As filed with the Securities and Exchange Commission on June 6, 1997
Registration No. 333-
Post-Effective Amendment No. 1 to Registration No. 33-82662
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 1
UNDER
THE SECURITIES ACT OF 1933
ULTRAMAR DIAMOND SHAMROCK CORPORATION Delaware 13-3663331
UDS CAPITAL I Delaware To be applied for
UDS CAPITAL II Delaware To be applied for
UDS FUNDING I, L.P. Delaware 74-2835441
UDS FUNDING II, L.P. Delaware 74-2835442
(Exact name of registrant as (State or other (I.R.S. Employer
specified in its charter) jurisdiction of (Identification
incorporation or No.)
organization,
9830 Colonnade Boulevard
San Antonio, TX 78230
(210) 641-6800
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Patrick J. Guarino, Esq.
Executive Vice President, General Counsel, and Secretary
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, TX 78230
(210) 641-6800
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Vincent J. Pisano, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
(212) 735-3000
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box: [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(c) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ X ]
The registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Each Offering Aggregate Amount of
Class of Secu- Amount to Price Per Offering Registra-
rities to be be Regis- Unit (1) Price tion
Registered tered (1) (2)(3) (1)(2)(3) Fee (2)
Trust Preferred Secu-
rities of UDS Capital I
and UDS Capital II
Partnership Preferred
Securities of UDS
Funding I, L.P. and
UDS Funding II, L.P.(4)
Guarantees of Trust
Preferred Securities
of UDS Capital I and
UDS Capital II and Part-
nership Preferred Secu-
rities of UDS Funding I,
L.P. and UDS Funding II,
L.P. by Ultramar Diamond
Shamrock Corporation
("UDS") (5)
Subordinated Debt Secu- *
rities of UDS (4)
Investment Guarantees
(6)
Senior Debt Securities
of UDS
Common Stock of UDS (7)
Total $850,000,000 100% $850,000,000 $257,576.00
(1) Such indeterminate (a) number of Trust Preferred Securities of UDS
Capital I and UDS Capital II, (b) number of Partnership Preferred Securities
of UDS Funding I, L.P. and UDS Funding II, L.P., (c) principal amount of
Subordinated Debt Securities of UDS, (d) principal amount of Senior Debt
Securities of UDS, and (e) number of shares of Common Stock of UDS as may from
time to time be issued at indeterminate prices. Subordinated Debt Securities
may be issued and sold to UDS Funding I, L.P. and UDS Funding II, L.P., in
which event such Subordinated Debt Securities may later be distributed to the
holders of Partnership Preferred Securities upon a dissolution of UDS Funding
I, L.P. or UDS Funding II, L.P., as the case may be, and the distribution of
the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933, as amended. The
aggregate public offering price of all of the securities registered hereby
will not exceed $850,000,000. Does not include registration fee previously
paid with respect to $50,000,000 aggregate amount of Senior Debt Securities
covered by Registration Statement No. 33-82662.
(3) Exclusive of accrued interest and distributions, if any.
(4) The Partnership Preferred Securities will be purchased by UDS Capital I
or UDS Capital II with the proceeds of the sale of the Trust Preferred
Securities, together with the proceeds received from UDS in respect of the
common securities to be issued by UDS Capital I or UDS Capital II, as the case
may be. The debt securities of UDS will be purchased by UDS Funding I, L.P.,
UDS Funding II, L.P., UDS Capital I, or UDS Capital II with the proceeds of
the sale of Partnership Preferred Securities and of General Partner's capital
contribution or the sale of Trust Preferred Securities and Common Securities,
as the case may be. No separate consideration will be received for the
Partnership Preferred Securities or the debt securities of UDS.
(5) Includes the rights of holders of the Trust Preferred Securities and
Partnership Preferred Securities under certain Guarantees and back-up
undertakings, consisting of obligations by UDS to provide certain indemnities
in respect of, and pay and be responsible for certain expenses, costs,
liabilities, and debts of, as applicable, UDS Capital I, UDS Capital II, UDS
Funding I, L.P., and UDS Funding II, L.P., as set forth in the Declaration of
Trust, Agreement of Limited Partnership, the Subordinated Debt Securities
Indenture and Supplemental Indentures thereto, in each case as further
described in the Registration Statement. No separate consideration will be
received for any such Guarantees or any back-up undertakings.
(6) Guarantees by UDS of debt instruments of certain domestic eligible
controlled affiliates of UDS in which UDS Funding I, L.P. and UDS Funding II,
L.P. may invest. No separate consideration will be received for the
Investment Guarantees.
(7) Also includes such indeterminate number of shares of Common Stock as may
be issued upon conversion or exchange for any Debt Securities that provide for
conversion or exchange into Common Stock. No separate consideration will be
received for the Common Stock issuable upon conversion of or in exchange for
such securities. Includes UDS Rights relating to each share of Common Stock
of UDS. The UDS Rights are associated with and trade with the UDS common
stock. See "UDS Rights" in the prospectus contained herein.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
included in this Registration Statement also relates to $50,000,000 of unsold
Senior Debt Securities of UDS covered by Registration Statement on Form S-3
(No. 33-82662), previously filed by UDS, which are being carried forward in
connection with this Registration Statement. Such Registration Statement is
accordingly amended to reflect the information contained herein, including the
addition of UDS Capital I, UDS Capital II, UDS Funding I, L.P. and UDS Funding
II, L.P. as registrants.
SUBJECT TO COMPLETION DATED JUNE 6, 1997
PROSPECTUS
$900,000,000
ULTRAMAR DIAMOND SHAMROCK CORPORATION
Senior Debt Securities
$850,000,000
ULTRAMAR DIAMOND SHAMROCK CORPORATION
Subordinated Debt Securities
Common Stock
$850,000,000
UDS CAPITAL I
UDS CAPITAL II
Trust Preferred Securities
Guaranteed to the extent set forth herein by Ultramar Diamond Shamrock
Corporation
$850,000,000
UDS FUNDING I, L.P.
UDS FUNDING II, L.P.
Partnership Preferred Securities
Guaranteed to the extent set forth herein by Ultramar Diamond Shamrock
Corporation
Ultramar Diamond Shamrock Corporation ("UDS" or the "Company") may from
time to time offer (i) its unsecured debt securities, which may be senior (the
"Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities"), and (ii) shares of its common stock, par value $.01 per share
(the "Common Stock"), together with the associated rights (the "Rights") to
purchase Common Stock.
UDS Capital I and UDS Capital II (each a "UDS Capital Trust"), each a
statutory business trust formed under the laws of the State of Delaware, may
offer, from time to time, trust preferred securities, representing undivided
beneficial interests in the assets of the respective UDS Capital Trusts
("Trust Preferred Securities"). The payment of distributions with respect to
Trust Preferred Securities of each of the UDS Capital Trusts out of moneys
held by each of the UDS Capital Trusts, and payment on liquidation, redemption
or otherwise with respect to such Trust Preferred Securities, will be
guaranteed by UDS to the extent described herein (each a "Trust Guarantee").
See "Description of the Trust Guarantees" below. UDS's obligations under the
Trust Guarantees will be subordinate and junior in right of payment to all
other liabilities of UDS and rank pari passu with the most senior preferred
stock, if any, issued from time to time by UDS. Subordinated Debt Securities
and/or Partnership Preferred Securities (as defined below) may be issued and
sold by UDS or a UDS Funding Partnership (as defined below), respectively,
from time to time in one or more series to a UDS Capital Trust, or a trustee
of such UDS Capital Trust, in connection with the investment of the proceeds
from the offering of Trust Preferred Securities and Common Securities (as
defined herein, together the "Trust Securities") of such UDS Capital Trust.
The Subordinated Debt Securities and/or Partnership Preferred Securities
purchased by a UDS Capital Trust may be subsequently distributed pro rata to
holders of Trust Preferred Securities and Common Securities in connection with
the dissolution of such UDS Capital Trust upon the occurrence of certain
events as may be described in an accompanying Prospectus Supplement.
UDS Funding I, L.P. and UDS Funding II, L.P. (each, a "UDS Funding
Partnership"), each a limited partnership formed under the laws of the State
of Delaware, may offer, from time to time, Partnership Preferred Securities,
representing limited partnership interests in the respective UDS Funding
Partnership ("Partnership Preferred Securities"). The payment of
distributions (if, as and when declared) with respect to Partnership Preferred
Securities of each of the UDS Funding Partnership out of moneys held by each
UDS Funding Partnership, and payment on liquidation, redemption or otherwise
with respect to such Partnership Preferred Securities, will be guaranteed by
UDS to the extent described herein (each a "Partnership Guarantee"). See
"Description of the Partnership Guarantees" below. UDS's obligations under
the Partnership Guarantees are subordinate and junior in right of payment to
all other liabilities of UDS and rank pari passu with the most senior
preferred stock, if any, issued from time to time by UDS. Subordinated Debt
Securities may be issued and sold by UDS from time to time in one or more
series to a UDS Funding Partnership together with debt instruments of certain
domestic eligible controlled affiliates (the "Affiliate Debentures") which
will be fully and unconditionally guaranteed by UDS (the "Investment
Guarantees") in connection with the investment of the proceeds from the
offering of Partnership Preferred Securities of and general partnership
interests in such UDS Funding Partnership.
The Senior Debt Securities, the Subordinated Debt Securities, the
Affiliate Debentures, the Investment Guarantees, the Common Stock, the Trust
Preferred Securities, the related Trust Guarantees, the Partnership Preferred
Securities and the related Partnership Guarantees are collectively referred
to as the "Offered Securities."
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable, (i) in the case of
Senior Debt Securities or Subordinated Debt Securities, the specific
designation, aggregate principal amount, currency, denomination, maturity,
priority, interest rate (which may be variable or fixed), time of payment of
interest, terms of redemption at the option of the Company or repayment at the
option of the holder or any provisions for sinking fund payments, the
designation of the Trustee acting under the applicable Indenture and the
initial public offering price; (ii) in the case of Trust Preferred
Securities, the related Trust Guarantees, Partnership Preferred Securities or
the related Partnership Guarantees, the specific designation, aggregate
offering amount, denomination, term, coupon rate, time of payment of
distributions, terms of redemption at the option of the Company or repayment
at the option of the holder, the designation of the Trustee acting under the
applicable Indenture or Guarantee and the initial public offering price; and
(iii) in the case of Common Stock, the public offering price, will be set
forth in the accompanying Prospectus Supplement.
The Offered Securities will be issued only in registered form, including
in the form of Global Securities, unless otherwise set forth in the Prospectus
Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Offered Securities may be offered directly, through agents designated
from time to time, to or through underwriters or dealers or through a
combination of such methods. See "Plan of Distribution." If any agents of the
Company, any UDS Capital Trust and/or any UDS Funding Partnership or any
underwriters are involved in the sale of the Offered Securities, the names of
such agents or underwriters and any applicable commissions or discounts will
be set forth in the Prospectus Supplement with respect to such Offered
Securities. The net proceeds to the Company from such sale also will be set
forth in the applicable Prospectus Supplement.
The date of this Prospectus is June , 1997.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE AND ANY FINAL PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PROSPECTUS
AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, any
accompanying Prospectus Supplement or the documents incorporated or deemed
incorporated by reference herein, and any information or representations not
contained herein or therein must not be relied upon as having been authorized
by the company or by any agent, dealer or underwriter. This Prospectus and
any accompanying Prospectus Supplement do not constitute an offer to sell or
a solicitation of an offer to buy the securities in any circumstances in which
such offer or solicitation is unlawful. Neither the delivery of this
Prospectus and the Prospectus Supplement nor any sale of or offer to sell the
Offered Securities offered hereby shall, under any circumstances, create an
implication that there has been no change in the affairs of the Company since
the respective dates of this Prospectus and the Prospectus Supplement or that
the information in this Prospectus or the Prospectus Supplement is correct as
of any time subsequent to the respective dates of this Prospectus and the
Prospectus Supplement.
AVAILABLE INFORMATION
Certain Filings and Other Information
This Prospectus constitutes a part of a combined Registration Statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") filed by UDS, the UDS Funding Partnerships and the
UDS Capital Trusts with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Offered Securities. This Prospectus and any
accompanying Prospectus Supplement do not contain all of the information set
forth in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Reference is
made to such Registration Statement and to the exhibits relating thereto for
further information with respect to the Company, the UDS Funding Partnerships,
the UDS Capital Trusts, and the Offered Securities. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission or incorporated
by reference herein are not necessarily complete, and, in each instance,
reference is made to the copy of such document so filed for a more complete
description of the matter involved. Each such statement is qualified in its
entirety by such reference.
UDS is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith file reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Suite 1300, Seven
World Trade Center, New York, New York 10048, and at The Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material also can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Commission maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. Such reports, proxy and information
statements and other information may be found on the Commission's web site
address, http://www.sec.gov. In addition, certain securities of UDS are
listed on the New York Stock Exchange (the "NYSE") and the Montreal Exchange
(the "ME"). Material filed by the Company may be inspected at the offices of
the NYSE at 20 Broad Street, New York, New York 10005 and the ME at 800
Victoria Square, Montreal, Quebec, Canada H4Z 1A9.
