SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 1, 2002
(Date of Earliest Event Reported)
Valero L.P.
(Exact name of registrant as specified in its charter)
Delaware 001-16417 74-2958817
(State or other (Commission File Number) (IRS Employer
jurisdiction Identification
of incorporation) Number)
6000 North Loop 1604 West
San Antonio, Texas 78249-1112
(210)592-2000
(Address, including zip code, and telephone number)
Item 2. Acquisition or Disposition of Assets.
(a) On February 1, 2002 Valero Logistics Operations, L.P., in which the
registrant owns a 98.98995% limited partnership interest, exercised
its option to purchase a 270-mile crude oil pipeline and related
storage facility from a wholly owned subsidiary of Valero Energy
Corporation for $64 million. Valero Energy Corporation indirectly owns
approximately 73.3% of the registrant. The pipeline runs from Wichita
Falls, Texas to Valero Energy Corporation's McKee Refinery in the
Texas panhandle. The option had been granted under the Omnibus
Agreement between Ultramar Diamond Shamrock Corporation (Valero Energy
Corporation's predecessor in interest by merger) and the registrant,
Valero Logistics Operations, L.P, and certain of their affiliates. The
Omnibus Agreement was executed in connection with the registrant's
initial public offering in April, 2001.
Item 7. Financial Statement, Pro Forma Financial Information, and Exhibits.
(a) Financial Statements of Businesses Acquired.
It is impracticable to provide the financial statements of the
business acquired at the time of this filing. The registrant will file
the required financial statements as soon as practicable, but in any
event on or prior to April 15, 2002.
(b) Pro Forma Financial Information.
It is impracticable to provide the pro forma financial information
pertaining to the business acquired at the time of this filing. The
registrant will file the required pro forma financial information as
soon as practicable, but in any event on or prior to April 15, 2002.
(c) Exhibits.
2.1 Omnibus Agreement.
99.1 Press Release
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Valero
L.P. has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
VALERO L.P.
By: Riverwalk Logistics, L.P.
By: Valero GP, LLC
By: /s/Todd Walker
Its: Secretary
Date: February 15, 2002
3
EXHIBITS
2.1 Omnibus Agreement
99.1 January 22, 2002 Press Release.
4
Exhibit 2.1
OMNIBUS AGREEMENT
among
ULTRAMAR DIAMOND SHAMROCK CORPORATION
SHAMROCK LOGISTICS GP, LLC
RIVERWALK LOGISTICS, L.P.
SHAMROCK LOGISTICS, L.P.
and
SHAMROCK LOGISTICS OPERATIONS, L.P.
OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing
Date by and among Ultramar Diamond Shamrock Corporation, a Delaware corporation
("UDS"), Shamrock Logistics GP, LLC, a Delaware limited liability company
("Shamrock GP"), Riverwalk Logistics, L.P., a Delaware limited partnership and
general partner of the MLP and the OLP ("Riverwalk"), Shamrock Logistics, L.P.,
a Delaware limited partnership (the "MLP"), and Shamrock Logistics Operations,
L.P., a Delaware limited partnership (the "OLP").
R E C I T A L:
UDS, the MLP, the OLP, Shamrock GP in its capacity as the general partner
of Riverwalk, and Riverwalk in its capacity as the general partner of each of
the MLP and the OLP, desire by their execution of this Agreement to evidence
their understanding, (i) as more fully set forth in Article II of this
Agreement, with respect to (a) those business opportunities that UDS will not
pursue unless the MLP has declined to engage in such business opportunities for
its own account and (b) the procedures whereby such business opportunities are
to be offered to the MLP and accepted or declined; (ii) as more fully set forth
in Article III of this Agreement, with respect to the indemnification
obligations of UDS relating to certain environmental and income tax liabilities,
and (iii) as more fully set forth in Article IV of this Agreement, with respect
to the options by the MLP to purchase certain assets currently under
construction which were retained by UDS at the time of the Formation
Transactions.
In consideration of the premises and the covenants, conditions, and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I.
Definitions
1.1 Definitions. (a) Capitalized terms used herein but not defined herein
shall have the meanings given them in the MLP Agreement.
(b) As used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Affiliate" shall have the meaning attributed to such term in the MLP
Agreement.
"Agreement" means this Omnibus Agreement, as amended, modified, or
supplemented from time to time in accordance with the terms hereof.
"Change of Control" shall have the meaning attributed to such term in
Section 2.4.
"Claim" means any claim, lawsuit, demand, suit, inquiry made, hearing,
investigation, notice of a violation, litigation, proceeding, arbitration,
or other dispute, whether civil, criminal, administrative or otherwise.
