
benefits or will arrange to make available to the Executive benefits
substantially similar to those that the Executive would otherwise have been
entitled to receive if his employment had not been terminated. Such benefits
will be provided to the Executive on the same terms and conditions (including
employee contributions toward the premium payments) under which the Executive
was entitled to participate immediately prior to his termination.

                    (iii) Release. No benefit will be paid or made available
under Section 5.5(i) (a) unless the Executive first executes a release in the
form attached as an exhibit to this Agreement, and (b) to the extent any portion
of such release is subject to the seven-day revocation period prescribed by the
Age Discrimination in Employment Act of 1967, as amended, or to any similar
revocation period in effect on the date of termination of Executive's
employment, such revocation period has expired.

         6. Change in Control Provisions.

               6.1. Impact of Change in Control. In the event of a "Change in
Control" of the Company, as defined in Section 6.2, (i) the Company will cause
all cash benefits due under this Agreement to be secured by an irrevocable trust
for the benefit of the Executive, the assets of

                                      -6-

<PAGE>   7

which will be subject to the claims of the Company's creditors, and will
transfer to such trust cash and other property adequate to satisfy all of the
expenses of the trust for at least five years after the Change in Control and
any of the Company's actual and potential cash obligations under this Agreement,
(ii) if the Executive's employment is involuntarily terminated without Cause
after the Change in Control, (A) the covenants of Sections 9.1 and 10 will be
inapplicable to the Executive, and (B) the covenant of Section 9.2 will expire
on the third anniversary of the date of termination of the Executive's
employment, and (iii) the definition of Good Reason, as set forth in Section
5.4(i) above, will be expanded to include the following:

               (a) A good faith determination by the Executive that, as a result
of the Change in Control and a change in circumstances thereafter significantly
affecting his positions, including a change in the scope of business or other
activities for which he was responsible, he has been rendered substantially
unable to carry out, has been substantially hindered in the performance of, or
has suffered a substantial reduction in, any of the authorities, powers,
functions, responsibilities or duties attached to any of the Executive's
positions; the Executive's determination will be presumed to have been made in
good faith unless otherwise shown by the Company by clear and convincing
evidence;

               (b) The relocation of the Company's principal executive offices
(but only if, immediately prior to the Change in Control, the Executive's
principal place of employment was at the Company's principal executive offices),
or requirement that the Executive have as his principal location of work any
location that is, in excess of 50 miles from the location thereof immediately
preceding the Change in Control or to travel away from his home or office
significantly more often than that required immediately prior to the Change in
Control; or

               (c) For any reason, or without reason, during the 30-day period
immediately following the first anniversary of the first occurrence of a Change
in Control.

               6.2. Definition of Change in Control. For purposes of this
Agreement, a "Change in Control" will be deemed to occur if at any time during
the term of the Agreement any of the following events will occur:

                    (i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization, less than 50% of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;

                    (ii) The Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal person,
and as a result of such sale or transfer, less than 50% of the combined voting
power of the then-outstanding voting securities of such corporation or person
are held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale;

                    (iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange

                                      -7-

<PAGE>   8

Act of 1934 (the "Exchange Act"), disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act)
has become the beneficial owner (as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 20% or more of the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of Directors of the Company ("Voting Stock");

                    (iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or

                    (v) If during the period of two consecutive years
individuals who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Company's
shareholders, of each Director of the Company first elected during such period
was approved by a vote of at least two-thirds of the Directors of the Company
then still in office who were Directors of the Company at the beginning of any
such period (excluding for this purpose the election of any new Director in
connection with an actual or threatened election or proxy contest).

               Notwithstanding the foregoing provisions of Section 6.2(iii) or
(iv) hereof, unless otherwise determined in a specific case by majority vote of
the Board (or the Compensation Committee thereof), a "Change in Control" will
not be deemed to have occurred for purposes of this Agreement solely because the
Company, an entity in which the Company directly or beneficially owns 50% or
more of the voting securities of such entity, any Company-sponsored employee
stock ownership plan or any other employee benefit plan of the Company either
files or becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of shares of voting securities of the
Company, whether in excess of 20% or otherwise, or because the Company reports
that a change in control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership. Notwithstanding the
foregoing provisions of Section 6.2, the Merger will not constitute a Change in
Control.

         7. Certain Additional Payments by the Company:

               (i) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
280G of

                                      -8-

<PAGE>   9

the Code (or any successor provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with respect to such excise tax
(such tax or taxes, together with any such interest and penalties, are hereafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment or payments (a "Gross-Up Payment") in
an amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. No Gross-Up
Payment will be made with respect to the Excise Tax, if any, attributable to (a)
any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement (unless a comparable Gross-Up
Payment has theretofore been made available with respect to such option), or (b)
any stock appreciation or similar right, whether or not limited, granted in
tandem with any ISO described in clause (a).

                    (ii) Subject to the provisions of Section 7(vi) hereof, all
determinations required to be made under this Section 7, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
will be made by a nationally recognized firm of certified public accountants
(the "Accounting Firm") selected by the Executive in his sole discretion. The
Executive will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within 15
calendar days after the Termination Date, if applicable, and any other such time
or times as may be requested by the Company or the Executive. If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the Company
will pay the required Gross-Up Payment to the Executive within five business
days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it will, at the
same time as it makes such determination, furnish the Executive with an opinion
that he has substantial authority not to report any Excise Tax on his federal,
state, local income or other tax return. Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment will be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section
4999 of the Code (or any successor provision thereto) and the possibility of
similar uncertainty regarding applicable state or local tax law at the time of
any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts or fails to pursue its remedies pursuant
to Section 7(vi) hereof and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive will direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and the
Executive as promptly as possible. Any such Underpayment will be promptly paid
by the Company to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations.

                    (iii) The Company and the Executive will each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 7(ii) hereof.

                                      -9-

<PAGE>   10

                    (iv) The federal, state and local income or other tax
returns filed by the Executive will be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive will make proper payment of the amount
of any Excise Tax, and at the request of the Company, provide to the Company
true and correct copies (with any amendments) of his federal income tax return
as filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, as such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive will within five business days pay to the Company the amount of such
reduction.

                    (v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Sections 7(ii) and (iv) hereof will be borne by the Company. If such fees and
expenses are initially advanced by the Executive, the Company will reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.

                    (vi) The Executive will notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification will be given as
promptly as practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive will further apprise
the Company of the nature of such claim and the date on which claim is requested
to be paid (in each case, to the extent known by the Executive). The Executive
will not pay such claim prior to the earlier of (a) the expiration of the
30-calendar-day period following the date on which he gives such notice to the
Company and (b) the date that any payment of amount with respect to such claim
is due. If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive will:

                    (1) provide the Company with any written records or
               documents in his possession relating to such claim reasonably
               requested by the Company;

                    (2) take such action in connection with contesting such
               claim as the Company will reasonably request in writing from time
               to time, including without limitation accepting legal
               representation with respect to such claim by an attorney
               competent in respect of the subject matter and reasonably
               selected by the Company;

                    (3) cooperate with the Company in good faith in order
               effectively to contest such claim; and

                    (4) permit the Company to participate in any proceedings
               relating to such claim;

                                      -10-

<PAGE>   11

provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 7(vi), the Company will control all proceedings taken in connection with
the contest of any claim contemplated by this Section 7(vi) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company will determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the
Company will advance the amount of such payment to the Executive on an
interest-free basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.

                    (vii) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(vi) hereof, the Executive receives
any refund with respect to such claim, the Executive will (subject to the
Company's complying with the requirements of Section 7(vi) hereof) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 7(vi)
hereof, a determination is made that the Executive will not be entitled to any
refund with respect to such claim and the Company does not notify the Executive
in writing of its intent to contest such denial or refund prior to the
expiration of 30 calendar days after such determination, then such advance will
be forgiven and will not be required to be repaid and the amount of such advance
will offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid pursuant to this Section 7.

         8. Mitigation and Offset. The Executive is under no obligation to
mitigate damages or the amount of any payment or benefit provided for hereunder
by seeking other employment or otherwise; provided, however, that the
Executive's coverage under the Company's welfare benefit plans will be reduced
to the extent that the Executive becomes covered under any comparable employee
benefit plan made available by another employer and covering the same type of
benefits. The Executive will report to the Company any such benefits actually
received by him.

                                      -11-

<PAGE>   12

         9. Competition; Confidentiality; Nonsolicitation.

          9.1. (i) Subject to Section 6.1(ii), the Executive hereby covenants
and agrees that during the Term and for one year following the Term he will not,
without the prior written consent of the Company, engage in Competition (as
defined below) with the Company. For purposes of this Agreement, if the
Executive takes any of the following action he will be engaged in "Competition":
engaging in or carrying on, directly or indirectly, any enterprise, whether as
an advisor, principal, agent, partner, officer, director, employee, stockholder,
associate or consultant to any person, partnership, corporation or any other
business entity, that is principally engaged in the business of refining and/or
marketing oil or related products in States or Provinces in which the Company,
(or any division or segment thereof) has operation; provided, however, that
"Competition" will not include (a) the mere ownership of securities in any
enterprise and exercise of rights appurtenant thereto or (b) participation in
management of any enterprise or business operation thereof other than in
connection with the competitive operation of such enterprise.