No separate financial statements of any of the UDS Capital Trusts or the
UDS Funding Partnerships have been included herein. UDS does not consider
that such financial statements would be material to holders of the Trust
Preferred Securities or the Partnership Preferred Securities because (i) all
of the voting securities of each of the UDS Capital Trusts and the UDS Funding
Partnerships will be owned, directly or indirectly, by UDS, a reporting
company under the Exchange Act, (ii) none of the UDS Capital Trusts and the
UDS Funding Partnerships has any independent operations but exists for the
sole purpose of issuing securities representing undivided beneficial interests
in the assets of such UDS Capital Trust or UDS Funding Partnership and
investing the proceeds thereof (a) in the case of the UDS Capital Trusts, in
Partnership Preferred Securities issued by one of the UDS Funding Partnerships
and (b) in the case of the UDS Funding Partnerships, in Subordinated Debt
Securities issued by UDS, and (iii) UDS's obligations described herein and in
any accompanying Prospectus Supplement under the Trust Declarations of each
UDS Capital Trust or the Limited Partnership Agreement of each UDS Funding
Partnership, the guarantees issued with respect to , the Subordinated Debt
Securities, the Partnership Guarantees, and the Trust Guarantees , taken
together, constitute a full and unconditional guarantee of payments due on the
Trust Preferred Securities and Partnership Preferred Securities. See
"Description of the Subordinated Debt Securities," "Description of the Trust
Guarantees" and "Description of the Partnership Guarantees."
None of the UDS Capital Trusts and the UDS Funding Partnerships is
currently subject to the information reporting requirements of the Exchange
Act. The UDS Capital Trusts and the UDS Funding Partnerships will become
subject to such requirements upon the effectiveness of the Registration
Statement, although they intend to seek and expect to receive exemptions
therefrom.
Certain Forward-Looking Statements
This Prospectus and the accompanying Prospectus Supplement (including the
documents incorporated by reference herein) contains certain forward-looking
statements (as such term is defined in the U.S. Private Securities Litigation
Reform Act of 1995) and information relating to UDS that are based on the
beliefs of the management of UDS as well as assumptions made by and
information currently available to the management of UDS. When used in this
Prospectus and the accompanying Prospectus Supplement, the words "anticipate,"
"believe," "estimate," "expect," "intend" and similar expressions, as they
relate to UDS, the UDS Capital Trusts, the UDS Funding Partnerships, or the
management of any such entities , identify forward-looking statements. Such
statements reflect the current views of the management the registrants with
respect to future events and are subject to certain risks, uncertainties and
assumptions relating to the operations and results of operations of the
registrants , including as a result of competitive factors and pricing
pressures, shifts in market demand and general economic conditions and other
factors. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or outcomes may
vary materially from those described herein as anticipated, believed,
estimated, expected or intended.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents which have been filed with the Commission by UDS
pursuant to the Exchange Act (File No. 1-11154) are hereby incorporated by
reference:
(i) Annual Report on Form 10-K for the year ended December 31, 1996;
(ii) Current Report on Form 8-K dated March 4, 1997, and Amendment to
Current Report on Form 8-K/A dated March 4, 1997; and
(iii) Quarterly Report on Form 10-Q for the three months ended March
31, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities offered hereby shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the accompanying Prospectus Supplement to
the extent that a statement contained herein or in any other subsequently
filed document that also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or the accompanying Prospectus
Supplement.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus and the accompanying Prospectus
Supplement is delivered, upon written or oral request of such person, a copy
of any and all documents incorporated herein by reference (not including
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to Ultramar
Diamond Shamrock Corporation, 9830 Colonnade Boulevard, San Antonio, TX
78230, Attention: Secretary (telephone number: (210) 641-6800).
ULTRAMAR DIAMOND SHAMROCK CORPORATION
UDS was the surviving corporation in the merger (the "UDS Merger") of two
leading North American independent refining and marketing companies, Ultramar
Corporation ("Ultramar") and Diamond Shamrock, Inc. ("DS"), effective in
December 1996. UDS is a leading independent refiner and marketer of high-
quality petroleum products in the Southwest United States, the Northeast
United States and Eastern Canada. In 1996, UDS sold over 400,000 barrels per
day ("BPD") of petroleum products and had total revenues of $10.2 billion.
UDS is one of the largest independent refining and marketing companies in the
United States and the largest retail marketer of gasoline in the state of
Texas. In the Southwest United States, UDS owns and operates a 150,000 BPD
refinery near Amarillo, Texas, a 100,000 BPD refinery near Long Beach,
California and a 90,000 BPD refinery near San Antonio, Texas. UDS markets
petroleum products and a broad range of convenience store items and other
merchandise in the Southwest United States under the Diamond Shamrock, Beacon
and Ultramar brand names through a network of approximately 3,000 outlets
located across ten states in the United States. UDS is also one of the
largest independent petroleum refining and marketing companies in the
Northeast United States and Eastern Canada, owning and operating a 160,000 BPD
refinery in St. Romuald, Quebec and marketing petroleum products through
approximately 1,320 retail outlets and 84 unattended facilities in Eastern
Canada. UDS is also one of the largest retail home heating oil companies in
the Northeast United States and Eastern Canada, selling heating oil to
approximately 210,000 households.
The Company's principal executive offices are located at 9830 Colonnade
Boulevard, San Antonio, TX 78230 and its telephone number is (210) 641-6800.
THE TRUSTS
Each of UDS Capital I and UDS Capital II is a statutory business trust
formed under Delaware law pursuant to (i) a separate declaration of trust
(each a "Declaration") executed by the Company, as sponsor for such trust (the
"Sponsor") and the UDS Capital Trustees (as defined herein) for such trust and
(ii) the filing of a certificate of trust with the Delaware Secretary of State
on June 5, 1997. Each Declaration will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Each
UDS Capital Trust exists for the exclusive purposes of (i) issuing the Trust
Preferred Securities and common securities representing undivided beneficial
interests in the assets of such Trust (the "Common Securities" and, together
with the Trust Preferred Securities, the "Trust Securities"), (ii) investing
the gross proceeds of the Trust Securities in Subordinated Debt Securities
and/or a specific series of Partnership Preferred Securities and (iii)
engaging in only those other activities necessary or incidental thereto. All
of the Common Securities will be directly or indirectly owned by the Company.
The Common Securities will rank pari passu, and payments will be made thereon
pro rata, with the Trust Preferred Securities except that upon an event of
default under the applicable Declaration, the rights of the holders of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption, and otherwise will be subordinated to the rights of
the holders of the Trust Preferred Securities. The Company will, directly or
indirectly, acquire Common Securities in an aggregate liquidation amount equal
to 3% of the total capital of each UDS Capital Trust. Each UDS Capital
Trust's business and affairs will be conducted by the trustees (the "UDS
Capital Trustees") appointed by the Company, as the direct or indirect holder
of all the Common Securities. Except in certain limited circumstances the
holder of the Common Securities will be entitled to appoint, remove or replace
any of, or increase or reduce the number of, the UDS Capital Trustees of a UDS
Capital Trust. The duties and obligations of the UDS Capital Trustees shall
be governed by the Declaration of such UDS Capital Trust. A majority of the
UDS Capital Trustees (the "Regular Trustees") of each UDS Capital Trust will
be persons who are employees or officers of or affiliated with the Company.
One UDS Capital Trustee of each UDS Capital Trust will be a financial
institution which will be unaffiliated with the Company and which shall act
as property trustee and as indenture trustee for purposes of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the
terms set forth in a Prospectus Supplement (the "Property Trustee"). In
addition, unless the Property Trustee maintains a principal place of business
in the State of Delaware, and otherwise meets the requirements of applicable
law, one UDS Capital Trustee of each UDS Capital Trust will have its principal
place of business or reside in the State of Delaware (the "Delaware Trustee").
The Company will pay all fees and expenses related to the UDS Capital Trusts
and the offering of Trust Securities, the payment of which will be guaranteed
by the Company. The office of the Delaware Trustee for each UDS Capital Trust
in the State of Delaware is The Bank of New York (Delaware), 23 White Clay
Center, Route 273, Newark, Delaware 19711. The principal place of business
of each UDS Capital Trust shall be c/o Ultramar Diamond Shamrock Corporation,
9830 Colonnade Boulevard, San Antonio, Texas 78230 and its telephone number
is (210) 641-6800.
Proposed Offering
Promptly after effectiveness of the Registration Statement, UDS Capital I
intends to offer to the public $150,000,000 in aggregate liquidation amount
of its Trust Preferred Securities. UDS Capital I intends to use the proceeds
of such offering, together with proceeds received from the sale to the Company
of $4,639,176 in aggregate liquidation amount of UDS Capital I's Trust Common
Securities, to purchase $154,639,176 in aggregate liquidation amount of UDS
Funding I, L.P.'s Partnership Preferred Securities. UDS Funding I, L.P., in
turn, intends to use substantially all of the proceeds of such sale, together
with a capital contribution received from the Company in exchange for a
general partnership interest in UDS Funding I, L.P., to purchase debt
securities of UDS and Affiliate Debentures and related Investment Guarantees,
as well as Eligible Debt Securities (as defined herein), all as shall be
described in a prospectus supplement filed with the Commission pursuant to
Rule 430A under the Securities Act.
THE PARTNERSHIPS
Each of UDS Funding I, L. P. and UDS Funding II, L. P. is a limited
partnership formed under the Delaware Revised Uniform Limited Partnership Act,
as amended (the "Partnership Act") on June 5, 1997. Pursuant to the
Certificate of Limited Partnership and the Agreement of Limited Partnership,
the Company is the sole general partner of each UDS Funding Partnership (in
such capacity the "General Partner"). Upon the issuance of the Partnership
Preferred Securities by a UDS Funding Partnership, which securities represent
limited partnership interests in that UDS Funding Partnership, UDS Capital I
or UDS Capital II, as the case may be, will be the sole limited partner of
that UDS Funding Partnership. Contemporaneous with the issuance of the
Partnership Preferred Securities, the General Partner will contribute capital
to the UDS Funding Partnership in an amount sufficient to establish its
initial capital account at an amount equal to at least 15% of the total
capital of the UDS Funding Partnership.
Each UDS Funding Partnership will be managed by the General Partner and
exists for the sole purpose of (i) issuing its partnership interests, (ii)
investing the proceeds thereof in Subordinated Debt Securities, Affiliate
Debentures and certain U.S. government obligations and commercial paper of
entities not affiliated with UDS (the "Eligible Debt Securities") and (iii)
engaging in only those other activities necessary or incidental thereto. To
the extent that aggregate payments to the UDS Funding Partnership on the
Subordinated Debt Securities, the Affiliate Debentures and the Eligible Debt
Securities exceed distributions payable with respect to the Partnership
Preferred Securities, the UDS Funding Partnership may at times have excess
funds which shall be allocated to and may, in the General Partner's sole
discretion, be distributed to the General Partner. To the extent that the
issuers (including, where applicable, UDS, as guarantor) of the securities in
which the UDS Funding Partnerships invest fail to make any payments in respect
of such securities (or, if applicable, guarantees), the UDS Funding
Partnerships will not have sufficient funds to pay and will not declare or pay
distributions on the Partnership Preferred Securities.
For so long as the Partnership Preferred Securities remain outstanding,
the General Partner will covenant in the Limited Partnership Agreement (i) to
remain the sole general partner of the UDS Funding Partnership and to maintain
direct ownership of 100% of the General Partner's interest in the UDS Funding
Partnership, which interest will at all times represent at least 1% of the
total capital of the UDS Funding Partnership, (ii) to cause the UDS Funding
Partnership to remain a limited partnership and not to voluntarily dissolve,
liquidate, wind-up or be terminated, except as permitted by the Limited
Partnership Agreement, (iii) to use its commercially reasonable efforts to
ensure that the UDS Funding Partnership will not be an "investment company"
for purposes of the 1940 Act and (iv) to take no action that would be
reasonably likely to cause the UDS Funding Partnership to be classified as an
association taxable as a corporation for United States federal income tax
purposes.
The rights of the holders of the Partnership Preferred Securities,
including economic rights, rights to information and voting rights, are set
forth in the Limited Partnership Agreement and the Partnership Act. See
"Description of the Partnership Preferred Securities."
The Limited Partnership Agreement provides that the General Partner will
have liability for the fees and expenses of the Partnership (including any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other domestic
taxing authority upon the UDS Funding Partnership) and be responsible for all
debts and obligations of the UDS Funding Partnership (other than with respect
to distributions on the Partnership Preferred Securities). Under Delaware
law, assuming a limited partner in a Delaware limited partnership such as a
UDS Funding Partnership (i.e., a holder of the Partnership Preferred
Securities) does not participate in the control of the business of the limited
partnership, such limited partner will not be personally liable for the debts,
obligations and liabilities of such limited partnership, whether arising in
contract, tort or otherwise, solely by reason of being a limited partner of
such limited partnership (subject to any obligation such limited partner may
have to repay any funds that may have been wrongfully distributed to it).