1
"Closing Date" means the date of the closing of the initial public
offering of common units representing limited partner interests in the MLP.
"Conflicts Committee" shall have the meaning attributed to such term
in the MLP Agreement.
"Contaminant" means any substance regulated under any Environmental
Law, or any substance defined by Environmental Law as being hazardous or
toxic or as being a pollutant.
"Contract" means any agreement, contract, commitment, or other binding
arrangement or understanding, whether written or oral.
"Environmental Laws" means any and all laws, statutes, judgments,
ordinances, rules, regulations, orders, determinations, interpretations, or
guidance of any Governmental Authority pertaining to health or the
environment in effect in any and all jurisdictions in which any UDS Entity
or Partnership Entity or any of their respective Affiliates is conducting
or at any time has conducted business, or where any property of any UDS
Entity or Partnership Entity or any of their respective Affiliates, whether
leased or owned, is located, or where any hazardous substances generated or
disposed of by any UDS Entity or Partnership Entity or any of their
respective Affiliates are located. The term "Environmental Law" includes,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 and as subsequently amended, 42 U.S.C. ss. 9601
et seq.; the Resource Conversation and Recovery Act, as amended, 42 U.S.C.
ss. 6901 et seq.; the Clean Air Act, as amended, 42 U.S.C. ss. 7401 et
seq.; and the Oil Pollution Act, as amended, 33 U.S.C. ss. 2701 et seq.
"Environmental Liabilities and Costs" means all Losses from any Claim
by any Person whether based on Contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including under any Remedial
Action, Environmental Law, Environmental Permit, Environmental Lien, Order
or agreement with any Governmental Authority, arising from environmental,
health or safety conditions, or the release of a Contaminant into the
environment.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Environmental Permit" shall mean any Permit, license, approval,
consent or other authorization required by or pursuant to any applicable
Environmental Law.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Formation Transactions" means (i) the contributions to the OLP of
certain crude oil pipeline and storage assets and refined product pipeline
and terminalling assets pursuant to those certain Conveyance, Assignment
and Bill of Sale Agreements dated effective as of July 1, 2000, by and
among the OLP and certain subsidiaries of UDS and (ii) the transfers of
certain crude oil pipeline and storage assets and refined product pipeline
and terminalling assets and certain ownership interests in Skelly-Belview
Pipeline Company, L.L.C. to the OLP by virtue of the mergers of certain
subsidiaries of UDS with and into the OLP effective as of July 1, 2000.
2
"Governmental Authority" shall mean (a) the United States of America,
(b) any state, county, municipality, or other governmental subdivision
within the United States of America, and (c) any court or any governmental
department, commission, board, bureau, agency, or other instrumentality of
the United States of America or of any state, county, municipality, water
rights, taxing, or zoning authority, or other governmental subdivision
within the United States of America.
"Indemnified Party" shall have the meaning assigned to such term in
Section 3.2(a).
"Indemnifying Party" shall have the meaning assigned to such term in
Section 3.2(a).
"Losses" means all liabilities, losses, costs, damages (including
punitive, consequential and treble damages), penalties or expenses
(including, without limitation, reasonable attorneys' fees and expenses and
costs of investigation and litigation), and also including any expenditures
or expenses incurred to cover, remedy or rectify any such Losses.
"MLP" means Shamrock Logistics, L.P., a Delaware limited partnership,
and any successors thereto.
"MLP Agreement" means the Second Amended and Restated Agreement of
Limited Partnership of the MLP, dated as of the Closing Date, as such
agreement is in effect on the Closing Date, to which reference is hereby
made for all purposes of this Agreement. No amendment or modification to
the MLP Agreement subsequent to the Closing Date shall be given effect for
the purposes of this Agreement unless consented to by each of the parties
to this Agreement.
"OLP" means Shamrock Logistics Operations, L.P., a Delaware limited
partnership, and any successors thereto.
"Option Purchase Amount" means (i) $64,000,000 for the Wichita Falls
Pipeline, (ii) $6,500,000 for the Ringgold Storage Facility or (iii)
$5,600,000 for the Southlake Terminal, respectively.
"Order" means any decree, order, injunction, rule, judgment, consent
of or by a Governmental Authority.
"Partnership Entities" means Shamrock GP, Riverwalk, the MLP and the
OLP.
"Person" means an individual, partnership, corporation, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other legal entity
of any kind.
3
"Permits" means any licenses, permits, registrations, variances,
interim permits, permit applications, certificates, approvals or other
authorizations under any Regulation applicable to any UDS Entity or
Partnership Entity.
