Exhibit 10.03
SECOND AMENDED AND RESTATED
SERVICES AGREEMENT
AMONG
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
VALERO CORPORATE SERVICES COMPANY
VALERO L.P.
VALERO LOGISTICS OPERATIONS, L.P.
RIVERWALK LOGISTICS, L.P.
AND
VALERO GP, L.L.C.
DATED AS OF JULY 1, 2005
SECOND AMENDED AND RESTATED SERVICES AGREEMENT
This SECOND AMENDED AND RESTATED SERVICES AGREEMENT (this Agreement) is entered into effective as of July 1, 2005 (the Effective Date) by and among DIAMOND SHAMROCK REFINING AND MARKETING COMPANY, a Delaware corporation (DSRMC) and VALERO CORPORATE SERVICES COMPANY, a Delaware corporation, both indirect wholly owned subsidiaries of Valero Energy Corporation (Valero Energy), VALERO L.P., a publicly traded Delaware limited partnership (the Partnership), VALERO LOGISTICS OPERATIONS, L.P. (the Operating Partnership), a Delaware limited partnership and an indirect wholly owned subsidiary of the Partnership, RIVERWALK LOGISTICS, L.P., the general partner (the General Partner) of the Partnership, and its general partner, VALERO GP, LLC (Valero GP).
RECITALS
WHEREAS, Valero GP, an indirect wholly owned subsidiary of Valero Energy, is the general partner of the General Partner; and
WHEREAS, the General Partner is the general partner of the Partnership; and
WHEREAS, all management powers over the business and affairs of the Partnership are exclusively vested in the General Partner and the General Partner is required to conduct, direct and exercise full control over all activities of the Partnership, including, among other things, providing various general and administrative resources and services; and
WHEREAS, certain parties hereto entered into a Services Agreement effective July 1, 2000 pursuant to which DSRMC agreed to provide (i) specified corporate, general and administrative services to the General Partner for an annual administrative fee of $5.2 million, subject to adjustment as provided in the Services Agreement and (ii) other specified services necessary to operate and maintain the assets and operations of the Partnership, with such other services being reimbursable to DSRMC; and
WHEREAS, the Services Agreement was amended and restated (the Amended and Restated Services Agreement) effective April 1, 2004 to reflect the significant changes that occurred in the business and operations of the Partnership between July 1, 2000, the effective date of the Services Agreement, and April 1, 2004; and
WHEREAS, the Amended and Restated Services Agreement provides that the General Partner, with the approval and consent of the conflicts committee (the Conflicts Committee) of Valero GP, may (i) agree on behalf of the Partnership to increases in the Administrative Services Fee (as such term is defined in the Amended and Restated Services Agreement) in connection with expansions of the Partnerships operations through acquisition or construction of new assets or businesses, and (ii) amend or modify the Services Agreement; and
WHEREAS, on July 1, 2005, the Partnership completed its acquisition of Kaneb Services, LLC and Kaneb Pipe Line Partners, L.P., effectively doubling the Partnerships operations; and
WHEREAS, on July 21, 2005, the Conflicts Committee approved a new Administrative Services Fee and the terms of this Agreement; and
WHEREAS, the parties desire to amend and restate the Services Agreement as set forth herein to reflect the significant changes that have occurred in the business and operations of the Partnership since the effective date of the Amended and Restated Services Agreement and to substitute VCSC as a party for DSRMC in all instances; and
WHEREAS, VCSC, for itself and its Affiliates, has agreed to provide certain administrative services under this Agreement to Valero GP, the General Partner, the Partnership and the Operating Partnership (individually, a Partnership Party, and collectively, the Partnership Parties); and
WHEREAS, the Partnership Parties have agreed to provide certain operational services under this Agreement to VCSC and its Affiliates;
NOW, THEREFORE, for and in consideration of the mutual covenants contained in this Agreement, the parties hereto hereby agree to amend and restate the Amended and Restated Services Agreement as follows:
For purposes of this Agreement, Affiliates means entities that directly or indirectly through one or more intermediaries control, or are controlled by, or are under common control with, such party, and the term control shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise, provided, however, that with respect to VCSC, the term Affiliate shall exclude Valero GP, the General Partner, the Partnership and the Operating Partnership.