The location of the principal executive offices of each UDS Funding
Partnership is c/o Ultramar Diamond Shamrock Corporation, 9830 Colonnade
Boulevard, San Antonio, TX 78230 and its telephone number is (210) 641-6800.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for each of the following periods:
Year Ended December 31,
Period
from July
Three Months 6, 1992
ended March 31 to Decem-
ber 31,
1996 1995 1996 1995 1994 1993 1992
Ratio of earnings
to fixed charges 2.2 1.9 1.2 1.8 3.0 2.6 2.1
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income before income taxes, extraordinary items, and
cumulative effect of changes in accounting principle, plus fixed charges
(excluding capitalized interest but including amortization of amounts
previously capitalized), less equity in undistributed earnings of companies
owned less than 50 percent. Fixed charges consist of interest (including
capitalized interest) on all indebtedness, amortization of debt discount and
expense, and that portion of rental expense which the Company believes to be
representative of interest. A statement setting forth the computation of the
unaudited ratio of earnings to fixed charges has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
USE OF PROCEEDS
The UDS Capital Trusts will use all proceeds received from the sale of
the Trust Preferred Securities to purchase Subordinated Debt Securities from
UDS and/or Partnership Preferred Securities from the UDS Funding Partnerships.
The UDS Funding Partnerships will use all proceeds received from the sale of
the Partnership Preferred Securities to purchase debt securities of UDS,
Affiliated Debentures and Eligible Debt Securities. UDS and the subsidiaries
of UDS which are the issuers of the Affiliate Debentures intend to add the net
proceeds from the sale of the Subordinated Debt Securities or Affiliate
Debentures, as applicable, along with the proceeds from the sale of Senior
Debt Securities and Common Stock to their general funds, to be used for
general corporate purposes, including capital expenditures, repayment or
repurchases of outstanding long-term indebtedness, investments in
subsidiaries, working capital, repayment of short-term commercial paper notes
and/or other business opportunities. Funds not required immediately for such
purposes may be invested in marketable securities and short-term investments.
DESCRIPTION OF SENIOR DEBT SECURITIES
The Senior Debt Securities will be unsecured obligations of the Company
issued in one or more series under an indenture (the "Senior Indenture")
entered into between the Company and The Bank of New York, as trustee (the
"Trustee") effective March 15, 1995, which is incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus is a part. The
following summaries of certain provisions of the Senior Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Senior Indenture. Wherever
particular provisions of the Senior Indenture or terms defined therein are
referred to herein or in the Prospectus Supplement, such provisions or terms
are incorporated by reference as a part of the statements made, and the
statements are qualified in their entirety by such reference. Section
references are references to sections of the Senior Indenture. Capitalized
terms not otherwise defined herein have the meanings given to them in the
Senior Indenture.
General
The Senior Debt Securities will rank equally with all other unsecured and
unsubordinated debt of the Company. The Senior Indenture does not limit the
amount of Debt which may be issued by the Company under the Senior Indenture
or otherwise. The Senior Indenture does, however, limit the ability of the
Company's Subsidiaries to Incur Debt and issue any Preferred Stock. The Senior
Debt Securities may be issued in one or more series with the same or various
maturities, at par or a premium or with original issue discount and may
include medium-term notes.
Reference is made to the Prospectus Supplement for the following terms
of the Senior Debt Securities offered pursuant to this Prospectus and the
Prospectus Supplement: (i) the designation of and any limit upon the aggregate
principal amount of such Senior Debt Securities; (ii) the price or prices at
which such Senior Debt Securities will be offered (expressed as a percentage
of the principal amount thereof); (iii) the date or dates on which such Senior
Debt Securities will mature; (iv) the currency or currencies of denomination
of such Senior Debt Securities, which may be U.S. dollars or any foreign
currency or units based on or related to currencies; (v) the designation of
the currency or currencies, or units based on or related to currencies, in
which payment of the principal of and any premium and any interest on such
Senior Debt Securities will be made, and if any such amounts are to be
payable, at the election of the Company or a Holder, in a currency or
currencies or units other than that in which such Senior Debt Securities are
stated to be payable, the period or periods within which, and the terms and
conditions upon which, such election may be made; (vi) the rate or rates
(which may be fixed or floating) per annum, if any, at which such Senior Debt
Securities will bear interest or the method of determining such rate or rates;
(vii) the date or dates from which any such interest shall accrue, the
Interest Payment Dates on which any such interest shall be payable and the
Regular Record Date for any interest payable on any Interest Payment Date;
(viii) any index of currencies, securities or commodities used to determine
the amounts of payments of principal, (and premium, if any) or interest, if
any, on such Senior Debt Securities; (ix) any provision for the exchange or
conversion of such Senior Debt Securities at the option of the Holders or the
Company for or into securities or other property; (x) any optional or
mandatory redemption or repayment terms or any sinking or purchase fund or
other analogous obligation; (xi) the denominations in which such Senior Debt
Securities shall be issuable if other than denominations of $1,000 and any
integral multiple thereof; (xii) whether such Senior Debt Securities are to
be issued in the form of Global Securities and, if so, the identity of the
Depositary with respect to such Global Securities; (xiii) in the case of
Discount Securities, the principal amount thereof payable upon acceleration
of the maturity thereof; and (xiv) any other specific terms associated with
such Senior Debt Securities.
Unless otherwise set forth in the applicable Prospectus Supplement, the
principal of and any premium and any interest on the Senior Debt Securities
is payable to registered Holders of Senior Debt Securities at the principal
office of the Trustee in New York, New York, or at any paying agency
maintained at the time by the Company for such purpose. At the option of the
Company, payment of interest to registered holders of Senior Debt Securities
may be made by check mailed to the address of the person entitled thereto as
it appears on the register for Senior Debt Securities.
The Senior Debt Securities shall be issued in fully registered form
unless the Prospectus Supplement provides otherwise. (Section 301) Subject to
the limitations provided in the Senior Indenture, Senior Debt Securities may
be presented for registration of transfer or exchange at such office of the
Trustee or at such other location or locations as may be established pursuant
to the Senior Indenture without any service charge, although the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Section 305)
Global Securities
The Senior Debt Securities may be issued in whole or in part in the form
of one or more Global Securities that will be deposited with, or on behalf of,
the Depositary identified in the Prospectus Supplement. Global Securities may
be issued only in fully registered form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for the individual
Senior Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to
a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by the Depositary or any
nominee of such Depositary to a successor Depositary or any nominee of such
successor.
The specific terms of any depositary arrangement with respect to Senior
Debt Securities issued in the form of one or more Global Securities will be
described in the Prospectus Supplement. Unless otherwise specified in the
Prospectus Supplement, the following provisions will apply to all depositary
arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit on its book-entry registration and
transfer system the respective principal amounts of the individual Senior Debt
Securities represented by such Global Security to the accounts of institutions
that have accounts with such Depositary ("Participants"). Such accounts shall
be designated by the underwriters, dealers, or agents with respect to such
Senior Debt Securities or by the Company if such Senior Debt Securities are
offered and sold directly by the Company. Owners of beneficial interests in
a Global Security that are not Participants or persons that may hold through
Participants but desire to sell or otherwise transfer ownership of such
beneficial interests by book-entry on the records of the Depositary may do so
only through Participants and persons that may hold through Participants.
Because the Depositary can only act on behalf of Participants and persons that
may hold through Participants, the ability of an owner of a beneficial
interest in a Global Security to pledge such beneficial interests to persons
or entities that do not participate in the book-entry and transfer system of
the Depositary, or otherwise take actions in respect of such beneficial
interests, may be limited. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limitations on the ownership of beneficial interests in
a Global Security and such laws may impair the ability to transfer beneficial
interests in a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Senior
Debt Securities represented by such Global Security for all purposes under the
Senior Indenture. Except as provided below, owners of beneficial interests in
a Global Security will not be entitled to have any of the individual Senior
Debt Securities of the series represented by such Global Security registered
in their names, will not receive or be entitled to receive physical delivery
of any such Senior Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Senior Indenture.
Payments of principal of (and premium, if any) and interest, if any, on
individual Senior Debt Securities represented by a Global Security registered
in the name of a Depositary or its nominee will be made to the Depositary or
its nominee, as the case may be, as the registered owner of the Global
Security representing such Senior Debt Securities. None of the Company, the
Trustee, any paying agent or registrar for such Senior Debt Securities will
have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests in the
Global Security for such Senior Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for a series of Senior Debt
Securities or its nominee, upon receipt of any payment of principal, premium
or interest in respect of a Global Security representing any of such Senior
Debt Securities, immediately will credit Participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Security held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name". Such payments will
be the responsibility of such Participants and not of the Company or the
Depositary. Owners of beneficial interests in Global Securities may experience
some delay in the receipt of interest and principal payments since the
Depositary for such Global Securities will forward payments to its
Participants, which in turn will forward them to persons that hold beneficial
interests in such Global Securities through such Participants.
If a Depositary for a series of Senior Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Senior Debt Securities of such series in definitive form in
exchange for the Global Security representing such series of Senior Debt
Securities. In addition, the Company may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement,
determine not to have any Senior Debt Securities of such series represented
by one or more Global Securities and, in such event, will issue individual
Senior Debt Securities of such series in exchange for the Global Security or
Securities representing such series of Senior Debt Securities. In either
instance, the Company will issue Senior Debt Securities in definitive form,
equal in aggregate principal amount to the Global Securities, in such names
and in such principal amounts as the Depositary for such Global Securities
shall request. Individual Senior Debt Securities of such series so issued will
be issued in denominations, unless otherwise specified by the Company, of
$1,000 and integral multiples thereof.
Covenants
The covenants summarized below will be applicable (unless waived or
amended) so long as any of the Senior Debt Securities are outstanding, unless
stated otherwise in the Prospectus Supplement.
Limitation on Subsidiary Debt and Preferred Stock
The Company will not permit any Subsidiary of the Company to Incur or
suffer to exist any Debt or issue any Preferred Stock except: (i) Debt or
Preferred Stock outstanding on the date of the original issuance of the Senior
Debt Securities of a particular series; (ii) Debt under the Bank Credit
Agreements and other Debt in an aggregate principal amount which, together,
shall, at the time of such incurrence and after giving effect thereto, not
exceed 80% of Consolidated Current Assets at the end of the preceding month;
(iii) interest rate swap or similar agreements and foreign currency swap,
exchange or similar agreements for the purpose of providing a hedge to protect
against fluctuations in interest rates and currency exchange rates,
respectively, and not for the purpose of speculation, provided that such
agreements are entered into in, or are incidental to, the ordinary course of
business or are entered into in connection with the incurrence of Debt
permitted hereunder; (iv) Debt Incurred pursuant to industrial revenue or
development bonds in an aggregate principal amount not to exceed $50 million
at any one time outstanding; (v) Debt Incurred or Incurrable in respect of
trade letters of credit, bankers' acceptances, performance or return-of-money
bonds or other obligations of a like nature Incurred in the ordinary course
of business; (vi) Debt or Preferred Stock issued to and held by the Company
or a Wholly owned Subsidiary of the Company, but only so long as held or owned
by the Company or a Wholly owned Subsidiary of the Company; (vii) Debt
Incurred or Preferred Stock issued by a Person prior to the time (A) such
Person became a Subsidiary of the Company, (B) such Person merges into or
consolidates with a Subsidiary of the Company or (C) another Subsidiary of the
Company merges into or consolidates with such Person (in a transaction in
which such Person becomes a Subsidiary of the Company), which Debt or
Preferred Stock was not Incurred or issued in anticipation of such
transaction; (viii) Debt Incurred for the purpose of financing all or any part
of the purchase price or the cost of construction of or improvements (or
additions to improvements) to the property of the Company or any of its
Subsidiaries in an aggregate principal amount not to exceed the fair market
value of such property, construction or improvements (or additions to
improvements); (ix) Debt or Preferred Stock that is exchanged for, or the
proceeds of which are used to refinance or refund, any Debt or Preferred Stock
permitted to be outstanding pursuant to clauses (i) through (viii) (or any
extension or renewal thereof) (A) in an aggregate principal amount (which, in
the case of Debt or Preferred Stock that is a Discount Security, shall be the
issue price thereof) not to exceed the principal amount of the Debt, in the
case of Debt, or the liquidation preference of the Preferred Stock, in the
case of Preferred Stock, so exchanged, refinanced or refunded (which, in the
case of Debt or Preferred Stock that is a Discount Security, shall be the
accreted value thereof, as determined by the Company for financial reporting
purposes as of the date of such exchange, refinancing or refunding) and (B)
provided that such Debt or Preferred Stock does not require the payment of all
or a portion of the principal or liquidation value thereof (whether pursuant
to purchase, redemption, defeasance, retirement, sinking fund payment, payment
at Stated Maturity or otherwise, but excluding any payment or retirement
required by virtue of acceleration of such Debt upon an event of default
thereunder and any redemption or other retirement at the option of the holder
of such Debt or Preferred Stock (including pursuant to an offer to purchase)
which is conditioned upon the change of control of the Company or any
Subsidiary) prior to the scheduled maturity or maturities of the Debt or
Preferred Stock being refinanced or refunded; and (x) Debt not otherwise
permitted to be Incurred pursuant to clauses (i) through (ix) above, which,
together with any other outstanding Debt Incurred pursuant to this clause (x),
has an aggregate principal amount not in excess of the greater of $25 million
or 10% of Consolidated Stockholders' Equity. (Section 1006)
Limitation on Liens
The Company shall not Incur any Lien on property or assets of the Company
to secure Debt without making effective provision for securing the Senior Debt
Securities of each series having the benefit of this covenant (and, if
required by its governing instruments, any other Debt of the Company that is
not subordinate to the Senior Debt Securities of such series) equally and
ratably with such Debt as to such property for so long as such Debt will be
so secured or, in the event such Debt is Debt of the Company which is
subordinate in right of payment to the Senior Debt Securities of such series,
prior to such Debt as to such property for so long as such Debt will be so
secured.
