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 Partnership’s 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 Partnership’s 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:

ARTICLE I
PROVISION OF SERVICES

Section 1.1             Provision of Administrative Services by VCSC and Affiliates.

(a)            General and Administrative Services .  VCSC or any Affiliate or designee of VCSC shall provide non-exclusive management, employee-related and other related services to the Partnership Parties through Valero GP or any Affiliate, which shall include, but shall not be limited to, services related to acquisitions to be made by the Partnership Parties, cash management, review of significant financial opportunities and operating, accounting, legal, engineering, commercial, human resources, information technology and such other management, employee-related and other general and administrative services as set forth on Exhibit A hereto and as VCSC and Valero GP may from time to time agree (the “ Administrative Services ”).

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.

(b)            Additional Services .  VCSC or any Affiliate shall provide the Partnership Parties with such other services as Valero GP may request from time to time during the term of this Agreement and for such additional compensation as the parties may agree.

(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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all third party expenses directly related to the Partnership Parties, including, but not limited to, public company costs, outside legal fees, outside accounting fees, fees and expenses of external advisors and consultants, and insurance costs, including but not limited to, general liability, automobile liability, comprehensive liability, excess liability, property and directors and officers.

(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 1.2             Fees for Administrative Services.

(a)            Commencing on the Effective Date of this Agreement, and for each contract year thereafter, the Partnership shall pay to VCSC an annual fee (the “ Administrative Services Fee ”).  The Administrative Services Fee for the contract year ended June 30, 2006 shall be $13.8 million, for the contract year ended June 30, 2007 shall be $14.8 million, and thereafter such fee shall be $15.8 million for the contract year ended June 30, 2008 and the years following, subject to adjustment as provided in paragraph (b) below.

(b)            On the last day of each contract year starting with the contract year ending June 30, 2006, and prior to the beginning of the next contract year, the Administrative Services Fee shall be increased by an amount equal to Valero Energy’s general annual merit increase percentage for the just completed contract year.

(c)            The General Partner, with the approval and consent of the Conflicts Committee, may agree on behalf of the Partnership to further modifications in the Administrative Services Fee in connection with changed levels of Administrative Services provided to the Partnership Parties due to expansions of the Partnership’s operations through acquisition or construction of new assets or businesses.

(d)            At the end of each contract year, the scope of the Administrative Services and the related Administrative 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, with any modification of the Administrative Services Fee other than as provided in paragraph (a) above subject to the consent and approval of the Conflicts Committee.

(e)            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.

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.

(d)            Annual Adjustment .  On the last day of each contract year starting with the contract year ending June 30, 2006, and prior to the beginning of the next contract year, the Operational Services Fee shall be increased by an amount equal to the Partnership’s general annual merit increase percentage for the just completed contract year.

(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 VCSC’s 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 service