                    (ii) Subject to Section 6.1(ii), the Executive hereby
covenants and agrees that during the Term and for three years following the Term
he will not assist a third party in preparing or making an unsolicited bid for
the Company, engaging in a proxy contents with the Company, or engaging in
another other similar activity.

               9.2. During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 9.2) to the extent necessary for Executive to carry out his obligations
under this Agreement. Subject to Section 6.1(ii), the Executive hereby covenants
and agrees that he will not, without the prior written consent of the Company,
during the Term or thereafter disclose to any person not employed by the
Company, or use in connection with engaging in Competition with the Company, any
confidential or proprietary information of the Company. For purposes of this
Agreement, the term "confidential or proprietary information" will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available or generally known to persons engaged in businesses
similar or related to those of the Company. Confidential information will
include, without limitation, the Company's financial matters, customers,
employees, industry contracts, and all other secrets and all other information
of a confidential or proprietary nature. The foregoing obligations imposed by
this Section 9.2 will cease if such confidential or proprietary information will
have become, through no fault of the Executive, generally known to the public or
the Executive is required by law to make disclosure (after giving the Company
notice and an opportunity to contest such requirement).

               9.3. The Executive hereby covenants and agrees that during the
Term and for one year thereafter he will not attempt to influence, persuade or
induce, or assist any other person in so persuading or inducing, any employee of
the Company to give up, or to not commence, employment or a business
relationship with the Company.

               9.4. Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his post-termination obligations
under Sections 9.1, 9.2 and 9.3 would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges,

                                      -12-

<PAGE>   13

consents and agrees that, in addition to any other rights or remedies which the
Company may have at law, in equity or under this Agreement, upon adequate proof
of his violation of any such provision of this Agreement, the Company will be
entitled to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach, without the necessity of proof of
actual damage.

         10. Post-termination Assistance. Subject to Section 6.1(ii), the
Executive agrees that after his employment with the Company has terminated he
will provide, upon reasonable notice, such information and assistance to the
Company as may reasonably be requested by the Company in connection with any
audit, governmental investigation or litigation in which it or any of its
affiliates is or may become a party; provided, however, that (i) the Company
agrees to reimburse the Executive for any related out-of-pocket expenses,
including travel expenses, and to pay the Executive reasonable compensation for
his time based on his rate of annual salary at the time of termination and (ii)
any such assistance may not unreasonably interfere with the then-current
employment of the Executive.

         11. Survival. The expiration or termination of the Term will not impair
the rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated herein.
In addition to the foregoing, the Executive's covenants contained in Sections
9.1, 9.2, 9.3 and 10 and the Company's obligations under Sections 5, 7 and 12.1
will survive the expiration or termination of Executive's employment.

         12. Miscellaneous Provisions.

               12.1. Legal Fees and Expenses. Without regard to whether the
Executive prevails, in whole or in part, in connection therewith, the Company
will pay and be financially responsible for 100% of any and all attorneys' and
related fees and expenses incurred by the Executive in connection with any
dispute associated with the interpretation, enforcement or defense of the
Executive's rights under this Agreement by litigation or otherwise; provided
that, in regard to such dispute, the Executive has not acted in bad faith or
with no colorable claim of success. All such fees and expenses will be paid by
the Company as incurred by the Executive on a monthly basis upon an undertaking
by the Executive to repay such advanced amounts if a court determines, in a
decision against which no appeal may be taken or with respect to which the time
period to appeal has expired, that he acted in bad faith or with no colorable
claim of success.

               12.2. Binding on Successors. This Agreement will be binding upon
and inure to the benefit of the Company, the Executive and each of their
respective successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.

               12.3. Governing Law. This Agreement will be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Delaware, without regard to conflicts of law principles.

               12.4. Severability. Any provision of this Agreement that is
deemed invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent

                                      -13-

<PAGE>   14

of such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant will be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.

               12.5. Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof confirmed), or five
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business days after
having been sent by a nationally recognized overnight courier service such as
Federal Express, UPS, or Purolator, addressed to the Company (to the attention
of the Secretary of the Company) at its principal executive offices and to the
Executive at his principal residence, or to such other address as any party may
have furnished to the other in writing and in accordance herewith, except that
notices or changes of address will be effective only upon receipt.

                    (i) To the Company. If to the Company, addressed to the
attention of General Counsel at 9830 Colonnade Boulevard, San Antonio, Texas
78230.

                    (ii) To the Executive. If to the Executive, to him in care
of the Company at the above address.

               12.6. Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.

               12.7. Entire Agreement. The terms of this Agreement are intended
by the parties to be the final expression of their agreement with respect to the
Executive's employment by the Company and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement will constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding to vary the terms of this Agreement.

               12.8. Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, approved by the
Company and signed by the Executive and the Company. Failure on the part of
either party to complain of any action or omission, breach or default on the
part of the other party, no matter how long the same may continue, will never be
deemed to be a waiver of any rights or remedies hereunder, at law or in equity.
The Executive or the Company may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform only through an executed writing; provided, however, that such
waiver will not operate as a waiver of, or estoppel with respect to, any other
or subsequent failure.

                                      -14-

<PAGE>   15

               12.9. No Inconsistent Actions. The parties will not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential intent of this Agreement.
Furthermore, it is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and application of the
provisions of this Agreement.

               12.10. Headings and Section References. The headings used in this
Agreement are intended for convenience or reference only and will not in any
manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.

               12.11. Indemnification. The Company will indemnify, defend and
hold the Executive harmless, to the maximum extent permitted by law, from any
and all claims, litigations or suits arising out of the activities of the
Executive reasonably taken in the performance of his duties hereunder, including
all reasonable expenses and professional fees that may relate thereto. The
Company agrees to use its best efforts to obtain a directors and officers
liability insurance policy covering the Executive in a sufficient amount to
provide such indemnification, and to maintain such policy during the Term (and
for so long thereafter as is practicable in the circumstances taking into
account the availability of such insurance).

         13. Effectiveness and Prior Agreement. This Agreement will become
effective upon, and the Prior Agreement will terminate immediately prior to, the
Effective Date. Notwithstanding any other provision of this Agreement, if the
Merger Agreement is terminated prior to the Effective Date, this Agreement will
have no further force or effect, and the Prior Agreement will continue in effect
as though this Agreement had not been entered into.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written but effective as provided in Section 13.

                                                   /s/ Curtis Anastasio
                                                   -----------------------------
                                                   Curtis Anastasio

                                                   ULTRAMAR CORPORATION
                                                   a Delaware corporation

                                                   By: /s/ Jean Gaulin
                                                      --------------------------
                                                       Jean Gaulin
                                                       Chief Executive Officer

                                      -15-
<PAGE>   16

                                     Exhibit

                          GENERAL RELEASE OF ALL CLAIMS

         This General Release of all Claims (this "Agreement") is entered into
by and between __________ ("Executive") and Ultramar Diamond Shamrock
Corporation (including its subsidiaries) (collectively the "Company") effective
as of _______.

         In consideration of the promises set forth in the employment agreement
between Executive and the Company, dated ________, 1996, as amended as of the
effective date hereof (the "Employment Agreement"), as well as any promises set
forth in this Agreement, Executive and the Company agree as follows:

(1)      Employment Agreement Entitlements

         The Company will provide Executive the post-termination payments and
         benefits to which he is entitled under the Employment Agreement.

(2)      Return of Property

         All Company files, access keys, desk keys, ID badges and credit cards,
         and such other property of the Company as the Company may reasonable
         request, in Executive's possession must be returned no later than the
         date of Executive's termination from the Company (the "Termination
         Date").

(3)      General Release and Waiver of Claims

         Except as provided in the last sentence of this paragraph (3),
         Executive hereby unconditionally and forever releases, discharges and
         waives any and all claims of any nature whatsoever, whether legal,
         equitable or otherwise, which Executive may have against the Company
         arising at any time on or before the Termination Date, other than with
         respect to the obligations of the Company to the Executive under the
         Employment Agreement. This release of claims extends to any and all
         claims of any nature whatsoever, other than with respect to the
         obligations of the Company to the Executive under the Employment
         Agreement, whether known, unknown or capable or incapable of being
         known as of the Termination Date of thereafter. This Agreement is a
         release of all claims of any nature whatsoever by Executive against the
         Company, other than with respect to the obligations of the Company to
         the Executive under the Employment Agreement, and includes, other than
         as herein provided, any and all claims, demands, causes of action,
         liabilities whether known or unknown including those caused by, arising
         from or related to Executive's employment relationship with the Company
         including, but without limitation, any and all alleged discrimination
         or acts of discrimination which occurred or may have occurred on or
         before the Termination Date based upon race, color, sex, creed,
         national origin, age, disability or any other violation of any Equal
         Employment Opportunity Law, ordinance, rule, regulation or order,
         including, but not limited to, Title VII of the Civil Rights Act of
         1964, as amended; the Civil Rights Act of 1991; the Age Discrimination
         in Employment Act, as amended (as further described in

                                      -16-

<PAGE>   17

         Section 7 below); the Americans with Disabilities Act; claims under
         the Employee Retirement Income Security Act ("ERISA"); or any other
         federal, state or local laws or regulations regarding employment
         discrimination or termination of employment. This also includes claims
         for wrongful discharge, fraud, or misrepresentation under any statute,
         rule, regulation or under the common law.