With respect to any particular series of Senior Debt Securities, the
foregoing restrictions will not apply to: (i) Liens existing at the date of
original issuance of such series of Senior Debt Securities; (ii) Liens
securing Debt Incurred under the Bank Credit Agreements or other Liens on
inventories and accounts receivable existing from time to time; (iii) Liens
securing the Senior Debt Securities of such series; (iv) Liens on property of
a Person existing at the time such Person is merged into or consolidated with
the Company and not securing Debt Incurred in anticipation of such
transaction; (v) Liens on property existing at the time of acquisition
thereof; (vi) Liens to secure Debt Incurred for the purpose of financing all
or any part of the purchase price or the cost of construction or improvement
(or additions to improvements) of the property subject to such Liens; (vii)
Liens on property of the Company in favor of the United States of America or
any state thereof, or any instrumentality of either, or Canada or any province
thereof, or any instrumentality of either, to secure certain payments pursuant
to any contract or statute; (viii) Liens granted to any bank or other
institution on cash, marketable securities or other current assets to secure
obligations under any interest rate swap or similar agreement or foreign
currency swap, exchange or similar agreement for the purpose of providing a
hedge to protect against fluctuations in interest rates and currency exchange
rates, respectively, and not for the purpose of speculation, provided that
such agreements are entered into in, or are incidental to, the ordinary course
of business, between the Company and such institution; (ix) Liens granted to
any bank or other institution on the payments to be made by such institution
to the Company pursuant to any interest rate swap or similar agreement or
foreign currency hedge, exchange or similar agreement designed to provide
protection against fluctuations in interest rates and currency exchange rates,
respectively, provided that such agreements are entered into in, or are
incidental to, the ordinary course of business; (x) Liens to secure industrial
revenue or development bonds, not to exceed $50 million at any one time
outstanding; (xi) mechanics', workmen's, materialmen's or similar Liens
arising in the ordinary course of business; (xii) Liens to secure any
extension, renewal, refinancing or refunding (or successive extensions,
renewals, refinancings or refundings), in whole or in part, of any Debt
secured by Liens referred to in the foregoing clauses (i) to (xi) so long as
such Lien does not extend to any other property and the Debt so secured is not
increased; (xiii) Liens incurred in the ordinary course of business that are
not material to the business or financial condition of the Company and its
Subsidiaries taken as a whole and which do not secure Debt in an aggregate
principal amount in excess of $25 million at any one time outstanding; and
(xiv) any Liens securing Debt owed by the Company to one or more Wholly owned
Subsidiaries of the Company (but only if such Debt is held by such Wholly
owned Subsidiaries). (Section 1007)
Limitation on Sale and Leaseback Transactions
The Company shall not enter into any Sale and Leaseback Transaction
(except for a period not exceeding three years) unless: (1) the Company would
be entitled to Incur a Lien to secure Debt by reason of the provisions
described in clauses (i) through (xiv) of the second paragraph under the
"Limitation on Liens" covenant in an amount equal to the Attributable Value
of such Sale and Leaseback Transaction without equally and ratably securing
all Outstanding Senior Debt Securities of each series having the benefit of
this covenant or (2) the Company applies within one year an amount equal to
the Net Available Proceeds of the sale pursuant to the Sale and Leaseback
Transaction (A) to the repayment of Debt under the Bank Credit Agreements to
the extent required, then (under each of the following clauses to the extent,
if any, that Net Available Proceeds remain after the prior applications) (B)
at the Company's option, to the acquisition of, or the construction of
improvements (or additions to improvements) to, assets to be used in lines of
business of the Company and its Subsidiaries as of the date of the Senior
Indenture or in activities incidental thereto, then (C) to the redemption of
the Senior Debt Securities of each series having the benefit of this covenant
(if then permitted) on a pro rata basis or, if the Senior Debt Securities of
any such series are not then redeemable, the Company shall apply any remaining
Net Available Proceeds to defease the Senior Debt Securities of any such
series, if then permitted under the defeasance provisions of the Senior
Indenture; provided, however, that nothing contained in this covenant of the
Senior Indenture shall obligate the Company to redeem or defease the Senior
Debt Securities of any series that are redeemable only upon the payment of a
premium above the principal amount or, if the Senior Debt Securities of such
Series are Discount Securities, at a premium above the portion of such
principal amount that would at the time be payable upon acceleration following
an Event of Default, then (D) to the repayment of Company Debt that is pari
passu with the Senior Debt Securities of any such series or Subsidiary Debt,
in each case to the extent that such Debt can be repaid without premium or
penalty, and then (E) to the repayment of other Company or Subsidiary Debt.
(Section 1008)
Mergers, Consolidations and Certain Sales of Assets
The Company may not (i) (A) consolidate with or merge into any other
Person, (B) permit any other Person to consolidate with or merge into the
Company or (C) permit any other Person to consolidate with or merge into any
Significant Subsidiary of the Company (except in a transaction in which such
Significant Subsidiary ceases to be a Subsidiary of the Company); or (ii)
directly or indirectly, transfer, convey, sell, lease or otherwise dispose of
all or substantially all of its properties and assets as an entirety, unless:
(a) immediately after giving effect to such transaction and treating any Debt
Incurred by the Company or a Subsidiary as a result of such transaction as
having been Incurred by the Company or such Subsidiary at the time of the
transaction, no Event of Default with respect to any series of Senior Debt
Securities or event that with the passing of time or the giving of notice, or
both, shall constitute an Event of Default with respect to any series of
Senior Debt Securities shall have occurred and be continuing; (b) in a
transaction in which the Company does not survive or in which the Company
transfers, conveys, sells, leases or otherwise disposes of all or
substantially all its properties and assets as an entirety, the successor
entity to the Company or such assets is a corporation, partnership or trust
which is organized and validly existing under the laws of the United States
of America, any State thereof or the District of Columbia and will expressly
assume, by a supplemental Senior Indenture executed and delivered to the
Trustee in form satisfactory to the Trustee, all of the Company's obligations
under the Senior Indenture relating to the Senior Debt Securities of each
series having the benefit of this covenant; (c) if, as a result of any such
transaction, property or assets of the Company would become subject to a Lien
which would require the Company to equally and ratably secure the Senior Debt
Securities of each series having the benefit of this covenant pursuant to the
"Limitation on Liens" covenant, the Company or the successor entity to the
Company will have secured the Senior Debt Securities of each such series as
required by such covenant; and (d) the Company has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel as specified in the Senior
Indenture. (Section 801)
Events of Default; Waiver and Notice Thereof; Senior Debt Securities in
Foreign Currencies
As to any series of Senior Debt Securities, an Event of Default is
defined in the Senior Indenture as being any one of the following events and
such other events as may be established for the Senior Debt Securities of such
series: (a) failure to pay any interest on the Senior Debt Securities of such
series when due, continued for 30 days; (b) failure to pay principal of (or
premium, if any, on) the Senior Debt Securities of such series when due; (C)
failure to pay any sinking fund, purchase or other analogous obligation, if
any, when due, pertaining to such series of Senior Debt Securities; (d)
failure to perform or comply with the provisions described under "Mergers,
Consolidations and Certain Sales of Assets", continued for 30 days; (e)
failure to perform any other covenant or warranty of the Company in the Senior
Debt Securities of such series or in the Senior Indenture for the benefit of
such series, continued for 60 days after written notice as provided in the
Senior Indenture; (f) failure to pay when due at final maturity (after the
expiration of any applicable grace period), or upon the acceleration of, any
Debt of the Company or any of its Subsidiaries in an aggregate principal
amount in excess of $50 million, if such indebtedness is not discharged, or
such acceleration is not annulled, within 60 days after written notice as
provided in the Senior Indenture; (g) the rendering of a final judgment or
judgments (not subject to appeal) against the Company or any of its
Subsidiaries in an aggregate amount in excess of $25 million (to the extent
not covered by insurance) which remains unstayed, undischarged or unbonded for
a period of 30 days thereafter; or (h) certain events of bankruptcy,
insolvency or reorganization affecting the Company or any Significant
Subsidiary of the Company. Any additional Events of Default applicable to a
particular series of Senior Debt Securities are described in the Prospectus
Supplement relating to such series. (Sections 301 and 501)
The Senior Indenture provides that (i) if an Event of Default described
in clause (a), (b), (c), (d), (e), (f) or (g) above (in the case of clause
(e), if the Event of Default is with respect to less than all series of Senior
Debt Securities then Outstanding) shall have occurred and be continuing with
respect to Senior Debt Securities of any series, then either the Trustee or
the Holders of not less than 25% in aggregate principal amount of the Senior
Debt Securities of each series then Outstanding (each such series acting as
a separate class) may declare the principal (or, in the case of Discount
Securities, the portion thereof specified in the terms thereof) of all
Outstanding Senior Debt Securities of such series and the interest accrued
thereon, if any, to be due and payable immediately; (ii) if an Event of
Default described in clause (e) above with respect to all series of Senior
Debt Securities then Outstanding shall have occurred and be continuing, then
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Senior Debt Securities of each series then Outstanding (treated
as one class) may declare the principal (or, in the case of Discount
Securities, the portion thereof specified in the terms thereof) of all Senior
Debt Securities of such series then Outstanding and the interest accrued
thereon, if any, to be due and payable immediately; and (iii) if an Event of
Default described in clause (h) above shall have occurred and be continuing,
the principal (or, in the case of Discount Securities, the portion thereof
specified in the terms thereof) of all Senior Debt Securities then Outstanding
and the interest accrued thereon, if any, shall become immediately due and
payable; provided, however, that upon certain conditions such declarations or
accelerations, as the case may be, may be annulled and past defaults (except
for defaults in the payment of principal of, any premium on, or any interest
on the Senior Debt Securities of such series, or in the payment of any sinking
fund, purchase or other analogous obligation, applicable to the Senior Debt
Securities of such series, and in compliance with certain covenants) may be
waived by the Holders of a majority in aggregate principal amount of the
Senior Debt Securities of any series having the benefit of this covenant then
Outstanding. (Sections 502 and 513)
Under the Senior Indenture, the Trustee must give to the Holders of each
series of Senior Debt Securities notice of all uncured defaults known to it
with respect to such series within 90 days after such a default occurs, unless
such default shall have been cured or waived; provided that in the case of a
default described in clause (e) above, no such notice shall be given until at
least 90 days after such default occurs; and provided further that, except in
the case of default in the payment of principal of and any premium or any
interest on any of the Senior Debt Securities, or default in the payment of
any sinking or purchase fund installment or analogous obligations, the Trustee
shall be protected in withholding such notice if it in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Senior Debt Securities of such series. For the purpose of this paragraph, the
term "default" includes the events specified above without notice or grace
periods. (Section 602)
No Holder of any Senior Debt Securities of any series may institute any
action under the Senior Indenture unless (a) such Holder shall have given the
Trustee written notice of a continuing Event of Default with respect to such
series; (b) the Holders of not less than 25% in aggregate principal amount of
the Senior Debt Securities of such series then Outstanding shall have
requested the Trustee to institute proceedings in respect of such Event of
Default; (c) such Holder or Holders shall have offered the Trustee such
reasonable indemnity as the Trustee may require; (d) the Trustee shall have
failed to institute an action for 60 days thereafter; and (e) no inconsistent
direction shall have been given to the Trustee during such 60-day period by
the Holders of a majority in aggregate principal amount of Senior Debt
Securities of such series. (Section 507) However, such limitations do not
apply to a suit instituted by the Holder of Senior Debt Securities of any
series entitled to the benefit of this covenant for enforcement of payment of
the principal of (and premium, if any) or interest on Senior Debt Securities
of such series on or after the respective Stated Maturities expressed in the
Senior Debt Securities of such series (or in the case of redemption or
repayment, on the Redemption Date or Repayment Date, as the case may be).