"Regulation" means any law, statute, regulation, ruling, rule, Order
or Permit, of, administered or enforced by or on behalf of any Governmental
Authority, as may be amended from time to time.
"Remedial Action" means all actions required to (a) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (b) prevent the release or threat of release or minimize the
further release of Contaminants so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Restricted Business" has the meaning attributed to such term in
Section 2.1.
"Ringgold Storage Facility" means a new crude oil storage facility at
Ringgold, Texas that is currently being constructed by UDS and which will
have a storage capacity of approximately 600,000 barrels.
"Riverwalk" means Riverwalk Logistics, L.P., a Delaware limited
partnership and general partner of the MLP and OLP.
"Shamrock GP" means Shamrock Logistics GP, LLC, a Delaware limited
liability company and general partner of Riverwalk.
"Southlake Terminal" means a refined product terminal in Southlake,
Texas that is currently undergoing construction conducted by UDS.
"Transferred Assets" means the assets contributed or transferred to
the Partnership Entities in the Formation Transactions.
"UDS" means Ultramar Diamond Shamrock Corporation.
"UDS Entities" means UDS and any of its Affiliates, other than the
Partnership Entities.
"Voting Stock" means securities or membership interests of any class
or series of either UDS, Shamrock GP or Riverwalk entitling the holders
thereof to vote on a regular basis in the election of members of the board
of directors, board of managers or other governing body of such entity.
"Wichita Falls Pipeline" means the crude oil pipeline from Wichita
Falls, Texas to UDS' McKee Refinery with a current capacity of
approximately 85,000 barrels a day, which is being expanded by UDS to a
capacity of approximately 110,000 barrels per day, along with related crude
oil storage facilities with a storage capacity of approximately 360,000
barrels.
4
ARTICLE II.
Business Opportunities
2.1 Restricted Businesses. Subject to the terms of the MLP Agreement, for
as long as (i) Shamrock GP (or any Affiliate of UDS) is the general partner of
Riverwalk and (ii) Riverwalk (or any Affiliate of UDS) is the general partner of
the MLP or the OLP, each of the UDS Entities are prohibited from engaging in,
whether by acquisition or otherwise, the business of transporting crude oil or
refined petroleum products (including petrochemicals) or operating crude oil
storage or refined petroleum products terminalling assets in the United States
(a "Restricted Business").
2.2 Permitted Exceptions. Notwithstanding any provision of Section 2.1, a
UDS Entity may pursue an opportunity to purchase or invest in, and may
ultimately purchase, own and/or operate, a Restricted Business under any of the
following circumstances:
(a) Any business retained by a UDS Entity at the Closing;
(b) Any further development of the Diamond-Koch Joint Venture
petrochemicals business;
(c) Any business with a fair market value (as determined by the board
of directors of UDS in good faith) of less than $10 million;
(d) Any business acquired by a UDS Entity that constitutes less than
50% of the fair market value (as determined by a nationally
recognized independent financial advisor) of a larger acquisition
by such UDS Entity; provided the MLP has been offered and
declined (with the concurrence of a majority of the members of
the Conflicts Committee) the opportunity to purchase such
business in accordance with the procedures set forth in Section
2.3;
(e) Each of the Wichita Falls Pipeline, the Southlake Terminal and
the Ringold Storage Facility should the MLP decline to exercise
its option to purchase them pursuant to the Purchase Option
described in more detail in Article IV hereof; or
(f) Any logistics assets newly constructed by a UDS Entity that the
MLP has not elected to purchase pursuant to Section 4.3.
2.3 Procedures.
(a) If a UDS Entity becomes aware of an opportunity to purchase a
Restricted Business, then, as soon as practicable, such UDS Entity shall notify
Shamrock GP of such opportunity and deliver to Shamrock GP all information
prepared by or on behalf of such UDS Entity relating to such potential purchase.
As soon as practicable but in any event within 30 days after receipt of such
notification and information, Shamrock GP, on behalf of the MLP, shall notify
the UDS Entity that either (i) Shamrock GP, on behalf of the MLP, has elected,
with the approval of a majority of the members of the Conflicts Committee, not
to cause the MLP to pursue the opportunity to acquire such Restricted Business,
or (ii) Shamrock GP, on behalf of the MLP, has elected to cause the MLP to
pursue the opportunity to acquire such Restricted Business. If, at any time,
Shamrock GP or its Affiliates abandons such opportunity (as evidenced in writing
by Shamrock GP or such Affiliates following the request of the UDS Entity), the
UDS Entity may pursue such opportunity. Any Restricted Business which is
permitted to be purchased by an UDS Entity must be so purchased (i) within 12
months of the time the UDS Entity becomes able to pursue such acquisition in
accordance with the provisions of this Section 2.3 and (ii) on terms not
materially more favorable to the UDS Entity than were offered to the MLP. If
either of these conditions are not satisfied, the opportunity must be reoffered
to the MLP.