         The Executive agrees and understands and knowingly agrees to this
         release because it is his intent in executing this Agreement to forever
         discharge the Company from any and all present, future, foreseen or
         unforeseen causes of action except for the obligations of the Company
         set forth in the Employment Agreement.

         Notwithstanding the foregoing, Executive does not release, discharge or
         waive any rights to indemnification that he may have under the By-Laws
         of the Company, the laws of the State of Delaware, any indemnification
         agreement between the Executive and the Company or any insurance
         coverage maintained by or on behalf of the Company.

(4)      Release and Waiver of Claims Under the Age Discrimination in Employment
         Act

         Executive acknowledges that the Company encouraged him to consult with
         an attorney of his choosing, and through this Agreement encourages him
         to consult with his attorney with respect to possible claims under the
         Age Discrimination in Employment Act of 1967, as amended ("ADEA") and
         that Executive acknowledges that he understands that the ADEA is a
         federal statute that prohibits discrimination, on the basis of age, in
         employment, benefits and benefit plans. Executive whishes to waive any
         and all claims under the ADEA that he may have, as of the Termination
         Date, against the Company, its shareholders, employees, or successors
         and hereby waives such claims. Executive further understands that by
         signing this Agreement he is in fact waiving, releasing and forever
         giving up any claim under the ADEA that may have existed on or prior to
         the Termination Date. Executive acknowledges that the Company has
         informed him that he has at his option, twenty-one (21) days in which
         to sign the waiver of this claim under ADEA, and he does hereby
         knowingly and voluntarily waive said twenty-one (21) day period.
         Executive also understands that he has seven (7) days following the
         Termination Date within which to revoke the release contained in this
         paragraph by providing a written notice of his revocation of the
         release and waiver contained in this paragraph to the Company.
         Executive further understands that this right to revoke the release
         contained in this paragraph relates only to this paragraph and does not
         act as a revocation of any other term of this Agreement.

(5)      Proceedings

         Executive has not filed, and agrees not to initiate or cause to be
         initiated on his behalf, any complaint, charge, claim or proceeding
         against the Company before any local, state or federal agency, court or
         other body relating to his employment or the termination of his
         employment, other than with respect to the obligations of the Company
         to the Executive under the Employment Agreement (each individually, a
         "Proceeding"), and agrees not to voluntarily participate in any
         Proceeding. Executive waives any right he

                                      -17-

<PAGE>   18

         may have to benefit in any manner from any relief (whether monetary or
         otherwise) arising out of any Proceeding.

(6)      Remedies

         In the event Executive initiates or voluntarily participates in any
         Proceeding, or if he fails to abide by any of the terms of this
         Agreement or his post-termination obligations contained in the
         Employment Agreement, or if he revokes the ADEA release contained in
         Paragraph 4 of this Agreement within the seven-day period provided
         under Paragraph 4, the Company may, in addition to any other remedies
         it may have, reclaim any amounts paid to him under the termination
         provisions of the Employment Agreement or terminate any benefits or
         payments that are subsequently due under the Employment Agreement,
         without waiving the release granted herein. Executive acknowledges and
         agrees that the remedy at law available to the Company for breach of
         any of his post-termination obligations under the Employment Agreement
         or his obligations under Paragraphs 3, 4, and 5 of this Agreement would
         be inadequate and that damages flowing from such a breach may not
         readily be susceptible to being measured in monetary terms.
         Accordingly, Executive acknowledges, consents and agrees that, in
         addition to any other rights or remedies which the Company may have at
         law, in equity or under this Agreement, upon adequate proof of his
         violation of any such provision of this Agreement, the Company shall be
         entitled to immediate injunctive relief and may obtain a temporary
         order restraining any threatened or further breach, without the
         necessity of proof of actual damage.

         Executive understands that by entering into this Agreement he will be
         limiting the availability of certain remedies that he may have against
         the Company and limiting also his ability to pursue certain claims
         against the Company.

(7)      Severability Clause

         In the event any provision or part of this Agreement is found to be
         invalid or unenforceable, only that particular provision or part so
         found, and not the entire agreement, will be inoperative.

(8)      Non-Admission

         Nothing contained in this Agreement will be deemed or construed as an
         admission of wrongdoing or liability on the part of the Company.

(9)      Governing Law

         This Agreement shall be governed by and construed in accordance with
         the laws of the State of Delaware, applicable to agreements made and to
         be performed in that State; and the parties agree to the jurisdiction
         of the U.S. District Court for the District of Delaware, and agree to
         appear in any action in such courts by service of process by certified
         mail, return receipt requested, at the following addresses:

                                      -18-

<PAGE>   19

         To Company:        ULTRAMAR DIAMOND SHAMROCK CORPORATION
                            9830 Colonnade Boulevard
                            San Antonio, Texas 78230

                            and

         To Executive:
                            -------------------------------------

                            -------------------------------------

                            -------------------------------------

THE EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY
KNOWS, UNDERSTANDS, AND APPRECIATES ITS CONTENTS, AND THAT HE HERBY EXECUTES THE
SAME AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS PROVIDED FOR HEREIN
VOLUNTARILY AND OF HIS OWN FREE WILL.

         IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the
date first set forth above.

                                             -----------------------------------
                                             Curtis Anastasio

                                             ULTRAMAR DIAMOND SHAMROCK
                                             CORPORATION, a Delaware corporation

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

                                      -19-

<PAGE>   20

                     FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

Curtis Anastasio ("Executive") and Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the "Company"), hereby enter into this First Amendment to
the Employment Agreement between Executive and the Company, dated as of November
25, 1996 and effective as of December 3, 1996 (the "Agreement").

WHEREAS, the Executive serves as Vice President of the Company; and

WHEREAS, the Executive and the Company entered into the Agreement as of the date
stated above; and

WHEREAS, Section 12.8 of the Agreement provides that it may be amended only by
an instrument in writing approved by the Company and signed by the Executive and
the Company; and

WHEREAS, the Company considers it in the best interests of its stockholders to
foster the continued employment of certain key management personnel; and

WHEREAS, the Company wishes to amend the Agreement to add certain provisions
approved by the Compensation Committee of the Board of Directors of the Company
at a meeting held on May 1, 2000.

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and in the Agreement, it is agreed that, effective as of May 1, 2000, the
Agreement shall be amended as follows:

                                       I.

The first sentence of Section 1.2 shall be amended by striking the reference to
"two years" and inserting "three years" in lieu thereof.

                                      II.

Section 5.2(i) of the Agreement is hereby deleted and substituted with the
following:

                  (i) If the Company determines in good faith that the Executive
         has incurred a Disability (as defined below) during the Term, the
         Company may give the Executive written notice of its intention to
         terminate its obligations under this Agreement, which notice may, but
         not need not, include a statement of the Company's intent to terminate
         the Executive's employment. In such event, the Company's obligations
         under this Agreement, and the Executive's employment (if applicable),
         will terminate effective on the 30th day after receipt of such notice
         by the Executive (the "Disability Termination Date"), provided that
         within the 30 days after such receipt, the Executive will not have
         returned to full-time

<PAGE>   21

         performance of his duties. The Executive will continue to receive his
         annual base salary until the Disability Termination Date. The
         Executive will continue to receive benefits until the Disability
         Termination Date, provided that if the Company has not elected to
         terminate the Executive's employment under this provision (but rather
         to terminate only its obligations under this Agreement), the
         Executive's right to continue to receive benefits following the
         Disability Termination Date will be governed by the policies and
         procedures of the Company generally applicable to disabled employees.
         In that event, the Executive will be considered an "employee at will"
         following the Disability Termination Date, and either the Executive or
         the Company may thereafter terminate the Executive's employment for
         any reason or for no reason, and the rights and obligations of the
         Executive and the Company upon such termination will be governed by
         the policies and procedures of the Company applicable to employees at
         will, and by applicable law.

         In the event of the Executive's disability, the Company will pay the
         Executive, promptly after the Disability Termination Date, (a) the
         unpaid annual base salary to which he is entitled, pursuant to Section
         4.1, through the Disability Termination Date, (b) for any accrued but
         unused vacation days, to the extent and in the amounts, if any,
         provided under the Company's usual policies and arrangements, and (c) a
         lump sum in cash in an amount equal to 50% of his annual base salary at
         the Disability Termination Date. This Section 5.2 will not limit the
         entitlement of the Executive, the Executive's estate or beneficiaries
         to any disability or other benefits then available to the Executive
         under any disability insurance or other benefit plan or policy that is
         maintained by the Company for the Executive's benefit; provided that
         (i) any amounts paid as base salary shall offset, on a
         dollar-for-dollar basis (but not below zero), the Company's obligation
         to pay the Executive short-term disability benefits under any
         short-term disability plan, program or arrangement of the Company, in
         respect of the same period for which such base salary is paid, and (ii)
         any benefits paid pursuant to the Company's long-term disability plan
         shall reduce, on a dollar-for-dollar basis (but not below zero), the
         Company's obligation to pay the Executive base salary in respect of the
         same period for which such benefits are paid; provided, however, that
         any such offset or reduction shall not affect, or be affected by, the
         payments provided to be made in accordance with clauses (a), (b), or
         (c) of this Section 5.2(i).

                                      III.