(Section 508)
The Holders of a majority in aggregate principal amount of the Senior
Debt Securities of any series affected and then Outstanding will have the
right, subject to certain limitations, to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to such
series of Senior Debt Securities. (Section 512) The Senior Indenture provides
that, in case an Event of Default shall occur and be continuing, the Trustee,
in exercising its rights and powers under the Senior Indenture, will be
required to use the degree of care of a prudent person in the conduct of his
or her own affairs. The Senior Indenture further provides that the Trustee
shall not be required to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties under the Senior
Indenture if it has reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. (Section 601)
The Company must furnish to the Trustee within 120 days after the end of
each fiscal year an Officers' Certificate to the effect that a review of the
activities of the Company during such year and of its performance under the
Senior Indenture and the terms of the Senior Debt Securities has been made,
and, to the best of the knowledge of the signatories based on such review, the
Company is not in default in the performance and observance of the terms of
the Senior Indenture or, if the Company is in default, specifying such
default. (Section 1004)
If any Senior Debt Securities are not denominated in United States
Dollars, then for the purposes of determining whether the Holders of the
requisite principal amount of Senior Debt Securities have taken any action as
described in the Senior Indenture, the principal amount of such Senior Debt
Securities shall be deemed to be that amount of United States Dollars that
could be obtained for such principal amount on the basis of the spot rate of
exchange into United States Dollars for the currency or units based on or
related to currencies in which such Senior Debt Securities are denominated (as
evidenced to the Trustee by an Officers' Certificate) as of the date the
taking of such action by the Holders of such requisite principal amount is
evidenced to the Trustee as provided in the Senior Indenture. (Section 104)
If any Senior Debt Securities are Discount Securities, then for the
purposes of determining whether the Holders of the requisite principal amount
of Senior Debt Securities have taken any action herein described, the
principal amount of such Senior Debt Securities shall be deemed to be the
portion of such principal amount that would be due and payable at the time of
the taking of such action upon acceleration of the maturity thereof. (Section
101)
Defeasance
The Company may discharge any and all obligations in respect of the
Outstanding Senior Debt Securities of any series (except for certain
obligations to issue temporary Senior Debt Securities of each series and
exchange them for definitive Senior Debt Securities of such series, register
the transfer or exchange of Senior Debt Securities of each series, replace
mutilated, destroyed, lost and stolen Senior Debt Securities of each series,
and maintain paying agencies) if all Senior Debt Securities of such series
mature within one year or are to be called for redemption within one year and
if (i) the Company irrevocably deposits with the Trustee, in trust, (a) money
in the currency in which the Senior Debt Securities of a particular series are
denominated in an amount, or (b) the equivalent in securities of the
government which issued the currency in which the Senior Debt Securities of
such series are denominated or government agencies backed by the full faith
and credit of such government, or (C) a combination of (a) and (b),
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of and premium, if any, and each
installment of interest, if any, on the Outstanding Senior Debt Securities of
such series to maturity or redemption, as the case may be, and (ii) certain
other conditions are satisfied. (Section 401)
The Company may (A) be discharged from any and all obligations in respect
of the Outstanding Senior Debt Securities of any series (except for certain
obligations to issue temporary Senior Debt Securities of each series and
exchange them for definitive Senior Debt Securities of such series, register
the transfer or exchange of Senior Debt Securities of each series, replace
mutilated, destroyed, lost and stolen Senior Debt Securities of each series
and maintain paying agencies) or (B) omit to comply with certain restrictive
covenants applicable to Senior Debt Securities of any series that are
described in the Senior Indenture (including those described under "Limitation
on Subsidiary Debt", "Limitations on Liens", and "Limitation on Sale and
Leaseback Transactions" and any additional covenants provided for the benefit
of a particular series of Senior Debt Securities) and the events described in
clauses (c) through (g) under "Events of Default" and any other Events of
Default for which this provision is specified to be applicable shall not
constitute Events of Default with respect to the Senior Debt Securities of
such series, in either case (A) or (B) upon irrevocable deposit with the
Trustee, in trust, of (i) money in the currency in which the Senior Debt
Securities of a particular series are denominated in an amount, or (ii) the
equivalent in securities of the government which issued the currency in which
the Senior Debt Securities of such series are denominated or government
agencies backed by the full faith and credit of such government, or (iii) a
combination of (i) and (ii), which through the payment of interest thereon and
principal thereof in accordance with their terms will provide, not later than
one day before the due date of any payment, money in an amount sufficient in
the opinion of a nationally recognized firm of independent public accountants
to pay the principal of and premium, if any, and each installment of interest,
if any, on the applicable Outstanding Senior Debt Securities of such series.
The obligations with respect to the Senior Debt Securities of such series
under the Senior Indenture, other than with respect to the covenants described
in clause (B) and the Events of Default with respect to the Senior Debt
Securities of such series under the Senior Indenture, other than the Events
of Default described in clause (B), shall remain in full force and effect.
Such trust may only be established if, among other things, (i) the Company has
delivered to the Trustee (a) a ruling from the Internal Revenue Service
directed to the Trustee or an Opinion of Counsel accompanied by a ruling from
the Internal Revenue Service to the effect that the deposit and related
defeasance would not cause the Holders of the Senior Debt Securities of such
series to recognize gain or loss for United States Federal income tax
purposes, unless there has been a change in applicable United States federal
income tax law, which, in the opinion of such counsel, makes such ruling
unnecessary, which change in federal income tax law shall be based upon a
ruling of the Internal Revenue Service or a change in applicable United States
Federal income tax laws occurring after March 15, 1995; and (b) an Officers'
Certificate to the effect that the Senior Debt Securities of such series, if
then listed on any securities exchange, will not be delisted as a result of
such deposit; (ii) no Event of Default with respect to the Senior Debt
Securities of such series or event that with the passing of time or the giving
of notice, or both, shall constitute an Event of Default with respect to the
Senior Debt Securities of such series shall have occurred or be continuing (a)
on the date of such deposit, or (b) insofar as certain events of bankruptcy,
insolvency, or reorganization are concerned, at any time during the period
ending on the 123rd day after the date of such deposit; (iii) such defeasance
or covenant defeasance will not result in the trust arising from such deposit
being in violation of the Investment Company Act of 1940, as amended; and (iv)
certain other conditions are satisfied. (Sections 402 and 403)
Modification and Waiver
With certain exceptions, the Senior Indenture or the rights of the
Holders of the Senior Debt Securities may be modified by the Company and the
Trustee with the consent of the Holders of a majority in aggregate principal
amount of the Senior Debt Securities of each series affected by such
modification then Outstanding, but no such modification may be made without
the consent of the Holder of each Outstanding Senior Debt Security affected
thereby which would (a) change the Maturity of the principal of, or the Stated
Maturity of any premium on or any installment of interest on any Senior Debt
Security, or reduce the principal amount thereof or the interest or any
premium thereon, or change the method of computing the amount of principal
thereof or interest thereon on any date or change any place of payment where,
or the currency (or units based on or related to currencies) in which, any
Senior Debt Security or any premium or interest thereon is payable, or change
the currency (or units based on or related to currencies) in which any Senior
Debt Security is denominated, or impair the right to institute suit for the
enforcement of any such payment on or after the Maturity or Stated Maturity,
as the case may be, thereof (or, in the case of redemption or repayment, on
or after the Redemption Date or the Repayment Date, as the case may be); (b)
reduce the percentage in principal amount of the Outstanding Senior Debt
Securities of any series, the consent of whose Holders is required for any
such modification, or the consent of whose Holders is required for any waiver
of compliance with certain provisions of the Senior Indenture or certain
defaults thereunder and their consequences provided for in the Senior
Indenture; or (C) modify any of the provisions of certain sections of the
Senior Indenture, including the provisions summarized in this paragraph,
except to increase any such percentage or to provide that certain other
provisions of the Senior Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Senior Debt Security affected
thereby. (Section 902)
The Holders of a majority in aggregate principal amount of the
Outstanding Senior Debt Securities of any series under the Senior Indenture
may waive compliance by the Company with certain restrictive provisions of the
Senior Indenture. The Holders of a majority in aggregate principal amount of
the Outstanding Senior Debt Securities of any series under the Senior
Indenture may waive any past default under such Senior Indenture, except a
default in the payment of principal of, any premium on, or any interest on the
Senior Debt Securities of such series, or in the payment of any sinking fund,
purchase or other analogous obligation applicable to the Senior Debt
Securities of such series. (Sections 513 and 1010)
Certain Definitions
Certain terms defined in Section 101 of the Senior Indenture are
summarized below.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition, directly or indirectly, by such Person or any of
its Subsidiaries of assets or rights of such Person or any of its Subsidiaries
outside of the ordinary course of business.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount
of rent required to be paid by such Person under such lease during the initial
term thereof as determined in accordance with GAAP, discounted from the last
date of such initial term to the date of determination at a rate per annum
equal to the discount rate which would be applicable to a Capital Lease
Obligation with like term in accordance with GAAP. The net amount of rent
required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period
after excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges. In the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such penalty, but
no rent shall be considered as required to be paid under such lease subsequent
to the first date upon which it may be so terminated. "Attributable Value"
means, as to a Capital Lease Obligation under which any Person is at the time
liable and at any date as of which the amount thereof is to be determined, the
capitalized amount thereof that would appear on the face of a balance sheet
of such Person in accordance with GAAP.
"Bank Credit Agreements" means the Credit Agreement dated as of December
19, 1996 among UDS, the banks named therein and Morgan Guaranty Trust Company
of New York, as agent, and the Credit Agreement dated as of December 19, 1996
among Canadian Ultramar Company, the Company, the banks named therein and
Canadian Imperial Bank of Commerce, as agent, as such agreements may have been
amended from time to time.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability
on the face of a balance sheet of such Person in accordance with GAAP. The
stated maturity of such obligation shall be the date of the last payment of
rent or on any other amount due under such lease or other Debt arrangements
prior to the first date upon which such lease may be terminated by the lessee
without payment of a penalty.
"Consolidated Current Assets" of any Person means all assets of such
Person which would, in accordance with GAAP, be classified as current assets
of a company conducting a business the same as or similar to that of such
Person, after deducting reserves against current assets in each case in which
a reserve is proper in accordance with GAAP.
"Consolidated Stockholders' Equity" of any Person means the consolidated
stockholders' equity of such Person and its consolidated subsidiaries, as
determined on a consolidated basis in accordance with GAAP, excluding amounts
attributable to Redeemable Stock of such Person.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or
not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with
acquisition of property, assets or businesses (even though the rights and
remedies of the seller in the event of a default are limited to repossession
or sale of the property, assets or business), (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every Capital
Lease Obligation of such Person, (vi) the maximum fixed redemption or
repurchase price of Redeemable Stock of such Person at the time of
determination, (vii) every payment obligation of such Person under interest
rate swap or similar agreements or foreign currency hedge, exchange or similar
agreements at the time of determination, (viii) every obligation to pay rent
or other similar amounts of such Person with respect to any Sale and Leaseback
Transaction to which such Person is a party and (ix) every obligation of the
type referred to in clauses (i) through (viii) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise and such obligations secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise,
to be secured by) any Lien or property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such obligation.
"Discount Security" means (i) any security (including any Senior Debt
Security) which provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration of the Maturity
thereof; and (ii) any other security (including any Senior Debt Security)
deemed a Discount Security for United States Federal income tax purposes.
"GAAP" means generally accepted accounting principles in the United
States, consistently applied, that are in effect from time to time.
"Holder" means a Person in whose name a Senior Debt Security is
registered in the Security Register.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Debt or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Debt or other obligation on the balance sheet of such Person (and
"Incurrence", "Incurred", "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that a change in GAAP that
results in an obligation of such Person that exists at such time becoming Debt
shall not be deemed an Incurrence of such Debt.
"Interest Payment Date", when used with respect to any series of Senior
Debt Securities, means the Stated Maturity of any installment of interest on
those Senior Debt Securities.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit agreement, security
interest, lien, charge, easement (other than any title defect or easement not
materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind
or nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or readily marketable cash equivalents received (including by way of sale
or discounting of a note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquiror of Debt or other obligations relating to such properties or assets
or received in any other noncash form) therefrom by such Person, net of (i)
all legal, title and recording tax expenses, commissions and other fees and
expenses incurred and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability as a consequence of such Asset
Disposition, (ii) all payments made by such Person or its Subsidiaries on any
Debt which is secured by such assets in accordance with the terms of any Lien
upon or with respect to such assets or which must by the terms of such Lien
or in order to obtain a necessary consent to such Asset Disposition or by
applicable law be repaid out of the proceeds from such Asset Disposition, and
(iii) all distributions and other payments made to minority interest holders
in Subsidiaries of such Person or joint ventures as a result of such Asset
Disposition.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and the Chief Financial Officer,
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company, and who shall be reasonably acceptable
to the Trustee.