5
(b) If a UDS Entity acquires a Restricted Business as part of a larger
transaction in accordance with the provisions of Section 2.2(d), then, within 30
days after the consummation of such purchase, such UDS Entity shall notify
Shamrock GP of such purchase and such UDS Entity shall offer the MLP the
opportunity to purchase the Restricted Business constituting a portion of such
purchase and deliver to Shamrock GP all information prepared by or on behalf of
or in the possession of such UDS Entity relating to the Restricted Business. As
soon as practicable but in any event within 30 days after receipt of such
notification, Shamrock GP shall notify the UDS Entity that either (i) Shamrock
GP, on behalf of the MLP, has elected, with the approval of a majority of the
members of the Conflicts Committee, not to cause the MLP to purchase such
Restricted Business, in which event the UDS Entity shall be free to continue to
engage in such Restricted Business and shall be free to improve and expand such
Restricted Business if necessary to maintain existing market share, or (ii)
Shamrock GP, on behalf of the MLP, has elected to cause the MLP to purchase such
Restricted Business, in which event the following procedures shall be followed:
(i) The UDS Entity shall submit a good faith offer to Shamrock GP to
sell the Restricted Business (the "Offer") to any member of the Partnership
Group designated by Shamrock GP on the terms and for the consideration
stated in the Offer.
(ii) The UDS Entity and Shamrock GP shall negotiate in good faith, for
120 days after receipt of such Offer by Shamrock GP, the terms on which the
Restricted Business will be sold to the MLP. The UDS Entity shall provide
all information concerning the business, operations and finances of such
Restricted Business as may be reasonably requested by Shamrock GP.
(A) If the UDS Entity and Shamrock GP agree on such terms within
120 days after receipt by Shamrock GP of the Offer, the MLP shall
purchase the Restricted Business on such terms as soon as commercially
practicable after such agreement has been reached.
(B) If the UDS Entity and Shamrock GP are unable to agree on the
terms of a sale during such 120-day period, the UDS Entity shall
attempt to sell the Restricted Business to a Person that is not an
Affiliate of the UDS Entity (a "NonAffiliate Purchaser") within nine
months of the termination of such 120-day period. Any such sale to a
NonAffiliate Purchaser must be for a purchase price, as determined by
the board of directors of UDS, not less than 95% of the purchase price
last offered by the MLP.
6
(C) During such 120-day period the UDS Entity shall be free to
make capital expenditures to maintain the Restricted Business and to
improve or expand the Restricted Business if necessary to maintain the
Restricted Business' existing market share.
(iii) If, after the expiration of the nine-month period referred to in
clause (ii)(B) above, the UDS Entity has not sold the Restricted Business to a
NonAffiliate Purchaser, it shall submit another Offer (the "Second Offer") to
Shamrock GP within seven days after the expiration of such nine-month period.
The UDS Entity shall provide all information concerning the business, operations
and finances of such Restricted Business as may be reasonably requested by
Shamrock GP.
(A) If Shamrock GP, with the concurrence of a majority of the
members of the Conflicts Committee, elects not to cause the MLP to
pursue the Second Offer, the UDS Entity shall be free to continue to
engage in such Restricted Business.
(B) If Shamrock GP shall elect to cause the MLP to purchase such
Restricted Business, then Shamrock GP and the UDS Entity shall
negotiate the terms of such purchase for 60 days. If the UDS Entity
and Shamrock GP agree on such terms within 60 days after receipt by
Shamrock GP of the Second Offer, the MLP shall purchase the Restricted
Business on such terms as soon as commercially practicable after such
agreement has been reached.
(C) If during such 60-day period, no agreement has been reached
between the UDS Entity and Shamrock GP or a member of the Partnership
Group, the UDS Entity and Shamrock GP will engage an independent
investment banking firm with a national reputation to determine the
value of the Restricted Business. Such investment banking firm will
determine the value of the Restricted Business within 30 days and
furnish the UDS Entity and Shamrock GP its opinion of such value. The
UDS Entity and Shamrock GP shall share equally the fees and expenses
of such investment banking firm. Upon receipt of such opinion,
Shamrock GP will have the option, subject to the approval of a
majority of the members of the Conflicts Committee, to (A) cause the
MLP to purchase the Restricted Business for an amount equal to the
value determined by such investment banking firm or (B) decline to
purchase such Restricted Business, in which event the UDS Entity will
be free to continue to engage in such Restricted Business.