Section 5.5(i)(a) of the Agreement shall be revised to read as follows:

         (i) Form and Amount. Upon Executive's involuntary termination, other
         than for Cause, the Company shall:

                                       2

<PAGE>   22

                  (a) subject to Section 5.5(iii), pay or provide Executive

                           (1) his annual salary and benefits until the date of
                  termination,

                           (2) within five business days after any revocation
                  period in the release described in Section 5.5(iii) has
                  expired, a lump sum cash payment equal to three multiplied by
                  the sum of (x) and (y), where (x) is Executive's highest
                  annual base salary in effect during the three years prior to
                  his date of termination, and (y) is the highest annual
                  incentive compensation earned by Executive during the three
                  years prior to his termination; provided, however, that all
                  amounts received by Executive pursuant to the Ultramar Diamond
                  Shamrock Corporation Intermediate Incentive and
                  Performance-Based Restricted Stock Plan shall not be
                  considered "annual incentive compensation" for purposes of
                  this Section 5.5(i)(a)(2),

                           (3) three additional years of age and service credit
                  under all Company-sponsored employee benefit plans, including
                  all retirement income plans and welfare benefit plans,
                  policies or programs or arrangements in which Executive
                  participates, including any savings, pension, supplemental
                  executive retirement or other retirement income or welfare
                  benefit, short or long-term disability, and any other deferred
                  compensation, group and/or executive life, health, retiree
                  health, medical/hospital, or other insurance (whether funded
                  by actual insurance or self-insured by the Company), expense
                  reimbursement or other employee benefit plans, policies,
                  programs or arrangements or any equivalent successor plans,
                  policies, programs or arrangements that may not now exist or
                  may be adopted hereafter by the Company (but only to the
                  extent that eligibility, vesting, or the timing or amount of
                  the benefit are dependent upon age and service); provided,
                  however, that in the case of a qualified defined benefit
                  pension plan, the present value of the additional benefit
                  Executive would have accrued if he had been credited for all
                  purposes with the three additional years of age and service
                  under such plan as of his date of termination with the Company
                  will be paid in a lump sum in cash within five business after
                  any revocation period in the release described in Section
                  5.5(iii) has expired, with (i) in the event that Executive's
                  aforementioned involuntary termination occurs on or after a
                  "Change in Control" of the Company, as defined in Section 6.2
                  (or prior to, but in anticipation of, such a "Change in
                  Control," such present value being determined using the
                  interest rate and mortality table set forth in Section
                  4.1(m)(i) and 4.1(n)(i), respectively, of the Ultramar
                  Corporation Supplemental Executive

                                       3

<PAGE>   23

                  Retirement Plan (or any equivalent successor plan, policy,
                  program or arrangement) (collectively, the "Ultramar SERP")
                  and (ii) in the event that Executive's aforementioned
                  involuntary termination occurs prior to such a "Change in
                  Control" of the Company (other than such a termination in
                  anticipation of such a "Change in Control"), such present
                  value being determined using the interest rate and mortality
                  table set forth in Section 4.1(m)(ii) and 4.1(n)(ii),
                  respectively, of the Ultramar SERP, and further, provided,
                  in crediting the three additional years of age and service
                  for purposes of calculating current and unused vacation such
                  additional years shall be applied in determining the amount
                  of annual vacation to which Executive is entitled, but shall
                  not be deemed to cause Executive to have earned three
                  additional years worth of unused vacation,

                           (4) within five business days after any revocation
                  period in the release described in Section 5.5(iii) has
                  expired, a lump sum cash payment equal to three times the
                  maximum amount the Company could have contributed on behalf of
                  Executive to all of the Company-sponsored qualified and
                  nonqualified defined contribution retirement plans in which
                  Executive participated for any of the three years ending on
                  the date of Executive's termination of employment, assuming
                  that Executive made the maximum voluntary contributions
                  thereto,

                           (5) for a period of three years after the date of
                  Executive's termination of employment, the continuation of the
                  employee welfare benefits set forth in Section 4.2 (other than
                  short-term or long-term disability benefits), except as offset
                  by benefits paid by other sources as set forth in Section 8.2,
                  or as provided in Section 5.5(ii) (provided, however, that in
                  the event that any such continued coverage is not permitted
                  under the terms of any applicable welfare plan or policy, the
                  Company shall provide Executive with the after-tax economic
                  equivalent of any coverage foregone, such economic equivalent
                  to be deemed to be no less than the total cost to Executive of
                  obtaining such coverage on an individual basis and to be paid
                  quarterly in advance without discount);

                                      IV.

Section 5.5(i)(b) of the Agreement shall be revised to read as follows:

                  (b) the Company shall provide Executive with outplacement
         services for a period of one year commencing on the date his employment
         is terminated in accordance with the Company's executive outplacement

                                       4

<PAGE>   24

         policy in effect at the time his employment is terminated or
         immediately prior to a Change in Control (if prior to his termination
         of employment), whichever is more generous.

                                       V.

Section 5.5(i)(c) of the Agreement shall be deleted from the Agreement.

                                      VI.

Section 5.5(ii) of the Agreement shall be amended by striking the reference to
"Section 5.5(i)(a)(4)" and inserting "Section 5.5(i)(a)(5)" in lieu thereof and
adding a new sentence to the end thereof which shall read as follows:

         Notwithstanding the above, if Executive's continued participation in
         any of the benefits referenced in Section 5.5(i)(a)(5) would violate
         any applicable law or cause any benefits plan, policy, or arrangement
         of the Company to fail to qualify for tax-favored status, the Company
         shall not be required to provide such benefits to Executive through the
         Company's plans, policies, or arrangements, but instead shall either
         (A) arrange to make a substantially similar benefit available to
         Executive at no cost to the Executive or (B) pay Executive a sufficient
         amount of cash to allow Executive to purchase, on an after-tax basis, a
         substantially similar benefit on the open market at no incremental cost
         to Executive.

                                      VII.

Section 5.5 of the Agreement shall be amended by adding a new subsection (iv) to
the end thereof which shall read as follows:

                  (iv) Other Severance Benefits. Notwithstanding any provision
         of this Agreement to the contrary, Executive shall be entitled to
         receive the greater of (a) the termination payments and benefits
         provided under Section 5.5 of this Agreement, or (b) the termination
         payments and benefits provided by any other Company-sponsored plan,
         program or policy which has as its primary purpose the provision of
         severance benefits, but in no event shall Executive be eligible to
         receive termination payments and benefits provided under both this
         Agreement and any such plan, program or policy.

                                     VIII.

Section 8 of the Agreement shall be revised to read as follows:

                                       5

<PAGE>   25

         8. Mitigation and Offset.

                  8.1 Executive's right to receive when due the payments and
         other benefits provided for under and in accordance with the terms of
         this Agreement is absolute, unconditional and subject to no set-off,
         counterclaim or legal equitable defense. Any claim which the Company
         may have against Executive, whether for breach of this Agreement or
         otherwise, shall be brought in a separate action or proceeding and not
         part of any action or proceeding brought by Executive to enforce the
         rights against the Company under this Agreement.

                  8.2 Executive shall not have any duty to mitigate the amounts
         payable by the Company under this Agreement upon any termination of
         employment by seeking new employment following termination. All amounts
         payable pursuant to this Agreement shall be paid without reduction
         regardless of any amount of salary, compensation or other amounts which
         may be paid or payable to Executive as the result of Executive's
         employment by another employer; provided, however, that Executive's
         coverage under the Company's welfare benefit plans will be reduced to
         the extent that Executive becomes covered under any comparable employee
         benefit plan made available by another employer and covering the same
         type of benefits. Executive shall report to the Company any such
         benefits actually received by him.

                                      IX.

Section 12.5(i) of the Agreement shall be amended to read as follows:

                  (i) To The Company. If to the Company, addressed to the
         attention of the Chief Executive Officer at P.O. Box 696000, San
         Antonio, Texas, 78269-6000, with a copy sent to the attention of the
         General Counsel at such address.

                                       X.

Section 12 of the Agreement shall be amended to add a new Subsection 12.12 which
shall read as follows:

                  12.12 Dialogue. Unless Executive otherwise consents by the
         execution of an instrument in writing that specifically refers to
         Section 12.12 of this Agreement, no claim or dispute arising out of or
         related to this Agreement or any other agreement, policy, plan, program
         or arrangement, including, without limitation, any qualified or
         nonqualified retirement plan, stock option plan or agreement, or any
         other equity incentive plan in which Executive participated prior to
         his termination, shall be subject to the Company's Dialogue Dispute
         Resolution Program.

                                       6

<PAGE>   26

                                      XI.

The model release attached to this First Amendment as "Exhibit A" shall be
substituted for the exhibit referred to in Section 5.5(iii) of the Agreement.

                                      XII.

Except as otherwise provided herein, the Agreement shall remain in full force
and effect.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day
of May, 2000.

/s/  CURTIS ANASTASIO
--------------------------------------
Curtis Anastasio

ULTRAMAR DIAMOND SHAMROCK CORPORATION

By: /s/ JEAN GAULIN
   -----------------------------------
Title:  Chairman, President & CEO
      --------------------------------

                                       7

<PAGE>   27
                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

Curtis Anastasio ("Executive") and Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the "Company"), hereby enter into this Second Amendment to
the Employment Agreement between Executive and the Company, dated as of November
25, 1996 and effective as of December 3, 1996 (the "Agreement") as amended by
the First Amendment to the Agreement.