"pari passu", when used with respect to the ranking of any Debt of any
Person in relation to other Debt of such Person, means that each such Debt (a)
either (i) is not subordinated in right of payment to any other Debt of such
Person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other and is so subordinate to the same extent and (b) is not
subordinate in right of payment to the other or to any Debt of such Person as
to which the other is not so subordinate.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
"Redeemable Stock" of any Person means any equity security of such Person
that by its terms or otherwise is required to be redeemed prior to the Stated
Maturity of the Senior Debt Securities of such series or is redeemable at the
option of the holder thereof at any time prior to the Stated Maturity of the
Senior Debt Securities of such series.
"Redemption Date", when used with respect to any Senior Debt Security to
be redeemed, means the date fixed for such redemption by or pursuant to the
Senior Indenture.
"Regular Record Date" for the interest payable on any Senior Debt
Security on any Interest Payment Date means the date specified in such Senior
Debt Security as the Regular Record Date.
"Repayment Date", when used with respect to any Senior Debt Security to
be repaid, means the date fixed for such repayment pursuant to such Senior
Debt Security.
"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party
providing for the leasing by such Person of any property or asset of such
Person which has been or is being sold or transferred by such Person more than
one year after the acquisition thereof or the completion of construction or
commencement of operation thereof to such lender or investor or to any person
to whom funds have been or are to be advanced by such lender or investor on
the security of such property or asset. The stated maturity of such
arrangement shall be the date of the last payment of rent or any other similar
amount due under such arrangement prior to the first date on which such
arrangement may be terminated by the lessee without payment of a penalty.
"Significant Subsidiary" of any Person means a Subsidiary of such Person
that is a "significant subsidiary" as defined in Regulation S-X, as
promulgated by the Commission.
"Stated Maturity", when used with respect to any Senior Debt Security or
any installment of principal thereof or interest thereon, means the date
specified in such Senior Debt Security as the fixed date on which the
principal of such Senior Debt Security or such installment of principal or
interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more other Subsidiaries thereof or (ii) any other Person (other
than a corporation) in which such Person, or one or more other Subsidiaries
of such Person or such Person and one or more other Subsidiaries thereof,
directly or indirectly, has at least a majority ownership and power to direct
the policies, management and affairs thereof.
"Wholly owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly owned Subsidiaries of such Person or by such
Person and one or more Wholly owned Subsidiaries of such Person.
Concerning the Trustee
The Bank of New York is the Trustee under the Senior Indenture.
Governing Law
The Senior Debt Securities of each series and the Senior Indenture shall
be governed by and construed in accordance with the laws of the State of New
York.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Subordinated Debt Securities may be issued from time to time in one or
more series under an indenture (the "Subordinated Indenture"), to be entered
into between the Company and The Bank of New York, as Trustee (the "Debt
Trustee") the form of which is filed as an exhibit to the Registration
Statement of which this prospectus is a part. The terms of the Subordinated
Debt Securities will include those stated in the Subordinated Indenture and
those made part of the Subordinated Indenture by reference to the Trust
Indenture Act. The following summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Subordinated Indenture and the Trust Indenture Act.
Whenever particular provisions or defined terms in the Subordinated Indenture
are referred to herein, such provisions or defined terms are incorporated by
reference herein. Section and Article references used herein are references
to provisions of the Subordinated Indenture unless otherwise noted.
General
The Subordinated Debt Securities will be unsecured, subordinated
obligations of the Company. The Subordinated Indenture does not limit the
aggregate principal amount of Subordinated Debt Securities which may be issued
thereunder and provides that the Subordinated Debt Securities may be issued
from time to time in one or more series. The Subordinated Debt Securities are
issuable in one or more series pursuant to an Subordinated Indenture
supplemental to the Subordinated Indenture or a resolution of the Company's
Board of Directors or a special committee appointed thereby (each, a
"Supplemental Subordinated Indenture"). (Section )
In the event Subordinated Debt Securities are issued to a UDS Capital
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such UDS Capital Trust, such Subordinated Debt Securities
subsequently may be distributed pro rata to the holders of such Trust
Securities in connection with the dissolution of such UDS Capital Trust upon
the occurrence of certain events described in the Prospectus Supplement
relating to such Trust Securities. Only one series of Subordinated Debt
Securities will be issued to a UDS Capital Trust or a trustee of such trust
in connection with the issuance of Trust Securities by such UDS Capital Trust.
Reference is made to the Prospectus Supplement relating to the particular
Subordinated Debt Securities being offered thereby for the following terms:
(1) the designation of such Subordinated Debt Securities; (2) the aggregate
principal amount of such Subordinated Debt Securities; (3) the percentage of
their principal amount at which such Subordinated Debt Securities will be
issued, (4) the date or dates on which such Subordinated Debt Securities will
mature and the right, if any, to extend such date or dates; (5) the rate or
rates, if any, per annum, at which such Subordinated Debt Securities will bear
interest, or the method of determination of such rate or rates; (6) the date
or dates from which such interest shall accrue, the interest payment dates on
which such interest will be payable or the manner of determination of such
interest payment dates and the record dates for the determination of holders
to whom interest is payable on any such interest payment dates; (7) the right,
if any, to extend the interest payment periods and the duration of such
extension; (8) provisions for a sinking purchase or other analogous fund, if
any; (9) the period or periods, if any, within which, the price or prices of
which, and the terms and conditions upon which such Subordinated Debt
Securities may be redeemed, in whole or in part, at the option of the Company
or the holder; (10) the form of such Subordinated Debt Securities; and (11)
any other specific terms of the Subordinated Debt Securities. Principal,
premium, if any, and interest, if any, will be payable, and the Subordinated
Debt Securities offered hereby will be transferable, at the corporate trust
office of the Debt Trustee in New York, New York, provided that payment of
interest, if any, may be made at the option of the Company by check mailed to
the address of the person entitled thereto as it appears in the Security
Register. (Section )
If a Prospectus Supplement specifies that a series of Subordinated Debt
Securities is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Subordinated Debt Securities will be issued and the coin or
currency in which the principal, premium, if any, and interest, if any, on
such Subordinated Debt Securities will be payable, which may be United States
dollars based upon the exchange rate for such other currency or currency unit
existing on or about the time a payment is due.
The Subordinated Indenture contains no covenants or other provisions to
afford protection to holders of the Subordinated Debt Securities in the event
of a highly leveraged transaction or a change in control of the Company,
except to the limited extent described under "Limitation on Mergers and Sales
of Assets" below.
Form, Exchange, Registration, Transfer and Payment
Unless otherwise specified in the applicable Prospectus Supplement, the
Subordinated Debt Securities will be issued in fully registered form without
coupons and in denominations of $1,000 and multiples of $1,000. No service
charge will be made for any transfer or exchange of the Subordinated Debt
Securities, but the Company or the Debt Trustee may require payment of a sum
sufficient to cover any tax or other government charge payable in connection
therewith. Where Subordinated Debt Securities of any series are issued in
bearer form, the special restrictions and considerations, including special
offering restrictions and special United States federal income tax
considerations, applicable to any such Subordinated Debt Securities and to
payment on and transfer and exchange of such Subordinated Debt Securities will
be described in the applicable Prospectus Supplement. Bearer Subordinated
Debt Securities will be transferrable by delivery.
Unless otherwise provided in the applicable Prospectus Supplement,
principal and premium, if any, or interest, if any, will be payable and the
Subordinated Debt Securities may be surrendered for payment or transferred at
the offices of the Debt Trustee as paying and authenticating agent, provided
that payment of interest on registered securities may be made at the option
of the Company by check mailed to the address of the person entitled thereto
as it appears in the Security Register. Payment of Subordinated Debt
Securities in bearer form will be made at such paying agencies outside of the
United States as the Company may appoint.
Book-entry Subordinated Debt Securities
The Subordinated Debt Securities of a series may be issued in whole or
in part in the form of one or more Global Securities that will be deposited
with, or on behalf of, a depositary (the "Global Depositary"), or its nominee,
identified in the Prospectus Supplement relating to such series. In such a
case, one or more Global Securities will be issued in a denomination or
aggregate denomination equal to the portion of the aggregate principal amount
of Outstanding Subordinated Debt Securities of the series to be represented
by such Global Security or Securities. Unless and until it is exchanged in
whole or in part for Subordinated Debt Securities in definitive registered
form, a Global Security may not be registered for transfer or exchange except
as a whole by the Global Depositary for such Global Security to a nominee for
such Global Depositary and except in the circumstances described in the
applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Subordinated Debt Securities to be represented by a
Global Security and a description of the Global Depositary will be provided
in the applicable Prospectus Supplement.
Subordination
The Subordinated Debt Securities will be subordinated and junior in right
of payment to certain other indebtedness of the Company to the extent set
forth in the applicable Prospectus Supplement.
Certain Covenants of the Company
If Subordinated Debt Securities are issued to a UDS Capital Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such UDS Capital Trust and (i) there shall have occurred any event that would
constitute an Event of Default (as defined herein) or (ii) the Company shall
be in default with respect to its payment of any obligations under the related
Trust Guarantee or Common Securities Guarantee, then (a) the Company shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of shares of UDS
Common Stock in connection with the satisfaction by UDS of its obligations
under any employee benefit plans or the satisfaction by UDS of its obligations
pursuant to any contract or security requiring UDS to purchase shares of UDS
Common Stock, or (ii) the purchase of fractional interests in shares of UDS
capital stock as a result of a reclassification of UDS capital stock or the
exchange or conversion of one class or series of UDS capital stock for another
class or series of UDS capital stock) or make any guarantee payments with
respect to the foregoing, and (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by the Company which rank pari
passu with or junior to such Subordinated Debt Securities.
If Subordinated Debt Securities are issued to a UDS Capital Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such UDS Capital Trust and the Company shall have given notice of its election
to defer payments of interest on such Subordinated Debt Securities by
extending the interest payment period as provided in the Subordinated
Indenture and such period, or any extension thereof, shall be continuing, then
(a) the Company shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, and (b) the Company shall
not make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company which rank pari passu with or junior to such Subordinated Debt
Securities.
In the event Subordinated Debt Securities are issued to a UDS Capital
Trust or a trustee of such trust in connection with the issuance of Trust
Securities of such UDS Capital Trust, for so long as such Trust Securities
remain outstanding, the Company will covenant (i) to directly or indirectly
maintain 100% ownership of the Common Securities of such UDS Capital Trust;
provided, however, that any permitted successor of the Company under the
Subordinated Indenture may succeed to the Company's ownership of such Common
Securities, (ii) to use its reasonable efforts to cause such UDS Capital Trust
(a) to remain a statutory business trust, except in connection with the
distribution of Subordinated Debt Securities to the holders of Trust
Securities in liquidation of such UDS Capital Trust, the redemption of all of
the Trust Securities of such UDS Capital Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
UDS Capital Trust, and (b) to otherwise continue not to be classified as an
association taxable as a corporation or partnership for United States federal
income tax purposes and (iii) to use its reasonable efforts to cause each
holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Subordinated Debt Securities. (Section )
Limitation on Mergers and Sales of Assets
The Company shall not consolidate with, or merge into, any corporation
or convey or transfer its properties and assets substantially as an entirety
to any Person unless the successor entity shall be a corporation organized
under the laws of the United States or any State or the District of Columbia
and shall expressly assume the obligations of the Company under the
Subordinated Indenture. (Section 10.01)
Events of Default, Waiver and Notice
The Subordinated Indenture provides than any one or more of the following
described events which has occurred and is continuing constitutes an "Event
of Default" with respect to each series of Subordinated Debt Securities:
(a) default for 30 days in payment of any interest on the Subordinated
Debt Securities of that series, including any Additional Interest in respect
thereof, when due; provided, however, that a valid extension of the interest
payment period by the Company shall not constitute a default in the payment
of interest for this purpose; or
(b) default in payment of principal and premium, if any, on the
Subordinated Debt Securities of that series when due either at maturity, upon
redemption, by declaration or otherwise; provided, however, that a valid
extension of the maturity of such Subordinated Debt Securities shall not
constitute a default for this purpose; or
(c) default by the Company in the performance of any other of the
covenants or agreements in the Subordinated Indenture which shall not have
been remedied for a period of 90 days after notice; or
(d) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(e) in the event Subordinated Debt Securities are issued to a UDS
Capital Trust or a trustee of such trust in connection with the issuance of
Trust Securities by such UDS Capital Trust, the voluntary or involuntary
dissolution, winding-up or termination of such UDS Capital Trust, except in
connection with the distribution of Subordinated Debt Securities to the
holders of Trust Securities in liquidation of such UDS Capital Trust, the
redemption of all of the Trust Securities of such UDS Capital Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of such UDS Capital Trust. (Section 5.01)
The Subordinated Indenture provides that the Debt Trustee may withhold
notice to the holders of a series of Subordinated Debt Securities (except in
payment of principal or of interest or premium on the Subordinated Debt
Securities) if the Trustee considers it in the interest of such holders to do
so. (Section 5.08).