2.4 Change of Control. If a Change of Control of UDS or each of Shamrock GP
or Riverwalk occurs, the provisions of this Article II shall not apply to the
existing logistics activities of any acquiring entity. A Change of Control of
UDS or each of Shamrock GP or Riverwalk shall be deemed to have occurred upon
the occurrence of one or more of the following events: (i) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the UDS or Shamrock
GP to any Person or its Affiliates, unless immediately following such sale,
lease, exchange or other transfer such assets are owned, directly or indirectly,
by the UDS Entities or Shamrock GP; (ii) the consolidation or merger of UDS or
Shamrock GP with or into another Person pursuant to a transaction in which the
outstanding Voting Stock of UDS or Shamrock GP is changed into or exchanged for
cash, securities or other property, other than any such transaction where (a)
the outstanding Voting Stock of UDS or Shamrock GP is changed into or exchanged
for Voting Stock of the surviving corporation or its parent and (b) the holders
of the Voting Stock of UDS or Shamrock GP immediately prior to such transaction
own, directly or indirectly, not less than a majority of the Voting Stock of the
surviving corporation or its parent immediately after such transaction; or (iii)
a "person" or "group" (within the meaning of Sections 13(d) or 14(d)(2) of the
Exchange Act) being or becoming the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) of more than 50% of all Voting Stock of
UDS or Shamrock GP then outstanding, other than in a merger or consolidation
which would not constitute a Change of Control under clause (ii) above.
7
2.5 Scope of Restricted Business Prohibition. Except as provided in this
Article II and the Partnership Agreement, each UDS Entity shall be free to
engage in any business activity whatsoever, including those that may be in
direct competition with any Partnership Entity.
2.6 Enforcement. The UDS Entities agree and acknowledge that the
Partnership Group does not have an adequate remedy at law for the breach by the
UDS Entities of the covenants and agreements set forth in this Article II, and
that any breach by the UDS Entities of the covenants and agreements set forth in
Article II would result in irreparable injury to the Partnership Group. The UDS
Entities further agree and acknowledge that any member of the Partnership Group
may, in addition to the other remedies which may be available to the Partnership
Group hereunder or under applicable law, file a suit in equity to enjoin the UDS
Entities from such breach, and consent to the issuance of injunctive relief
hereunder.
ARTICLE III.
Indemnification
3.1 Indemnification of Partnership Entities by UDS. In addition to its
indemnification obligations under certain (i) Indemnity Agreements entered into
in connection with the mergers of certain subsidiaries of UDS with and into the
OLP effective as of July 1, 2000, and (ii) Conveyance, Assignment and Bill of
Sale Agreements dated effective as of July 1, 2000, by and among the OLP and
certain subsidiaries of UDS, UDS, on behalf of each of the respective UDS
Entities, shall indemnify, defend and hold harmless the Partnership Entities
from and against (A) any and all Losses that are caused by, arise out of or are
attributable to Environmental Liabilities and Costs related to the Transferred
Assets that arose or relate to conditions existing prior to Closing and which
are discovered by the MLP within 10 years of the Closing (excluding
Environmental Liabilities and Costs to the extent such Environmental Liabilities
and Costs result from a change in law after closing) and (B) all federal, state
and local income tax liabilities attributable to the operation of the
Transferred Assets prior to the Closing Date, including any such income tax
liabilities of UDS and its Affiliates that may result from the consummation of
the Formation Transactions.
3.2 Indemnification Procedures.
(a) As used in this Section 3.2, the term "Indemnifying Party" refers to
UDS in the case of any indemnification obligation arising under Section 3.1, and
the term "Indemnified Party" refers to the Partnership Entities, as applicable,
in the case of any indemnification obligation arising under Section 3.1.
8
(b) If any action, suit or proceeding shall be brought against an
Indemnified Party, or if the Indemnified Party should otherwise become aware of
facts giving rise to a claim for indemnification pursuant to Section 3.1, the
Indemnified Party shall promptly notify the Indemnifying Party in writing
specifying the nature of and specific basis for such claim.
(c) The Indemnifying Party shall have the right to control all aspects of
the defense of (and any counterclaims with respect to) any claims brought
against the Indemnified Party that are covered by the indemnification set forth
in Section 3.1, including, without limitation, the selection of counsel,
determination of whether to appeal any decision of any court and the settling of
any such matter or any issues relating thereto; provided, however, that no such
settlement shall be entered into without the consent of the Indemnified Party
unless it includes a full release of the Indemnified Party from such matter or
issues, as the case may be.