WHEREAS, the Executive serves as Vice President of the Company; and

WHEREAS, the Executive and the Company entered into the Agreement as of the date
stated above; and

WHEREAS, Section 12.8 of the Agreement provides that it may be amended only by
an instrument in writing approved by the Company and signed by the Executive and
the Company; and

WHEREAS, the Company considers it in the best interests of its stockholders to
foster the continued employment of certain key management personnel; and

WHEREAS, the Company wishes to amend the Agreement to conform the Agreement to a
change in Executive's position approved by the Compensation Committee of the
Board of Directors of the Company.

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and in the Agreement, it is agreed that, effective as of August 1, 2000,
the Agreement shall be amended as follows:

                                       I.

Section 2.1 of the Agreement is hereby deleted and substituted with the
following:

         2.1 Position and Duties. During the Term, the Executive will serve as
         Vice President of the Company and President and Chief Executive Officer
         of Shamrock Logistics GP, LLC, a wholly owned indirect subsidiary of
         the Company. Executive will devote substantially all of his attention
         to the duties and functions, and shall have such responsibilities and
         authority, as are consistent with the Executive's position as President
         and Chief Executive Officer of Shamrock Logistics GP, LLC, and shall
         have such additional duties, functions, responsibilities, and authority
         as are (i) assigned to his office in the Company's bylaws or (ii)
         reasonably assigned to him by the Company's Board of Directors (the
         "Board").

<PAGE>   28

                                      II.

The first sentence of Section 4.1(i) of the Agreement shall be revised to read
as follows:

                  (i) Annual Base Salary. During the term of this Agreement, the
         Company will pay to the Executive an annual base salary of not less
         than $255,400, which annual base salary may be modified from time to
         time by the Board (or the Compensation Committee thereof) in its sole
         discretion, payable at the times and in the manner consistent with the
         Company's general policies regarding compensation of executive
         employees. The Board may from time to time authorize such additional
         compensation to the Executive, in cash or in property, as the Board may
         determine in its sole discretion to be appropriate.

                                      III.

Except as otherwise provided herein, the Agreement shall remain in full force
and effect.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day
of August, 2000.

/s/ CURTIS ANASTASIO
-------------------------------------
Curtis Anastasio

ULTRAMAR DIAMOND SHAMROCK CORPORATION

By: /s/ JEAN GAULIN
   ----------------------------------
        Jean Gaulin
        Chairman, President & CEO

                                       2<PAGE>   1

                                                                    EXHIBIT 10.6

                     PIPELINES AND TERMINALS USAGE AGREEMENT

         This Pipelines and Terminals Usage Agreement ("Agreement") is dated as
of this _________ _____, 2001, by and among Ultramar Diamond Shamrock
Corporation, a Delaware corporation ("UDS"), Shamrock Logistics Operations,
L.P., a Delaware limited partnership (the "Operating Partnership"), Shamrock
Logistics, L.P., a Delaware limited partnership ("Shamrock Logistics"),
Riverwalk Logistics, L.P., a Delaware limited partnership (the "General
Partner"), and Shamrock Logistics GP, LLC, a Delaware limited liability company
("Shamrock LLC").

                                    RECITALS:

         WHEREAS, pursuant to the terms and conditions of those certain
Conveyance, Assignment and Bill of Sale Agreements dated effective as of July 1,
2000, by and among the Operating Partnership and certain subsidiaries of UDS,
certain crude oil pipeline and storage assets and refined product pipeline and
terminalling assets were contributed by those subsidiaries to the Operating
Partnership in exchange for limited partner interests therein (collectively, the
"Contributions"); and

         WHEREAS, by virtue of mergers (collectively, the "Mergers") of certain
subsidiaries of UDS with and into the Operating Partnership effective July 1,
2000, certain additional crude oil pipeline and storage assets and refined
product pipeline and terminalling assets and certain ownership interests in
Skelly-Belvieu Pipeline Company, L.L.C., a Delaware limited liability company
("Skelly-Belvieu"), were transferred to the Operating Partnership; and

         WHEREAS, concurrently with the execution and delivery of this
Agreement, all of the limited partner interests in the Operating Partnership
held by subsidiaries of UDS are being contributed to Shamrock Logistics in
exchange for limited partner interests in Shamrock Logistics; and

         WHEREAS, as of July 1, 2000 and the date hereof, by virtue of its
indirect ownership interests in the General Partner, the Operating Partnership
or Shamrock Logistics, as applicable, UDS had and has an economic interest in
the financial and commercial success of the Operating Partnership; and

         WHEREAS, the Operating Partnership is substantially dependent upon UDS
for the volumes of Crude Oil and refined products transported through the
Operating Partnership's pipelines and the volumes of refined products handled at
the Operating Partnership's terminals such that a significant reduction in UDS'
use of the Operating Partnership's assets would likely result in a
correspondingly significant reduction in the financial and commercial success of
the Operating Partnership; and

         WHEREAS, in connection with the Contributions and the Mergers, UDS
desires to enter into this Agreement;

<PAGE>   2

         NOW, THEREFORE, in consideration of the covenants and obligations
contained herein and in the agreements relating to the Contributions and the
Mergers, the parties to this Agreement hereby agree as follows:

         SECTION 1. DEFINITIONS. Capitalized terms used throughout this
Agreement and not otherwise defined herein shall have the meanings set forth
below.

         "Applicable Law" shall mean any applicable statute, law, regulation,
ordinance, rule, judgment, rule of law, order, decree, permit, approval,
concession, grant, franchise, license, agreement, requirement, or other
governmental restriction or any similar form of decision of, or any provision or
condition of any permit, license or other operating authorization issued under
any of the foregoing by, or any determination by any Governmental Authority
having or asserting jurisdiction over the matter or matters in question, whether
now or hereafter in effect and in each case as amended (including without
limitation, all of the terms and provisions of the common law of such
Governmental Authority), as interpreted and enforced at the time in question.

         "Arbitrable Dispute" shall mean any and all disputes, Claims,
counterclaims, demands, causes of action, controversies and other matters in
question between any of the Partnership Parties, on the one hand, and UDS, on
the other hand, arising out of or relating to this Agreement or the alleged
breach hereof, or in any way relating to the subject matter of this Agreement or
the relationship between any of the Partnership Parties, on the one hand, and
UDS, on the other hand, created by this Agreement regardless of whether (a)
allegedly extra-contractual in nature, (b) sounding in contract, tort or
otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking
damages or any other relief, whether at law, in equity or otherwise.

         "Claim" shall mean any existing or threatened future claim, demand,
suit, action, investigation, proceeding, governmental action or cause of action
of any kind or character (in each case, whether civil, criminal, investigative
or administrative), known or unknown, under any theory, including those based on
theories of contract, tort, statutory liability, strict liability, employer
liability, premises liability, products liability, breach of warranty or
malpractice.

         "Controlled Affiliates" shall mean an entity that directly or
indirectly through one or more intermediaries is controlled by UDS, excluding
the Partnership Parties and Subsidiaries. For the purposes of this definition,
"control" (including with correlative meaning, the term "controlled by"), as
used with respect to any such entity, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such entity, whether through the ownership of voting securities, by
agreement or otherwise.

         "CRUDE OIL" SHALL MEAN CRUDE OIL AND GAS OIL USED BY UDS AS REFINERY
FEEDSTOCKS.

         "Crude Oil Pipelines" shall mean (a) the pipelines described on Exhibit
A attached hereto and (b) any other pipeline that transports Crude Oil in which
the Operating Partnership or any of

                                       -2-

<PAGE>   3

its Subsidiaries acquires, after the date hereof, an ownership interest or the
right to use all or a portion of its capacity.

         "Governmental Authority" shall mean any federal, state, local or
foreign government or any provincial, departmental or other political
subdivision thereof, or any entity, body or authority exercising executive,
legislative, judicial, regulatory, administrative or other governmental
functions or any court, department, commission, board, bureau, agency,
instrumentality or administrative body of any of the foregoing.

         "Partnership Parties" shall mean the Operating Partnership, Shamrock
Logistics, the General Partner and Shamrock LLC.

         "Prime Rate" shall mean the prime rate per annum established by The
Chase Manhattan Bank, or if The Chase Manhattan Bank no longer establishes a
prime rate for any reason, the prime rate per annum established by the largest
U.S. bank measured by deposits from time to time as its base rate on corporate
loans, automatically fluctuating upward or downward with each announcement of
such prime rate.

         "Refined Products" shall mean gasoline, distillates, natural gas
liquids, blend stocks and petrochemical feedstocks.

         "Refined Product Pipelines" shall mean (a) the pipelines described on
Exhibit B attached hereto and (b) any other pipeline that transports Refined
Products in which the Operating Partnership or any of its Subsidiaries acquires,
after the date hereof, an ownership interest or the right to use all or a
portion of its capacity.

         "Refined Product Terminals" shall mean (a) the terminals described on
Exhibit C attached hereto and (b) any other terminal for the handling of Refined
Products in which the Operating Partnership or any of its Subsidiaries acquires,
after the date hereof, an ownership interest or the right to use all or a
portion of its capacity.

         "Refineries" shall mean the following three refineries owned by UDS or
Controlled Affiliates: the Three Rivers refinery located near Three Rivers,
Texas, the McKee refinery located near Dumas, Texas and the Ardmore refinery
located near Ardmore, Oklahoma.

         "Subsidiary" shall mean any entity in which the Operating Partnership,
directly or indirectly through one or more intermediaries, has an ownership
interest.