(c) Direct Charges. Notwithstanding Section 1.1 (a) above, the following items will be directly charged to the Partnership (Direct Charges):
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(d) Nature and Quality of Services. The quality of the Administrative Services shall be substantially identical to those provided to other subsidiaries and Affiliates of VCSC.
Section 1.3 Provision of Operational Services by the Partnership Parties.
(a) Operational Services. During the term of this Agreement, the Partnership Parties shall provide certain operational services, including control room oversight, terminal operations oversight, external reporting, system measurement, GIS/mapping support, integrity management program planning and support and other general and operational services substantially to the
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same extent such services are provided by the Partnership Parties to VCSC and its Affiliates on the Effective Date hereof (the Operational Services). The quality of the Operational Services shall be substantially identical to those provided to other Partnership Parties.
(b) Additional Operational Services. The Partnership Parties shall provide VCSC or any Affiliate with such other services as VCSC may request from time to time during the term of this Agreement and for such additional compensation as the parties may agree.
(c) Fees for Operational Services. Commencing on the Effective Date of this Agreement and ending on June 30, 2010, and for each contract year thereafter, VCSC shall pay to the Partnership an annual fee (the Operational Services Fee). The Operational Services Fee for the contract year ended June 30, 2006 shall be $1.22 million and thereafter such fee shall be subject to adjustment as provided in paragraph (d) below. Notwithstanding anything to the contrary contained in this Agreement, the costs of all third parties (if any) utilized by the Partnership to provide Operational Services (in whole or in part) (Third Party Charges) will be directly charged to VCSC to the extent reasonably practicable.
(e) At the end of each contract year, the scope of the Operational Services and the related Operational Services Fee are subject to review either at the request of VCSC or the Partnership Parties, in either case by providing 10 days written notice to the other party but in no event later than 60 days before the end of the applicable contract year, with such review to be completed no later than July 31 of the immediately following contract year.
(f) The General Partner, with the approval and consent of the Conflicts Committee, may agree on behalf of the Partnership to further modifications in the Operational Services Fee in connection with changed levels of Operational Services provided by the Partnership Parties due to expansions of VCSCs or its affiliates operations through acquisition or construction of new assets or businesses.
(g) Any fees payable hereunder for periods less than a full contract year shall be prorated for the period services were provided based on the actual number of days elapsed and a year of 365 days.
(b) The fees to be paid pursuant to Section 1.3 shall be paid by VCSC in equal monthly installments in arrears within 30 days of the end of the month. The fees payable to the Partnership pursuant to Section 1.3 may be offset against any fees payable by the Partnership pursuant to Section 1.2.
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Section 1.5 Cancellation or Reduction of Services. The Partnership Parties may terminate or reduce the level of any Administrative Service on 60 days prior written notice to VCSC. Upon such termination or reduction, the Administrative Services Fee shall be reduced accordingly, whether on a temporary or a permanent basis, for such time as such Administrative Service is reduced or terminated. VCSC may terminate or reduce the level of any Operational Service on 60 days prior written notice to the Partnership Parties. Upon such termination or reduction, the Operational Services Fee shall be reduced accordingly, whether on a temporary or a permanent basis, for such time as such Operational Service is reduced or terminated.
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(a) VCSC represents that it will provide or cause the Administrative Services to be provided to the Partnership Parties with reasonable care and in accordance with all applicable laws, rules, and regulations, including without limitation those of the Federal Energy Regulatory Commission. EXCEPT AS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE AND IN SECTION 1.1 (d), ALL PRODUCTS OBTAINED FOR THE PARTNERSHIP PARTIES ARE AS IS, WHERE IS, WITH ALL FAULTS AND VCSC MAKES NO (AND HEREBY DISCLAIMS AND NEGATES ANY AND ALL) REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES RENDERED OR PRODUCTS OBTAINED FOR THE PARTNERSHIP PARTIES. FURTHERMORE, THE PARTNERSHIP PARTIES MAY NOT RELY UPON
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ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE MADE TO VCSC BY ANY PARTY (INCLUDING, AN AFFILIATE OF VCSC) PERFORMING SERVICES ON BEHALF OF VCSC HEREUNDER, UNLESS SUCH PARTY MAKES AN EXPRESS WARRANTY TO VALERO GP OR THE PARTNERSHIP PARTIES. HOWEVER, IN THE CASE OF SERVICES PROVIDED BY A THIRD PARTY FOR THE PARTNERSHIP PARTIES, IF THE THIRD PARTY PROVIDER OF SUCH SERVICES MAKES AN EXPRESS WARRANTY TO ANY OF THE PARTNERSHIP PARTIES, THE PARTNERSHIP PARTIES ARE ENTITLED TO CAUSE VCSC TO RELY ON AND TO ENFORCE SUCH WARRANTY.