(d) The Indemnified Party agrees, at its own cost and expense, to cooperate
fully with the Indemnifying Party with respect to all aspects of the defense of
any claims covered by the indemnification set forth in Section 3.1, including,
without limitation, the prompt furnishing to the Indemnifying Party of any
correspondence or other notice relating thereto that the Indemnified Party may
receive, permitting the name(s) of the Indemnified Party to be utilized in
connection with such defense, the making available to the Indemnifying Party of
any files, records or other information of the Indemnified Party that the
Indemnifying Party considers relevant to such defense and the making available
to the Indemnifying Party of any employees of the Indemnified Party; provided,
however, that in connection therewith the Indemnifying Party agrees to use
reasonable efforts to minimize the impact thereof on the operations of such
Indemnified Party. In no event shall the obligation of the Indemnified Party to
cooperate with the Indemnifying Party as set forth in the immediately preceding
sentence be construed as imposing upon the Indemnified Party an obligation to
hire and pay for counsel in connection with the defense of any claims covered by
the indemnification set forth in this Article III; provided, however, that an
Indemnified Party may, at its own option, cost and expense, hire and pay for
counsel in connection with any such defense. The Indemnifying Party agrees to
keep any such counsel hired by the Indemnified Party reasonably informed as to
the status of any such defense, but the Indemnifying Party shall have the right
to retain sole control over such defense.
(e) In determining the amount of any Loss for which any Indemnified Party
is entitled to indemnification under this Article III, the gross amount thereof
will be reduced by any insurance proceeds realized or to be realized by such
Indemnified Party, and such correlative insurance benefit shall be net of any
insurance premium that becomes due as a result of such claim.
ARTICLE IV.
4.1. Purchase Option for Assets Currently Under Construction. UDS, on
behalf of the UDS Entities, hereby grants the MLP, on behalf of the OLP, the
unconditional right and option to purchase and acquire from the applicable UDS
Entity all of the respective UDS Entity's right, title and interest in, to and
under any or all of (i) the Wichita Falls Pipeline, (ii) the Ringgold Storage
Facility and (iii) the Southlake Terminal, at any time, from time to time and no
later than one year from the date of notice from UDS of completion of
construction of such asset, such notice to be given as soon as practicable, for
a purchase price that is equal to the respective Option Purchase Amount, by
delivery to UDS, on behalf of the respective UDS Entity, of a written notice of
the exercise of such purchase option. The MLP may exercise this purchase option
with respect to all, part or none of the enumerated assets.
9
4.2. Closing of Purchase Option. Closing of purchase and sale pursuant to
this Article IV shall be conducted at such location mutually agreed upon by UDS
and the MLP. At closing, UDS will sell and assign to the OLP by deed, bill of
sale, assignment of contract rights or other appropriate documentation all of
UDS's (or the applicable UDS Entity's) right, title and interest in, to and
under the Wichita Falls Pipeline, the Ringgold Storage Facility or the Southlake
Terminal, as applicable, and the OLP shall make payment of the applicable Option
Purchase Amount to UDS or the applicable UDS Entity in cash or by electronic
wire transfer of immediately available funds to an account designated by UDS in
writing.
4.3. Purchase Option for Logistics Assets Constructed by UDS in the Future.
If a UDS Entity constructs any new logistics assets then, as soon as
practicable, such UDS Entity shall notify Shamrock GP of the completion of such
construction and such UDS Entity shall offer the MLP the opportunity to elect to
purchase, or have a subsidiary elect to purchase, the newly constructed assets
by written notice delivered to the UDS Entity no later than one year from the
date of notice. If Shamrock GP, with the concurrence of a majority of the
members of the Conflicts Committee, elects to purchase such assets, then
Shamrock GP and the UDS Entity shall negotiate the terms of such purchase for 60
days. If the UDS Entity and Shamrock GP agree on such terms within 60 days after
receipt by the UDS Entity of the notice of election to purchase, the MLP shall
purchase the newly constructed assets on such terms as soon as commercially
practicable after such agreement has been reached.