The Subordinated Indenture provides that, (a) if an Event of Default due
to the default in the payment of principal, interest or premium, if any, on
any series of Subordinated Debt Securities shall have occurred and be
continuing, either the Debt Trustee or the holders of 25 percent in principal
amount of the Subordinated Debt Securities of all series affected thereby then
outstanding may declare the principal of all such Subordinated Debt Securities
to be due and payable immediately, and (b) if an Event of Default resulting
from default in the performance of any other of the covenants or agreements
in the Subordinated Indenture or certain events of bankruptcy, insolvency and
reorganization of the Company shall have occurred and be continuing, either
the Debt Trustee or the holders of 25 percent in principal amount of all
Subordinated Debt Securities then outstanding (treated as one class) may
declare the principal of all Subordinated Debt Securities to be due and
payable immediately, but upon certain conditions such declarations may be
annulled and past defaults may be waived (except defaults in payment of
principal of or interest or premium on the Subordinated Debt Securities) by
the holders of a majority in principal amount of the Subordinated Debt
Securities of such series (or of all series, as the case may be) then
outstanding. (Section 5.01)
The holders of a majority in principal amount of the Subordinated Debt
Securities of any and all series affected and then outstanding shall have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Debt Trustee under the Subordinated Indenture,
provided that the holders of the Subordinated Debt Securities shall have
offered to the Debt Trustee reasonable indemnity against expenses and
liabilities. (Sections 5.07 and 5.04) The Subordinated Indenture requires
the annual filing by the Company with the Debt Trustee of a certificate as to
the absence of certain defaults under the Subordinated Indenture. (Section
3.07)
Modification
The Subordinated Indenture contains provisions permitting the Company and
the Debt Trustee, with the consent of the holders of not less than a majority
in principal amount of the Subordinated Debt Securities of all series affected
by such modification at the time outstanding, to modify the Subordinated
Indenture or any supplemental Subordinated Indenture or the rights of the
holders of the Subordinated Debt Securities; provided that no such
modification shall (i) extend the fixed maturity of any Security, or reduce
the principal amount thereof (including in the case of a discounted Security
the amount payable thereon in the event of acceleration or the amount provable
in bankruptcy) or any redemption premium thereon, or reduce the rate or extend
the time of payment of interest thereon, or make the principal of, or interest
or premium on, the Subordinated Debt Securities payable in any coin or
currency other than that provided in the Subordinated Debt Securities, or
impair or affect the right of any holder of Subordinated Debt Securities to
institute suit for the payment thereof or the right of prepayment, if any, at
the option of the holder, without the consent of the holder of each Security
so affected, or (ii) reduce the aforesaid percentage of Subordinated Debt
Securities the consent of the holders of which is required for any such
modification without the consent of the holders of each Security affected.
(Section 9.02)
Defeasance
The Subordinated Indenture provides that the Company, at the Company's
option: (a) will be Discharged from any and all obligations in respect of the
Subordinated Debt Securities of a series (except for certain obligations to
register the transfer or exchange of Subordinated Debt Securities, replace
stolen, lost or mutilated Subordinated Debt Securities, maintain paying
agencies and hold moneys for payment in trust) or (b) need not comply with
certain restrictive covenants of the Subordinated Indenture (including those
described under "Certain Covenants of the Company"), in each case if the
Company deposits, in trust with the Debt Trustee or the Defeasance Agent,
money or U.S. Government Obligations which through the payment of interest
thereon and principal thereof in accordance with their terms will provide
money, in an amount sufficient to pay all the principal (including any
mandatory sinking fund payments) of, and interest and premium, if any, on, the
Subordinated Debt Securities of such series on the dates such payments are due
in accordance with the terms of such Subordinated Debt Securities. To
exercise any such option, the Company is required to deliver to the Debt
Trustee and the Defeasance Agent, if any, an opinion of counsel to the effect
that (i) the deposit and related defeasance would not cause the holders of the
Subordinated Debt Securities of such series to recognize income, gain or loss
for federal income tax purposes and, in the case of a Discharge pursuant to
clause (a), such opinion shall be accompanied by a private letter ruling to
the effect received from the United States Internal Revenue Service or a
revenue ruling pertaining to a comparable form of transaction to the effect
published by the United States Internal Revenue Service, and (ii) if listed
on any national securities exchange, such Subordinated Debt Securities would
not be delisted from such exchange as a result of the exercise of such option.
(Section 11.05)
Governing Law
The Subordinated Indenture and the Subordinated Debt Securities will be
governed by, and construed in accordance with, the internal laws of the State
of New York. (Section 13.04).
The Debt Trustee
The Company may have normal banking relationships with the Debt Trustee
in the ordinary course of business.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
Each UDS Capital Trust may issue, from time to time, only one series of
Trust Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each UDS Capital Trust authorizes the
Regular Trustees of such UDS Capital Trust to issue on behalf of such UDS
Capital Trust one series of Trust Preferred Securities. The Declaration will
be qualified as an indenture under the Trust Indenture Act. The Trust
Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration or made part of the Declaration by the Trust Indenture Act.
Reference is made to the Prospectus Supplement relating to the Trust Preferred
Securities of the UDS Capital Trust for specific terms, including (i) the
distinctive designation of such Trust Preferred Securities; (ii) the number
of Trust Preferred Securities issued by such UDS Capital Trust; (iii) the
annual distribution rate (or method of determining such rate) for Trust
Preferred Securities issued by such UDS Capital Trust and the date or dates
upon which such distributions shall be payable; provided, however, that
distributions on such Trust Preferred Securities shall be payable on a
quarterly basis to holders of such Trust Preferred Securities as of a record
date in each quarter during which such Trust Preferred Securities are
outstanding; (iv) whether distributions on Trust Preferred Securities issued
by such UDS Capital Trust shall be cumulative, and, in the case of Trust
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Trust Preferred Securities issued by such UDS Capital Trust shall be
cumulative; (v) the amount or amounts which shall be paid out of the assets
of such UDS Capital Trust to the holders of Trust Preferred Securities of such
UDS Capital Trust upon voluntary or involuntary dissolution, winding-up or
termination of such UDS Capital Trust; (vi) the obligation, if any, of such
UDS Capital Trust to purchase or redeem Trust Preferred Securities issued by
such UDS Capital Trust and the price or prices at which, the period or periods
within which, and the terms and conditions upon which, Trust Preferred
Securities issued by such UDS Capital Trust shall be purchased or redeemed,
in whole or in part, pursuant to such obligation; (vii) the voting rights, if
any, of Trust Preferred Securities issued by such UDS Capital Trust in
addition to those required by law, including the number of votes per Trust
Preferred Security and any requirement for the approval by the holders of
Trust Preferred Securities, or of Trust Preferred Securities issued by one or
more UDS Capital Trusts, or of both, as a condition to specified action or
amendments to the Declaration of such UDS Capital Trust; (viii) the terms and
conditions, if any, upon which the assets of such UDS Capital Trust may be
distributed to holders of Trust Preferred Securities; (ix) if applicable, any
securities exchange upon which the Trust Preferred Securities shall be listed;
and (x) any other relevant rights, preferences, privileges, limitations or
restrictions of Trust Preferred Securities issued by such UDS Capital Trust
not inconsistent with the Declaration of such UDS Capital Trust or with
applicable law. All Trust Preferred Securities offered hereby will be
guaranteed by the Company to the extent set forth below under "Description of
the Trust Guarantees." Any United States federal income tax considerations
applicable to any offering of Trust Preferred Securities will be described in
the Prospectus Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, each UDS
Capital Trust will issue one series of Common Securities. The Declaration of
each UDS Capital Trust authorizes the Regular Trustees of such trust to issue
on behalf of such UDS Capital Trust one series of Common Securities having
such terms including distributions, redemption, voting, liquidation rights or
such restrictions as shall be set forth therein. The terms of the Common
Securities issued by a UDS Capital Trust will be substantially identical to
the terms of the Trust Preferred Securities issued by such trust and the
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Trust Preferred Securities except that, upon an event of
default under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Trust Preferred Securities. Except in certain limited
circumstances, the Common Securities will also carry the right to vote to
appoint, remove or replace any of the UDS Capital Trustees of a UDS Capital
Trust. All of the Common Securities of each UDS Capital Trust will be
directly or indirectly owned by the Company.
DESCRIPTION OF THE TRUST GUARANTEES
Set forth below is a summary of information concerning the Trust
Guarantees which will be executed and delivered by UDS for the benefit of the
holders from time to time of Trust Preferred Securities. Each Trust Guarantee
will be qualified as an indenture under the Trust Indenture Act. The Bank of
New York will act as indenture trustee under each Trust Guarantee (the
"Preferred Guarantee Trustee"). The terms of each Trust Guarantee will be
those set forth in such Trust Guarantee and those made part of such Trust
Guarantee by the Trust Indenture Act. The summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the form of Trust Guarantee, which is filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, and the Trust Indenture Act. Each Trust Guarantee will be held by the
Preferred Guarantee Trustee for the benefit of the holders of the Trust
Preferred Securities of the applicable UDS Capital Trust.
General
Pursuant to each Trust Guarantee, the Company will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full, to the
holders of the Trust Preferred Securities issued by a UDS Capital Trust, the
Trust Guarantee Payments (as defined herein) (except to the extent paid by
such UDS Capital Trust), as and when due, regardless of any defense, right of
set-off or counterclaim which such UDS Capital Trust may have or assert. The
following payments with respect to Trust Preferred Securities issued by a UDS
Capital Trust to the extent not paid by such UDS Capital Trust (the "Trust
Guarantee Payments"), will be subject to the Trust Guarantee thereon (without
duplication): (i) any accrued and unpaid distributions which are required to
be paid on such Trust Preferred Securities, to the extent such UDS Capital
Trust shall have funds available therefor; (ii) the redemption price,
including all accrued and unpaid distributions (the "Redemption Price"), to
the extent such UDS Capital Trust has funds available therefor with respect
to any Trust Preferred Securities called for redemption by such UDS Capital
Trust and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of such UDS Capital Trust (other than in connection with the
distribution of the assets of such UDS Capital Trust to the holders of Trust
Preferred Securities or the redemption of all of the Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Trust Preferred Securities to the
date of payment, to the extent such UDS Capital Trust has funds available
therefor and (b) the amount of assets of such UDS Capital Trust remaining
available for distribution to holders of such Trust Preferred Securities in
liquidation of such UDS Capital Trust. The Company's obligation to make a
Trust Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of Trust Preferred Securities or by
causing the applicable UDS Capital Trust to pay such amounts to such holders.
Each Trust Guarantee will be a full and unconditional guarantee with
respect to the Trust Preferred Securities issued by the applicable UDS Capital
Trust, but will not apply to any payment of distributions except to the extent
such UDS Capital Trust shall have funds available therefor. If the Company
does not make interest payments on the Subordinated Debt Securities purchased
by a UDS Capital Trust or if the respective UDS Funding Partnership does not
make distributions on the Partnership Preferred Securities purchased by a UDS
Capital Trust, such UDS Capital Trust will not pay distributions on the Trust
Preferred Securities issued by such UDS Capital Trust and will not have funds
available therefor. See "Description of the Subordinated Debt Securities --
Certain Covenants" and "Description of the Partnership Preferred Securities."
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the UDS Capital Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Trust Guarantees, except that upon an event of default under the Subordinated
Indenture, holders of Trust Preferred Securities shall have priority over
holders of Common Securities with respect to distributions and payments on
liquidation, redemption or otherwise.
Certain Covenants of the Company
In each Trust Guarantee, the Company will covenant that, so long as any
Trust Preferred Securities issued by the applicable UDS Capital Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Trust Guarantee or the Declaration of such UDS
Capital Trust, then (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase or make
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of UDS Common Stock in connection with the
satisfaction by UDS of its obligations under any employee benefit plans or the
satisfaction by UDS of its obligations pursuant to any contract or security
requiring UDS to purchase shares of UDS Common Stock or, (ii) the purchase of
fractional interests in shares of UDS capital stock as a result of a
reclassification of UDS capital stock or the exchange or conversion of one
class or series of UDS capital stock for another class or series of UDS
capital stock or make any guarantee payments with respect to the foregoing and
(b) the Company shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Company which rank pari passu with or junior to such
Subordinated Debt Securities.