IT IS EXPRESSLY UNDERSTOOD BY THE PARTNERSHIP PARTIES THAT VCSC AND ITS AFFILIATES SHALL HAVE NO LIABILITY FOR THE FAILURE OF THIRD PARTY PROVIDERS TO PERFORM ANY SERVICES HEREUNDER AND FURTHER THAT VCSC AND ITS AFFILIATES SHALL HAVE NO LIABILITY WHATSOEVER FOR THE SERVICES PROVIDED BY ANY SUCH THIRD PARTY UNLESS IN EITHER EVENT SUCH SERVICES ARE PROVIDED IN A MANNER WHICH WOULD EVIDENCE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT ON THE PART OF VCSC OR ITS AFFILIATES BUT VCSC SHALL, ON BEHALF OF THE PARTNERSHIP PARTIES, PURSUE ALL RIGHTS AND REMEDIES UNDER ANY SUCH THIRD PARTY CONTRACT. THE PARTNERSHIP PARTIES AGREE THAT THE REMUNERATION PAID TO VCSC HEREUNDER FOR THE SERVICES TO BE PERFORMED REFLECT THIS LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES. IN NO EVENT SHALL VCSC BE LIABLE TO THE PARTNERSHIP PARTIES OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY ERROR IN THE PERFORMANCE OF SERVICES OR FROM THE BREACH OF THIS AGREEMENT, REGARDLESS OF THE FAULT OF VCSC, ANY VCSC AFFILIATE, OR ANY THIRD PARTY PROVIDER OR WHETHER VCSC, ANY VCSC AFFILIATE, OR THE THIRD PARTY PROVIDER ARE WHOLLY, CONCURRENTLY, PARTIALLY, OR SOLELY NEGLIGENT. TO THE EXTENT ANY THIRD PARTY PROVIDER HAS LIMITED ITS LIABILITY TO VCSC OR ITS AFFILIATE FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT, THE PARTNERSHIP PARTIES AGREE TO BE BOUND BY SUCH LIMITATION OF LIABILITY FOR ANY PRODUCT OR SERVICE PROVIDED TO THE PARTNERSHIP PARTIES BY SUCH THIRD PARTY PROVIDER UNDER VCSCS OR SUCH AFFILIATES AGREEMENT.
(b) The Partnership Parties represent that they will provide or cause the Operational Services to be provided to VCSC and its Affiliates with reasonable care and in accordance with all applicable laws, rules, and regulations, including without limitation those of the Federal Energy Regulatory Commission. EXCEPT AS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE AND IN SECTION 1.3 (a), ALL PRODUCTS OBTAINED FOR VCSC AND ITS AFFILIATES ARE AS IS, WHERE IS, WITH ALL FAULTS AND THE PARTNERSHIP PARTIES MAKE NO (AND HEREBY DISCLAIM AND NEGATE ANY AND ALL) REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES RENDERED OR PRODUCTS OBTAINED FOR VCSC AND ITS AFFILIATES. FURTHERMORE, NEITHER
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VCSC NOR ITS AFFILIATES MAY RELY UPON ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE MADE TO THE PARTNERSHIP PARTIES BY ANY PARTY PERFORMING SERVICES ON BEHALF OF THE PARTNERSHIP PARTIES HEREUNDER, UNLESS SUCH PARTY MAKES AN EXPRESS WARRANTY TO VCSC OR ITS AFFILIATES. HOWEVER, IN THE CASE OF SERVICES PROVIDED BY A THIRD PARTY FORVCSC OR ITS AFFILIATES, IF THE THIRD PARTY PROVIDER OF SUCH SERVICES MAKES AN EXPRESS WARRANTY TO ANY OF VCSC OR THE PARTNERSHIP PARTIES, VCSC IS ENTITLED TO CAUSE THE PARTNERSHIP PARTIES TO RELY ON AND TO ENFORCE SUCH WARRANTY.