If during such 60-day period, no agreement has been reached between the UDS
Entity and Shamrock GP, the UDS Entity and Shamrock GP will engage an
independent investment banking firm with a national reputation to determine the
value of the newly constructed assets. Such investment banking firm will
determine the value of the newly constructed assets within 30 days and furnish
the UDS Entity and Shamrock GP its opinion of such value. The UDS Entity and
Shamrock GP shall share equally the fees and expenses of such investment banking
firm. Upon receipt of such opinion, Shamrock GP will have the option, subject to
the approval of a majority of the members of the Conflicts Committee, to (A)
purchase the newly constructed assets for an amount equal to the value
determined by such investment banking firm or (B) decline to purchase such newly
constructed assets, in which event, the UDS Entity will be free to continue to
own and operate such newly constructed assets.
ARTICLE V.
Miscellaneous
5.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be
subject to and governed by the laws of the State of Delaware, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state.
10
5.2 Notice. All notices or requests or consents provided for or permitted
to be given pursuant to this Agreement must be in writing and must be given by
depositing same in the United States mail, addressed to the Person to be
notified, postpaid, and registered or certified with return receipt requested or
by delivering such notice in person or by telecopier or telegram to such party.
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a party
pursuant to this Agreement shall be sent to or made at the address set forth
below such party's signature to this Agreement, or at such other address as such
party may stipulate to the other parties in the manner provided in this Section
5.2.
5.3 Entire Agreement; Supersedure. This Agreement constitutes the entire
agreement of the parties relating to the matters contained herein, superseding
all prior contracts or agreements, whether oral or written, relating to the
matters contained herein.
5.4 Effect of Waiver or Consent. No waiver or consent, express or implied,
by any party to or of any breach or default by any Person in the performance by
such Person of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such Person of the same or any other obligations of such Person hereunder.
Failure on the part of a party to complain of any act of any Person or to
declare any Person in default, irrespective of how long such failure continues,
shall not constitute a waiver by such party of its rights hereunder until the
applicable statute of limitations period has run.
5.5 Amendment or Modification. This Agreement may be amended or modified
from time to time only by the written agreement of all the parties hereto;
provided, however, that the MLP may not, without the prior approval of a
majority of the members of the Conflicts Committee, agree to any amendment or
modification of this Agreement that, in the reasonable discretion of Shamrock
GP, will adversely affect the holders of Common Units. Each such instrument
shall be reduced to writing and shall be designated on its face an "Amendment"
or an "Addendum" to this Agreement.
5.6 Assignment. No party shall have the right to assign its rights or
obligations under this Agreement without the consent of the other parties
hereto.
5.7 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.
5.8 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.
11
5.9 Gender, Parts, Articles and Sections. Whenever the context requires,
the gender of all words used in this Agreement shall include the masculine,
feminine and neuter, and the number of all words shall include the singular and
plural. All references to Article numbers and Section numbers refer to Parts,
Articles and Sections of this Agreement, unless the context otherwise requires.
5.10 Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
5.11 Withholding or Granting of Consent. Each party may, with respect to
any consent or approval that it is entitled to grant pursuant to this Agreement,
grant or withhold such consent or approval in its sole and uncontrolled
discretion, with or without cause, and subject to such conditions as it shall
deem appropriate.
5.12 Laws and Regulations. Notwithstanding any provision of this Agreement
to the contrary, no party hereto shall be required to take any act, or fail to
take any act, under this Agreement if the effect thereof would be to cause such
party to be in violation of any applicable law, statute, rule or regulation.
5.13 Negotiation of Rights of Limited Partners, Assignees, and Third
Parties. The provisions of this Agreement are enforceable solely by the parties
to this Agreement, and no Limited Partner, Assignee or other Person shall have
the right, separate and apart from the MLP, to enforce any provision of this
Agreement or to compel any party to this Agreement to comply with the terms of
this Agreement.
12
IN WITNESS WHEREOF, the parties have executed this Agreement on, and
effective as of, the Closing Date.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ Robert S. Shapard
------------------------------------------
Name: Robert S. Shapard
---------------------------------------
Title: Executive Vice President and Chief
----------------------------------
Financial Officer
---------------------------------------
Address for Notice: 6000 North Loop 1604 West
-------------------------
San Antonio, TX 68249
-------------------------
Telecopy Number:
-------------------------
SHAMROCK LOGISTICS GP, LLC
By: /s/ Curtis V. Anastasio
------------------------------------------
Name: Curtis V. Anastasio
---------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
Address for Notice: 6000 North Loop 1604 West
-------------------------
San Antonio, TX 78249
-------------------------
Telecopy Number:
-------------------------
13
RIVERWALK LOGISTICS, L.P.