         SECTION 2. AGREEMENT TO USE PIPELINES AND TERMINALS

         During the term of this Agreement and subject to the terms and
conditions of this Agreement, UDS agrees as follows:

                                      -3-
<PAGE>   4

         (a) Crude Oil Pipelines. Subject to Section 3, UDS will, and will cause
its Controlled Affiliates to, transport in the Crude Oil Pipelines an aggregate
of not less than 75%, calculated on an average basis over each full fiscal year
during the term of this Agreement (commencing on January 1 and ending on
December 31 of each such year), of all of the Crude Oil transported to the
Refineries, whether by pipeline, truck or other means.

         (b) Refined Product Pipelines. Subject to Section 3, UDS will, and will
cause its Controlled Affiliates to, transport in the Refined Product Pipelines
an aggregate of not less than 75%, calculated on an average basis over each full
fiscal year during the term of this Agreement (commencing on January 1 and
ending on December 31 of each such year), of all of the Refined Products
transported from the Refineries, whether transported from the Refineries by
pipeline, truck or other means.

         (c) Terminalling Assets. Subject to Section 3, UDS will, and will cause
its Controlled Affiliates to, utilize the Refined Product Terminals for
terminalling services for not less than 50%, calculated on an average basis over
each full fiscal year during the term of this Agreement (commencing on January 1
and ending on December 31 of each such year), of all of the Refined Products
transported from the Refineries, whether transported from the Refinery by
pipeline, truck or other means.

         For purposes of each of paragraph (a), (b) and (c) of this section 2,
for the initial year of the Agreement and for the year in which this Agreement
terminates, the respective percentage levels shall be calculated for the
respective effective periods of the Agreement in such years pro rata on an
annualized basis.

         (d) Jointly Owned Assets. In any instance in which the Operating
Partnership or a Subsidiary owns an interest in a pipeline or terminal jointly
with other parties, the terms "Crude Oil Pipelines," "Refined Product Pipelines"
and "Refined Product Terminals" when used in reference to such pipeline or
terminal, as applicable, shall mean only the ownership interest therein held by
the Operating Partnership or the Subsidiary. In any such instance, volumes
transported or terminalled for UDS and its Controlled Affiliates by or for the
account of other owners of the pipeline or terminal shall not be considered as
volumes transported in a Crude Oil Pipeline or a Refined Product Pipeline or
terminalled through a Refined Product Terminal, as applicable, for purposes of
determining whether UDS's obligations have been met under this Agreement.

         (e) Jointly Owned Subsidiaries. In any instance in which a Subsidiary
that is not, directly or indirectly through one or more intermediaries, a
wholly-owned Subsidiary of the Operating Partnership owns a pipeline or
terminal, the volumes deemed transported in a Crude Oil Pipeline or a Refined
Product Pipeline or terminalled through a Refined Product Terminal, as
applicable, by such Subsidiary shall be equal to the total volume transported on
such pipeline or terminalled through such terminal multiplied by the direct or
indirect ownership interest, on a percentage basis, of the Operating Partnership
in such Subsidiary.

                                      -4-
<PAGE>   5

         (f) Transport Through Multiple Pipelines or Handling at Multiple
Terminals. No barrel of Crude Oil that has already been transported in one Crude
Oil Pipeline and that has been counted as a barrel transported in the Crude Oil
Pipelines for purposes of Section 2(a) shall be counted again as a barrel
transported for purposes of Section 2(a), notwithstanding that it is transported
on one or more additional Crude Oil Pipelines. No barrel of Refined Products
that has already been transported in one Refined Product Pipeline and that has
been counted as a barrel transported in the Refined Product Pipelines for
purposes of Section 2(b) shall be counted again as a barrel transported for
purposes of Section 2(b), notwithstanding that it is transported on one or more
additional Refined Product Pipelines.

         SECTION 3. EXCEPTIONS TO UDS' OBLIGATIONS

         (a) Crude Oil Pipeline Market Conditions. If market conditions with
respect to the transportation of Crude Oil to a Refinery change in a material
manner after the date hereof such that it would have a material adverse effect
on UDS if UDS were to continue to transport in the Crude Oil Pipelines an
aggregate of not less than 75% of the Crude Oil transported to the Refineries
pursuant to Section 2(a), [after taking into consideration the ability of UDS,
if commercially practicable, to increase volumes of Crude Oil transported in
Crude Oil Pipelines not affected by the change in market conditions], UDS shall
be relieved of its obligations under Section 2(a) from the inception of the
change in market conditions and during the continuance thereof only to the
extent the decrease below 75% results from the change in market conditions and
cannot be mitigated by UDS, if commercially practicable, by increasing volumes
of Crude Oil transported in Crude Oil Pipelines not affected by the change in
market conditions; provided, that upon partial or full reversal of the change in
market conditions, the obligations of UDS under Section 2(a) shall resume
partially or in full, respectively.

         (b) Refined Product Pipeline Market Conditions. If market conditions
with respect to the transportation of Refined Products from a Refinery to any of
the markets to which UDS or any of its Controlled Affiliates directly or
indirectly market Refined Products change in a material manner after the date
hereof, or if market conditions in any of such markets change in a material
manner after the date hereof, in each case such that it would have a material
adverse effect on UDS if UDS were to continue to transport in the refined
Product Pipelines an aggregate of not less than 75% of the Refined Products
produced by the Refineries pursuant to Section 2(b), [after taking into
consideration the ability of UDS, if commercially practicable, to increase
volumes of Refined Products transported in Refined Product Pipelines not
affected by the change in market conditions], UDS shall be relieved of its
obligations under Section 2(b) from the inception of the change in market
conditions and during the continuance thereof only to the extent the decrease
below 75% results from the change in market conditions and cannot be mitigated
by UDS, if commercially practicable, by increasing volumes of Refined Products

                                      -5-
<PAGE>   6

transported in Refined Product Pipelines not affected by the change in market
conditions; provided, that upon partial or full reversal of the change in market
conditions, the obligations of UDS under Section 2(b) shall resume partially or
in full, respectively.

         (c) Failure of Operating Partnership to Provide Services. UDS shall not
be deemed to have failed to satisfy its obligations under Section 2(a), (b) or
(c), as applicable, if UDS and its Controlled Affiliates are unable to ship or
terminal the required volumes because of the inability of the Operating
Partnership to transport volumes of Crude Oil made available for shipment by UDS
and its Controlled Affiliates or to transport or terminal volumes of Refined
Products made available for shipment or terminalling by UDS and its Controlled
Affiliates, whether because of operational difficulties with the Crude Oil
Pipelines, Refined Products Pipelines or Refined Product Terminals or otherwise.

         SECTION 4. AGREEMENT TO REMAIN SHIPPER

         Subject to the availability of adequate supplies of crude oil at
commercially reasonable prices, UDS agrees that it will, and will cause its
Controlled Affiliates to, continue their historical commercial practice of
purchasing Crude Oil for their own account at Crude Oil receipt points
consistent with their past practices and to continue acting in the capacity of
the shipper of Crude Oil on the Crude Oil Pipelines. Subject to the availability
of adequate supplies of Refined Products at commercially reasonable prices, UDS
agrees that it will, and will cause its Controlled Affiliates to, continue their
historical commercial practice of acting in the capacity of the shipper of
Refined Products for their own account to delivery points consistent with their
past practices and to continue acting in the capacity of the shipper of Refined
Products on the Refined Product Pipelines.

         SECTION 5. AGREEMENT NOT TO CHALLENGE TARIFF RATES OR TERMINAL CHARGES

         UDS agrees not to challenge, nor to cause its Controlled Affiliates to
challenge, nor to encourage or recommend to any other person that it challenge,
in any forum, interstate or intrastate tariff rates (including joint tariffs)
for transportation of Crude Oil or Refined Products of the Operating Partnership
and its Subsidiaries. UDS agrees neither to protest or to file a complaint, nor
to cause its Controlled Affiliates to protest or to file a complaint, regulatory
filings of the Operating Partnership and its Subsidiaries to change interstate
or intrastate tariff rates (including joint tariffs) for transportation of Crude
Oil or Refined Products. UDS agrees not to seek, nor to cause its Controlled
Affiliates to seek, nor to encourage or recommend to any other person that it
seek regulatory review of, or regulatory jurisdiction over, the contractual
rates charged by the Operating Partnership and its Subsidiaries for terminalling
services or to challenge, in any forum, such rates or changes to such rates.

         SECTION 6. EFFECTIVENESS AND TERM

         This Agreement shall be effective as of _______________, 2001. The
Agreement shall

                                      -6-
<PAGE>   7

extend for a term of seven years from such date and shall terminate at 12:01
a.m. San Antonio, Texas, time on the seventh anniversary of such date, unless
extended by written mutual agreement of the parties hereto.