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The requirement that any force majeure situation be removed or remedied with all reasonable diligence shall not require the settlement of strikes, lockouts or other labour difficulty by the party involved, contrary to its wishes. Rather, all such difficulties may be handled entirely within the discretion of the party concerned.
The term force majeure means any one or more of: (a) an act of God, (b) a strike, lockout, labour difficulty or other industrial disturbance, (c) an act of a public enemy, war, blockade, insurrection or public riot, (d) lightning, fire, storm, flood or explosion, (e) governmental action, delay, restraint or inaction, (f) judicial order or injunction, (g) material shortage or unavailability of equipment, or (h) any other cause or event, whether of the kind specifically enumerated above or otherwise, which is not reasonably within the control of the party claiming suspension.
Valero Corporate Services Company
One Valero Way
San Antonio, Texas 78249
Attention: Legal Department
Telecopy: (210) 345-5889
Valero GP, LLC
One Valero Way
San Antonio, Texas 78249
Attention: President
Telecopy: (210) 370-4392
or at such other address of which notice may have been given by such party in accordance with the provisions of this Section.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement with effect as of the date first above written.
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DIAMOND
SHAMROCK REFINING AND MARKETING |
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By: |
/s/ Michael S. Ciskowski |
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Name: Michael S. Ciskowski |
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Title: Senior Vice President |
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VALERO CORPORATE SERVICES COMPANY |
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By: |
/s/ Michael S. Ciskowski |
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Name: Michael S. Ciskowski |
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Title: Senior Vice President |
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VALERO L.P |
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By: |
Riverwalk Logistics, L.P. |
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By: |
Valero GP, LLC |
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By: |
/s/ Curtis V. Anastasio |
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Name: Curtis V. Anastasio |
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Title: President |
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VALERO LOGISTICS OPERATIONS, L.P. |
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By: |
Valero GP, Inc. |
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By: |
/s/ Curtis V. Anastasio |
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Name: Curtis V. Anastasio |
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Title: President |
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VALERO GP, LLC |
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By: |
/s/ Curtis V. Anastasio |
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Name: Curtis V. Anastasio |
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Title: President |
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RIVERWALK LOGISTICS, L.P. |
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By: |
Valero GP, LLC |
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By: |
/s/ Curtis V. Anastasio |
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Name: Curtis V. Anastasio |
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Title: President |
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SIGNATURE PAGE TO SECOND AMENDED AND RESTATED SERVICES AGREEMENT
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EXHIBIT A
Administrative Services provided to the Partnership Parties:
Ad Valorem Tax Services (note: ad valorem taxes are Direct Charges)
Controller
External Reporting
Corporate Tax
Accounting Governance
Non-Hydrocarbons Operations Accounting
Corporate Aviation and Travel Services
Corporate Communications and Public Relations
Corporate Development
Data Processing and Information Technology Services
Executive Oversight
Financial Accounting and Reporting
Foreign Trade Zone Reporting and Accounting
Governmental Affairs
Group Accounting
Health, Safety & Environmental Services
Human Resources Services
Benefit Accounting
Benefit Plan Administration
Retirement Plan Administration
401(k) Savings Plan Administration
Payroll Services
Training Services
Internal Audit
Legal
General Litigation Support
General Corporate
General Commercial
Labor & Employment
Tariff Maintenance
Environmental and Regulatory
Office Services
Mail Center/ Mail Services
Health Club
Office Space including building maintenance
Purchasing/Fleet Management
Records Management
Real Estate Management
Right-of-Way Services
Risk and Claims Management Services (note: insurance premiums are Direct Charges)
Security Services
Shareholder and Investor Relations
Treasury & Banking
Finance Services
Cash Management
Credit Services
In providing the foregoing services, VCSC shall be acting on behalf of and as agent for the Partnership Parties.
A-1