By: Shamrock Logistics GP, LLC
its general partner
By: /s/ Curtis V. Anastasio
------------------------------------------
Name: Curtis V. Anastasio
---------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
Address for Notice: 6000 North Loop 1604 West
-------------------------
San Antonio, TX 78249
-------------------------
Telecopy Number:
-------------------------
SHAMROCK LOGISTICS, L.P.
By: Riverwalk Logistics, L.P.
its general partner
By: Shamrock Logistics GP, LLC
Its general partner
By: /s/ Curtis V. Anastasio
------------------------------------------
Name: Curtis V. Anastasio
---------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
Address for Notice: 6000 North Loop 1604 West
-------------------------
San Antonio, TX 78249
-------------------------
Telecopy Number:
-------------------------
14
SHAMROCK LOGISTICS OPERATIONS, L.P.
By: Riverwalk Logistics, L.P.
its general partner
By: Shamrock Logistics GP, LLC
Its general partner
By: /s/ Curtis V. Anastasio
------------------------------------------
Name: Curtis V. Anastasio
---------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
Address for Notice: 6000 North Loop 1604 West
-------------------------
San Antonio, TX 78249
-------------------------
Telecopy Number:
-------------------------
15
Exhibit 99.1
FOR IMMEDIATE RELEASE CONTACTS:
Mary Rose Brown (Media)
(210)370-2314
Lee Bailey (Investor Relations)
(210) 370-2139
VALERO L.P. TO ACQUIRE WICHITA FALLS
PIPELINE AND STORAGE FACILITY
QUARTERLY CASH DISTRIBUTION DECLARED
SAN ANTONIO, Jan. 22, 2002 -- Valero L.P. (NYSE: VLI) has approved the purchase
from Valero Energy Corporation (NYSE: VLO) of a 270-mile crude oil pipeline and
related storage facility. The 110,000 barrel-per-day pipeline delivers crude oil
from Wichita Falls, Texas to Valero Energy Corporation's McKee refinery located
in the Texas panhandle. The crude oil storage facility, which is located in
Wichita Falls, consists of four crude oil storage tanks with combined capacity
of 660,000 barrels. The sale is expected to close on February 1, 2002. Valero
L.P. will pay $64 million for the pipeline and the storage tanks.
"Strategically, this acquisition allows the partnership to significantly
increase its throughput volumes and revenues and provides a stable cash flow for
the unitholders," said Curt Anastasio, Chief Executive Officer of Valero L.P.
"This acquisition is expected to be very accretive to earnings and cash flow. We
believe that the incremental EBITDA from this purchase will be about $17 million
annually. With this acquisition, the partnership has completed the exercise of
the three asset purchase options announced at the time of our initial public
offering and we look forward to pursuing additional acquisition opportunities in
the future."
In addition, Valero L.P. today declared a cash distribution of $0.60 per common
and subordinated partnership unit for the fourth quarter ended December 31,
2001. The distribution will be paid on February 14, 2002, to holders of record
at the close of business on February 1, 2002.
1
Valero L.P. is scheduled to announce its fourth quarter earnings on Tuesday,
February 5, 2002. A conference call with management is scheduled for 11:00 a.m.
EST (10:00 a.m. CST) on February 5 to discuss the financial and operational
results for the quarter. Anyone interested in listening to the presentation can
call 800/633-8954, passcode 20273162 or visit the company's web site at
www.valerolp.com.
Valero L.P. owns 510 miles of crude oil pipelines, nearly 3,000 miles of refined
product pipelines and 11 refined product terminals. The partnership transports
refined products from Valero Energy's refineries to established and growing
markets in the Mid-Continent, Southwest and Mexico border region. In addition,
the pipelines supply Valero Energy's McKee, Ardmore, and Three Rivers refineries
with crude oil as well as provide access to Texas, Gulf Coast and international
crude sources. Valero L.P., which is a master limited partnership that went
public in April 2001, is owned approximately 73 percent by subsidiaries of
Valero Energy Corporation. Valero Energy assumed its ownership interest when the
company completed its merger with Ultramar Diamond Shamrock Corporation on
December 31, 2001.
For more information about Valero L.P., visit the partnership's web site at
www.valerolp.com.
Statements contained in this press release that state the Partnership's or
management's expectations or predictions of the future are forward-looking
statements intended to be covered by the safe harbor provisions of the
Securities Act of 1933 and the Securities Exchange Act of 1934. It is important
to note that the Partnership's actual results could differ materially from those
projected in such forward-looking statements. Factors that could affect those
results include those mentioned in the documents that the Partnership has filed
with the Securities and Exchange Commission, including without limitation the
risk factors and other cautionary statements included in the Partnership's
initial public offering prospectus.
2