         SECTION 7. NOTICES

         All notices, requests, demands, and other communications pertaining to
this Agreement shall be delivered personally, or by registered or certified mail
(postage prepaid and return receipt requested), or by express carrier or
delivery service, or by telecopy, to the parties hereto at the addresses below
(or at such other addresses as shall be specified by notice under this Section
6):

         (i)      if to UDS:

                  Ultramar Diamond Shamrock Corporation
                  6000 North Loop 1604 West
                  San Antonio, Texas 78249
                  Attn: President
                  Telecopy:

         (ii)     if to the Operating Partnership, Shamrock Logistics, the
                  General Partner or Shamrock LLC:

                  Shamrock Logistics, L.P.
                  6000 North Loop 1604 West
                  San Antonio, Texas 78249
                  Attn: President
                  Telecopy:

         SECTION 8. SUCCESSORS AND ASSIGNS

         This Agreement shall inure to the benefit of, and shall be binding
upon, UDS, the Operating Partnership, Shamrock Logistics, the General Partner
and Shamrock LLC and their respective successors and permitted assigns.
Successors shall include any corporation (limited liability or otherwise), any
partnership (limited or otherwise), or any person which succeeds to a
controlling interest in, or all of the economic interest of, UDS, the Operating
Partnership, Shamrock Logistics, the General Partner or Shamrock LLC, as
applicable. The parties hereto agree to require their respective successors, if
any, to expressly assume, in a form of agreement acceptable to the other
parties, the obligations under this Agreement.

         SECTION 9. ANNUAL CERTIFICATION.

         (a) Within 45 days of the end of each fiscal year, the chief financial
officer of UDS shall deliver a certificate (the "Compliance Certificate") to the
Operating Partnership, certifying

                                      -7-
<PAGE>   8

that, based upon due inquiry, the obligations of UDS under Sections 2(a), 2(b)
and 2(c) of this Agreement for such fiscal year, have been satisfied and setting
forth calculations and other information evidencing compliance with each such
provision, and, if any exception provided for pursuant to Section 3 of this
Agreement is being relied upon, (i) specifying which provision of Section 3 is
applicable, (ii) specifying in reasonable detail the basis for reliance on such
provision, (iii) specifying in reasonable detail the volume of Crude Oil or
Refined Products, as applicable, by which the applicable Section 2 obligation
should be reduced by reason of the applicable provision of Section 3, and (iv)
specifying in reasonable detail the basis for such volume reduction calculation.
Each Compliance Certificate will, in addition, be accompanied by an information
package containing such additional information as the parties may mutually agree
before the delivery thereof.

         (b) During the 30-day period following expiration of the 45-day period
referred to in Section 9(a), the Operating Partnership and its independent
public accountants will be permitted to review the accounting records of UDS and
any applicable Controlled Affiliates, any working papers of independent public
accountants of UDS and its Controlled Affiliates prepared in connection with the
Compliance Certificate and such additional information as the Operating
Partnership or its independent public accountants shall reasonably request for
the purpose of determining whether UDS has satisfied its obligations under each
of Sections 2(a), 2(b) and 2(c) of this Agreement. In this connection, UDS and
the Operating Partnership and their respective independent public accountants
shall, and UDS shall cause its Controlled Affiliates to, cooperate with each
other.

         (c) If, in connection with the period of review and consultation
provided for in Section 9(b), the Operating Partnership has reason to believe
that UDS has not fulfilled its obligations under any of Sections 2(a), 2(b) or
2(c), then within 30 days following the expiration of the period provided in
Section 9(a), the Operating Partnership may give UDS a written notice of its
disagreement (a "Notice of Disagreement"). If such Notice of Disagreement is not
timely given by the Operating Partnership, UDS will not have any liability under
this Section 9. Any Notice of Disagreement shall (i) specify in reasonable
detail the nature of any disagreement so asserted (including by specifying which
provision of Section 2 has not been satisfied), (ii) specify in reasonable
detail the basis for the Operating Partnership's belief that UDS has failed to
fulfill its obligations under the applicable provision of Section 2, (iii)
specify the approximate dollar amount which the Operating Partnership believes
would have been paid by UDS and its Controlled Affiliates to the Operating
Partnership if it had complied with the applicable provision(s) of Section 2
(the "Shortfall Payment") and (iv) specify in reasonable detail, in a manner
consistent with Section 9(e), the basis for such calculation. If a Notice of
Disagreement is received by UDS in a timely manner, then the determination of
whether UDS has fulfilled its obligations under Sections 2(a), 2(b) and 2(c)
and, if it has not, the amount of the Shortfall Payment, shall become final and
binding upon all parties hereto on either (i) the date the chief financial
officers of UDS and the General Partnership (on behalf of the Operating
Partnership) resolve in writing any differences they have with respect to the
matters specified in the Notice of Disagreement or (ii) the date any disputed
matters are finally resolved in writing by the Accounting Firm pursuant to
Section 9(d), as applicable.

                                      -8-
<PAGE>   9

         (d) If a Notice of Disagreement is delivered, within 15 days
thereafter, the chief financial officers of UDS and the General Partnership (on
behalf of the Operating Partnership) shall meet or communicate by telephone at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary and shall negotiate in good faith to attempt to resolve any
differences which they may have with respect to matters specified in the Notice
of Disagreement. During the 30-day period following delivery of the Notice of
Delivery, UDS and its independent public accountants shall have access to the
working papers of the Operating Partnership relating to the Notice of
Disagreement and the working papers of the Operating Partnership's independent
public accountants prepared in connection with the Notice of Disagreement. If
such differences are not resolved within 30 days following delivery of the
Notice of Delivery, UDS and the Operating Partnership shall, within 45 days
following the delivery of the Notice of Delivery, submit to a dispute resolution
group of an independent public accounting firm (the "Accounting Firm") for
review and resolution any and all matters which remain in dispute and which were
properly included in the Notice of Disagreement, in the form of a written brief.
The scope of the Accounting Firm's review shall include (i) determining whether
the Compliance Certificate that is the subject of the Notice of Disagreement has
been prepared in accordance with Section 9(a), (ii) determining whether UDS
fulfilled it obligations under Sections 2(a), 2(b) and 2(c), (iii) if a
determination is made that UDS has not so fulfilled its obligations,
determining, in a manner consistent with Section 9(e), the amount of the
Shortfall Payment and (iv) allocating the responsibility for paying the fees and
expenses of such Accounting Firm; provided that, except as provided in the
preceding clause (iv), such review shall be limited to only those matters which
remain in dispute and which were properly included in the Notice of
Disagreement. The Accounting Firm shall be such nationally recognized
independent public accounting firm as shall be agreed upon by UDS and the
Operating Partnership in writing. The Accounting Firm's decision shall be
accompanied by a certificate of the Accounting Firm that it reached its decision
in accordance with the provisions of this Section 9(d). The parties agree to use
commercially reasonably best efforts to cause the Accounting Firm to render a
decision resolving the matters submitted to the Accounting Firm within 30 days
following submission. The parties agree that judgment may be entered upon the
determination of the Accounting Firm in the Court of _______________ of Bexar
County, Texas and the United States District Court for the __________ District
of Texas. The fees and expenses of the Accounting Firm shall be borne by UDS and
the Operating Partnership in inverse proportion as they may prevail on matters
resolved by the Accounting Firm, which proportionate allocations shall also be
determined by the Accounting Firm at the time the determination of the
Accounting Firm is rendered on the merits of the matters submitted. Any fees and
disbursements of independent public accountants of UDS or the Operating
Partnership incurred in connection with their preparation or review of the
Compliance Certificate or the Notice of Disagreement shall be borne by the party
retaining such independent public accountants.

         (e) For purposes of this Section 9, the amount of any Shortfall Payment
for a Fiscal year shall be based on the aggregate dollar amount of tariffs or
terminalling fees, as applicable,

                                      -9-
<PAGE>   10
that would have been paid by UDS and its Controlled Affiliates to the Operating
Partnership if UDS and its Controlled Affiliates had transported or terminalled,
as applicable, during such Fiscal year, such aggregate number of barrels of
Crude Oil or Refined Products, as applicable, in the Crude Oil Pipelines,
Refined Product Pipelines or Refined Product Terminals, as applicable, as UDS
and its Controlled Affiliates did on average during the twelve months prior to
such Fiscal year, excluding any period as to which an exception under Section 3
to the obligations of UDS is, or is asserted to be, applicable; provided,
however, that UDS shall not be obligated to pay any amount with respect to
throughput that would have been in excess of the minimum usage obligations set
forth in Sections 2(a), 2(b) or 2(c), as applicable.

         (f) If it is finally determined pursuant to this Section 9 that UDS is
required to make a Shortfall Payment, UDS shall promptly make the Shortfall
Payment to the Operating Partnership in immediately available funds, plus
interest on the Shortfall Payment at the Prime Rate from the first day on or
after the midpoint of the calendar quarter to which the Notice of Disagreement
relates to the date of payment.

         SECTION 10. MISCELLANEOUS

         (a) UDS Intention as to Refineries. UDS represents to the Partnership
Parties that, as of the date of this Agreement, it does not intend to close any
of the Refineries or to cause any changes that would have a material adverse
effect on the operation of any of the Refineries.

         (b) Amendments and Waivers. No amendment or modification of this
Agreement shall be valid unless it is in writing and signed by the parties
hereto and, in the case of any amendment or modification adverse to the
Operating Partnership, approved by the Conflicts Committee of Shamrock
Logistics. No waiver of any provision of this Agreement shall be valid unless it
is in writing and signed by the party against whom the waiver is sought to be
enforced, and, in the case of any waiver by the Operating Partnership, approved
by the Conflicts Committee of Shamrock Logistics. No failure or delay in
exercising any right hereunder, and no course of conduct, shall operate as a
waiver of any provision of this Agreement. No single or partial exercise of a
right hereunder shall preclude further or complete exercise of that right or any
other right hereunder.

         (c) Permitted Assignments. Neither this Agreement nor any of the rights
or obligations hereunder shall be assigned without the prior written consent of
UDS (in the case of any assignment by the Operating Partnership, Shamrock
Logistics, the General Partner or Shamrock LLC) or the Operating Partnership (in
the case of any assignment by UDS); provided, however, that the Operating
Partnership may make such an assignment to an affiliate of the Operating
Partnership. Any attempt to make an assignment otherwise than as permitted by
the foregoing shall be null and void. Any assignment agreed to by UDS or the
Operating Partnership as applicable, shall not relieve the assignor of its
obligations under this Agreement.

         (d) Severability. If any provision of this Agreement shall be held
invalid or

                                      -10-
<PAGE>   11

unenforceable by a court or regulatory body of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect.

         (e) No Inconsistent Actions. No party hereto shall undertake any course
of action inconsistent with the provisions of this Agreement. Without limiting
the foregoing sentence, no party hereto shall enter into, modify, amend, or
waive any contract right or obligation if such action would conflict with or
impair the rights and protections granted to any other party under this
Agreement.

         (f) Arbitration Provision. Except as provided in Section 9, any and all
Arbitrable Disputes must be resolved through the use of binding arbitration
using three arbitrators, in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, as supplemented to the extent necessary to
determine any procedural appeal questions by the Federal Arbitration Act (Title
9 of the United States Code). If there is any inconsistency between this Section
and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms
of this Section will control the rights and obligations of the parties.
Arbitration must be initiated within the applicable time limits set forth in
this Agreement and not thereafter or if no time limit is given, within the time
period allowed by the applicable statute of limitations. Arbitration may be
initiated by a party ("Claimant") serving written notice on the other party
("Respondent") that the Claimant elects to refer the Arbitrable Dispute to
binding arbitration. Claimant's notice initiating binding arbitration must
identify the arbitrator Claimant has appointed. The Respondent shall respond to
Claimant within 30 days after receipt of Claimant's notice, identifying the
arbitrator Respondent has appointed. If the Respondent fails for any reason to
name an arbitrator within the 30 day period, Claimant shall petition to the
American Arbitration Association for appointment of an arbitrator for
Respondent's account. The two arbitrators so chosen shall select a third
arbitrator within 30 days after the second arbitrator has been appointed. The
Claimant will pay the compensation and expenses of the arbitrator named by or
for it, and the Respondent will pay the compensation and expenses of the
arbitrator named by or for it. The costs of petitioning for the appointment of
an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent
will each pay one-half of the compensation and expenses of the third arbitrator.
All arbitrators must (a) be neutral parties who have never been officers,
directors or employees of UDS, the Operating Partnership or any of their
affiliates and (b) have not less than seven years experience in the energy
industry. The hearing will be conducted in San Antonio, Texas and commence
within 30 days after the selection of the third arbitrator. UDS, the Operating
Partnership and the arbitrators should proceed diligently and in good faith in
order that the award may be made as promptly as possible. Except as provided in
the Federal Arbitration Act, the decision of the arbitrators will be binding on
and non-appealable by the parties hereto. The arbitrators shall have no right to
grant or award indirect, consequential, punitive or exemplary damages of any
kind.

                                      -11-
<PAGE>   12

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

                                       ULTRAMAR DIAMOND SHAMROCK
                                       CORPORATION

                                       By:
                                          --------------------------------------
                                          Name: William R. Klesse
                                          Title: Executive Vice President

                                       SHAMROCK LOGISTICS OPERATIONS, L.P.

                                       By:
                                          --------------------------------------
                                          Name: Curtis V. Anastasio
                                          Title: President and Chief Operating
                                                 Officer

                                       SHAMROCK LOGISTICS, L.P.

                                       By:
                                          --------------------------------------
                                          Name: Curtis V. Anastasio
                                          Title: President and Chief Operating
                                                 Officer

                                       RIVERWALK LOGISTICS, L.P.

                                       By:
                                          --------------------------------------
                                          Name: Curtis V. Anastasio
                                          Title: President and Chief Operating
                                                 Officer

                                      -12-
<PAGE>   13

                                       SHAMROCK LOGISTICS GP, LLC

                                       By:
                                          --------------------------------------
                                          Name: Curtis V. Anastasio
                                          Title: President and Chief Operating
                                                 Officer

                                      -13-
<PAGE>   14

                                                                       EXHIBIT A

                               CRUDE OIL PIPELINES

<TABLE>
<CAPTION>
                                                                                  OWNERSHIP INTEREST
                                                                                      OF OPERATING           THROUGHPUT
                                                                    LENGTH        PARTNERSHIP AND ITS         CAPACITY
ORIGIN AND DESTINATION                                            (MILES)(1)          SUBSIDIARIES          (BARRELS/DAY)
----------------------                                            ----------      -------------------       -------------
<S>                                                               <C>             <C>                       <C>
Cheyenne Wells, CO to McKee, TX ..................                  252.2                100%                    17,500
Dixon, TX to McKee, TX ...........................                   44.2                100%                    85,000
Hooker, OK  to Clawson, TX(2) ....................                   30.8                 50%                    22,000(2)
Clawson, TX to McKee, TX .........................                   40.7                100%                    36,000
Corpus Christi, TX to Three Rivers, TX ...........                   69.7                100%                   120,000
Ringgold, TX to Wasson, OK .......................                   44.2                100%                    90,000
Healdton, OK to Ringling, OK .....................                    3.5                100%                    52,000
Wasson, OK to Ardmore, OK ........................                   24.5(3)             100%                    90,000(3)
</TABLE>

----------

(1)      Length not adjusted for ownership interest.

(2)      The Operating Partnership owns 50% of the pipeline. However the
         Operating Partnership receives a split tariff with respect to 100% of
         the barrels transported on the pipeline. The throughput capacity given
         is for 100% of the pipeline.

(3)      Represents combined length and throughput capacity of two parallel
         pipelines.

                                       A-1
<PAGE>   15

                                                                       EXHIBIT B

                            REFINED PRODUCT PIPELINES

<TABLE>
<CAPTION>
                                                                            OWNERSHIP
                                                                           INTEREST OF
                                                                            OPERATING           THROUGHPUT
                                                           LENGTH         PARTNERSHIP AND        CAPACITY
             ORIGIN AND DESTINATION                      (MILES)(1)        SUBSIDIARIES      (BARRELS/DAY)(2)
             ----------------------                      ----------       ---------------    ----------------
<S>                                                      <C>              <C>                <C>
McKee, TX to El Paso, TX ....................              407.7              66.67%             40,000
McKee, TX to Colorado Springs, CO ...........              256.4                100%             52,000
Colorado Springs, CO to Airport .............                1.7                100%             12,000
Colorado Springs, CO to Denver, CO ..........              100.6                100%             32,000
McKee, TX to Denver, CO (Phillips) ..........              321.1                 30%             12,450
McKee, TX to Amarillo, TX (6") ..............               49.1                100%             51,000(3)
McKee, TX to Amarillo, TX (8") ..............               49.1                100%                   (3)
Amarillo, TX to Abernathy, TX ...............              102.1               38.7%              9,288
Amarillo, TX to Albuquerque, NM .............              292.7                 50%             16,083
McKee, TX to Skellytown, TX .................               52.8                100%             52,000
Skellytown, TX to Mont Belvieu, TX (4) ......              571.2                 50%             26,000
Three Rivers, TX to San Antonio, TX .........               81.1                100%             33,600
Three Rivers, TX to Laredo, TX ..............               98.1                100%             16,800
Three Rivers, TX to Corpus Christi, TX ......               71.6                100%             15,000
Three Rivers, TX to Pettus, TX (8") .........               28.8                100%             15,000
Three Rivers, TX to Pettus, TX (12") ........               28.8                100%             24,000
Ardmore, OK to Wynnewood, OK ................               31.1                100%             90,000
El Paso, TX to Kinder Morgan ................               12.1              66.67%             40,000
Amarillo, TX to Albuquerque, NM(5) ..........              263.6                 50%                   (5)
</TABLE>

----------

(1)      Length not adjusted for ownership interest.

(2)      Throughput capacity adjusted for relative ownership interest.

(3)      Throughput capacity shown for 6" pipeline is combined throughput
         capacity for 6" and 8".

(4)      Pipeline is owned 100% by Skelly-Belvieu Pipeline Company, L.L.C. of
         which Operating Partnership owns 50%. Throughput capacity given is for
         50% of pipeline.

(5)      Pipeline is currently idle.

                                       B-1
<PAGE>   16

                                                                       EXHIBIT C

                          REFINED PRODUCTS TERMINALS(1)

<TABLE>
<CAPTION>
                                                  NUMBER
                                     CAPACITY       OF
LOCATION                             (BARRELS)     TANKS
--------                             ---------    ------
<S>                                  <C>          <C>
Abernathy, TX....................     172,000        13
Amarillo, TX.....................     271,000        15
Albuquerque, NM..................     193,000        10
Denver, CO.......................     111,000        10
Colorado Springs, CO.............     324,000         8
El Paso, TX(1)...................     346,684        22
Corpus Christi, TX...............     372,000        16
San Antonio, TX..................     221,000        10
Laredo, TX.......................     203,000         6
Harlingen, TX....................     314,000         7
</TABLE>

----------

(1)        All terminals owned 100% by the Operating Partnership other than El
           Paso terminal of which the Operating Partnership owns 66.67%.
           Capacity shown for the El Paso terminal is adjusted for relative
           ownership interest.

                                       C-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}]]