Modification of the Trust Guarantees; Assignment
Except with respect to any changes which do not adversely affect the
rights of holders of Trust Preferred Securities (in which case no vote will
be required), each Trust Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Trust Preferred Securities issued by the applicable UDS Capital
Trust. The manner of obtaining any such approval of holders of such Trust
Preferred Securities will be as set forth in an accompanying Prospectus
Supplement. All guarantees and agreements contained in a Trust Guarantee
shall bind the successors, assigns, receivers, trustees and representatives
of the Company and shall inure to the benefit of the holders of the Trust
Preferred Securities of the applicable UDS Capital Trust then outstanding.
Termination
Each Trust Guarantee will terminate as to the Trust Preferred Securities
issued by the applicable UDS Capital Trust (a) upon full payment of the
Redemption Price of all Trust Preferred Securities of such UDS Capital Trust,
(b) upon distribution of the assets of such UDS Capital Trust to the holders
of the Trust Preferred Securities of such UDS Capital Trust or (c) upon full
payment of the amounts payable in accordance with the Declaration of such UDS
Capital Trust upon liquidation of such UDS Capital Trust. Each Trust
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Trust Preferred Securities issued by the
applicable UDS Capital Trust must restore payment of any sums paid under such
Trust Preferred Securities or such Trust Guarantee.
Events of Default
An event of default under a Trust Guarantee will occur upon the failure
of the Company to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Trust Preferred
Securities relating to such Trust Guarantee have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Preferred Guarantee Trustee in respect of the Trust Guarantee or to direct the
exercise of any trust or power conferred upon the Preferred Guarantee Trustee
under such Trust Preferred Securities. If the Preferred Guarantee Trustee
fails to enforce such Trust Guarantee, any holder of Trust Preferred
Securities relating to such Trust Guarantee may institute a legal proceeding
directly against the Company to enforce the Preferred Guarantee Trustee's
rights under such Trust Guarantee, without first instituting a legal
proceeding against the relevant UDS Capital Trust, the Preferred Guarantee
Trustee or any other person or entity. Notwithstanding the foregoing, if the
Company has failed to make a guarantee payment, a holder of Trust Preferred
Securities may directly institute a proceeding against the Company for
enforcement of the Trust Guarantee for such payment. The Company waives any
right or remedy to require that any action be brought first against such UDS
Capital Trust or any other person or entity before proceeding directly against
the Company.
Status of the Trust Guarantees
The Trust Guarantees will constitute unsecured obligations of the Company
and will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by UDS in respect of any preferred or preference
stock of any affiliate of the Company; and (iii) senior to the Company's
common stock. The terms of the Trust Preferred Securities provide that each
holder of Trust Preferred Securities issued by the applicable UDS Capital
Trust by acceptance thereof agrees to the subordination provisions and other
terms of the Trust Guarantee relating thereto.
The Trust Guarantees will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the guarantor to enforce its rights under the Trust Guarantee
without instituting a legal proceeding against any other person or entity).
Information Concerning the Trust Guarantee Trustee
The Trust Guarantee Trustee, prior to the occurrence of a default with
respect to a Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in such Trust Guarantee and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Trust
Guarantee Trustee is under no obligation to exercise any of the powers vested
in it by a Trust Guarantee at the request of any holder of Trust Preferred
Securities, unless offered reasonable indemnity against the costs, expenses
and liabilities which might be incurred thereby.
The Company and certain of its affiliates may from time to time maintain
a banking relationship with the Trust Guarantee Trustee.
Governing Law
The Trust Guarantees will be governed by and construed in accordance with
the internal laws of the State of New York.
DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES
All of the partnership interests in the UDS Funding Partnerships, other
than the Partnership Preferred Securities acquired by the UDS Capital Trusts,
will be owned directly by UDS. Initially, UDS will be the sole General
Partner of each UDS Funding Partnership. The Limited Partnership Agreement
of each of the UDS Funding Partnerships authorizes and creates the Partnership
Preferred Securities, which represent limited partner interests in such UDS
Funding Partnerships. The limited partner interests represented by the
Partnership Preferred Securities will have a preference with respect to
distributions and amounts payable on redemption or liquidation over the
General Partner's interest in each UDS Funding Partnership. Except as
otherwise described in the applicable Prospectus Supplement, the Limited
Partnership Agreements of each UDS Funding Partnership do not permit the
issuance of any additional partnership interests, or the incurrence of any
indebtedness by the UDS Funding Partnerships. The Partnership Preferred
Securities will have such terms, including distributions, redemption, voting,
liquidation rights and such other preferred, deferred or other special rights
or such restrictions as shall be set forth in the Limited Partnership
Agreement or made part of the Limited Partnership Agreement by the Partnership
Act. Reference is made to the Prospectus Supplement relating to the
Partnership Preferred Securities of the UDS Funding Partnership for specific
terms, including (i) the distinctive designation of such Partnership Preferred
Securities; (ii) the number of Partnership Preferred Securities issued by such
UDS Funding Partnership; (iii) the annual distribution rate (or method of
determining such rate) for Partnership Preferred Securities issued by such UDS
Funding Partnership and the date or dates upon which such distributions shall
be payable; provided, however, that distributions on such Partnership
Preferred Securities shall be payable on a quarterly basis to holders of such
Partnership Preferred Securities, if, as and when declared by the General
Partner, as of a record date in each quarter during which such Partnership
Preferred Securities are outstanding; (iv) whether distributions on
Partnership Preferred Securities issued by such UDS Funding Partnership shall
be cumulative, and, in the case of Partnership Preferred Securities having
such cumulative distribution rights, the date or dates or method of
determining the date or dates from which distributions on Partnership
Preferred Securities issued by such UDS Funding Partnership shall be
cumulative; (v) the amount or amounts which shall be paid out of the assets
of such UDS Funding Partnership to the holders of Partnership Preferred
Securities of such UDS Funding Partnership upon voluntary or involuntary
dissolution, winding-up or termination of such UDS Funding Partnership; (vi)
the obligation, if any, of such UDS Funding Partnership to purchase or redeem
Partnership Preferred Securities issued by such UDS Funding Partnership and
the price or prices at which, the period or periods within which, and the
terms and conditions upon which, Partnership Preferred Securities issued by
such UDS Funding Partnership shall be purchased or redeemed, in whole or in
part, pursuant to such obligation; (vii) the voting rights, if any, of
Partnership Preferred Securities issued by such UDS Funding Partnership in
addition to those required by law, including the number of votes per
Partnership Preferred Security, any rights to appoint and authorize a special
representative (a "Special Representative") of the UDS Funding Partnership to
enforce the rights of the holders of Partnership Preferred Securities in
certain situations and any requirement for the approval by the holders of
Partnership Preferred Securities, or of Partnership Preferred Securities
issued by one or more UDS Funding Partnerships, or of both, as a condition to
specified action or amendments to the Limited Partnership Agreement of such
UDS Funding Partnership; (viii) the terms and conditions, if any, upon which
the assets of such UDS Funding Partnership may be distributed to holders of
Partnership Preferred Securities; (ix) if applicable, any securities exchange
upon which the Partnership Preferred Securities shall be listed; and (x) any
other relevant rights, preferences, privileges, limitations or restrictions
of Partnership Preferred Securities issued by such UDS Funding Partnership not
inconsistent with the Limited Partnership Agreement of such UDS Funding
Partnership or with applicable law. All Partnership Preferred Securities
offered hereby will be guaranteed by the Company to the extent set forth below
under "Description of the Partnership Guarantees." Any United States federal
income tax considerations applicable to any offering of Partnership Preferred
Securities will be described in the Prospectus Supplement relating thereto.
DESCRIPTION OF THE PARTNERSHIP GUARANTEES
Set forth below is a summary of information concerning the Partnership
Guarantees which will be executed and delivered by UDS for the benefit of the
holders from time to time of Partnership Preferred Securities. The summary
does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the form of
Partnership Guarantee, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Each Partnership Guarantee
will be held by the General Partner of the applicable UDS Funding Partnership
for the benefit of the holders of the Partnership Preferred Securities of the
applicable UDS Funding Partnership.
General
Pursuant to each Partnership Guarantee, the Company will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full, to the
holders of the Partnership Preferred Securities issued by a UDS Funding
Partnership, the Partnership Guarantee Payments (as defined herein) (except
to the extent paid by such UDS Funding Partnership), as and when due,
regardless of any defense, right of set-off or counterclaim which such UDS
Funding Partnership may have or assert. The following payments with respect
to Partnership Preferred Securities issued by a UDS Funding Partnership to the
extent not paid by such UDS Funding Partnership (the "Partnership Guarantee
Payments"), will be subject to the Partnership Guarantee thereon (without
duplication): (i) any accrued and unpaid distributions that have been
declared on such Partnership Preferred Securities, out of Funds legally
available therefor; (ii) the redemption price, including all accrued and
unpaid distributions (the "Redemption Price"), out of funds legally available
therefor with respect to any Partnership Preferred Securities called for
redemption by such UDS Funding Partnership and (iii) upon a liquidation of
such UDS Funding Partnership, the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on such
Partnership Preferred Securities to the date of payment, and (b) the amount
of assets of such UDS Funding Partnership, after satisfaction of all
liabilities, remaining available for distribution to holders of such
Partnership Preferred Securities in liquidation of such UDS Funding
Partnership. The Company's obligation to make a Partnership Guarantee Payment
may be satisfied by direct payment of the required amounts by the Company to
the holders of Partnership Preferred Securities or by causing the applicable
UDS Funding Partnership to pay such amounts to such holders.
Each Partnership Guarantee will be a full and unconditional guarantee
with respect to the Partnership Preferred Securities issued by the applicable
UDS Funding Partnership, but will not apply to any payment of distributions
or Redemption Price, or to payments upon the liquidation of the applicable UDS
Funding Partnership, except to the extent such UDS Funding Partnership shall
have funds legally available therefor. If issuers (including, where
applicable, UDS, as guarantor) of the securities in which the UDS Funding
Partnerships invest fail to make any payments in respect of such securities
(or, if applicable, guarantees), the applicable UDS Funding Partnership may
not declare or pay dividends on the Partnership Preferred Securities of such
UDS Funding Partnership. In such event, holders of such Partnership Preferred
Securities would not be able to rely upon the Partnership Guarantee for
payment of such amounts. Instead, holders of such Partnership Preferred
Securities shall have certain remedies described in the applicable Prospectus
Supplement, including the right to direct the General Partner or the Special
Representative, as the case may be, to enforce the covenant restricting
certain distributions by UDS. See "-Certain Covenants of the Company" below.
Certain Covenants of the Company
In each Partnership Guarantee, UDS will covenant that if for any
distribution period, (a) full distributions on a cumulative basis on any
Partnership Preferred Securities have not been paid or declared and set a part
for payment, (b) an event of default by UDS or certain domestic eligible
controlled affiliates in respect of any debt security in which the UDS Funding
Partnership invests has occurred and is continuing or (c) UDS is in default
of its obligations under the applicable Trust Guarantee, Partnership
Guarantee or any Investment Guarantee, then, during such period (i) UDS shall
not declare or pay dividends on, make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to any
of its capital stock (except for dividends or distributions in shares of its
common stock and exchanges of common stock of one class for common stock of
another class), (ii) UDS shall not make any payment or cause any payment to
be made that would result in, and shall take such action as shall be necessary
to prevent, the payment of dividends on, any distribution with respect to, any
redemption, purchase or other acquisition of, or any liquidation payment with
respect to, any preferred security hereafter issued by any finance subsidiary
of UDS, the principal purpose of which is to lend the proceeds of the sale
thereof to UDS or to eligible affiliates of UDS, and (iii) UDS shall not make
any guarantee payments with respect to the foregoing.
Modification of the Partnership Guarantees; Assignment
Except with respect to any changes which do not adversely affect the
rights of holders of Partnership Preferred Securities (in which case no vote
will be required), each Partnership Guarantee may be amended only with the
prior approval of the holders of not less than a majority in liquidation
amount of the outstanding Partnership Preferred Securities issued by the
applicable UDS Funding Partnership. The manner of obtaining any such approval
of holders of such Partnership Preferred Securities will be as set forth in
an accompanying Prospectus Supplement. All guarantees and agreements
contained in a Partnership Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Company and shall inure to the
benefit of the holders of the Partnership Preferred Securities of the
applicable UDS Funding Partnership then outstanding.
Termination
Each Partnership Guarantee will terminate as to the Partnership Preferred
Securities issued by the applicable UDS Funding Partnership (a) upon full
payment of the Redemption Price of all Partnership Preferred Securities of
such UDS Funding Partnership, or (b) upon full payment of the amounts payable
in accordance with the Limited Partnership Agreement of such UDS Funding
Partnership upon liquidation of such UDS Funding Partnership. Each
Partnership Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of Partnership Preferred Securities
issued by the applicable UDS Funding Partnership must restore payment of any
sums paid under such Partnership Preferred Securities or such Partnership
Guarantee. The Partnership Act provides that a limited partner of a limited
partnership who wrongfully receives a distribution may be liable to the
limited partnership for the amount of such distribution.
Events of Default; Enforcement of Partnership Guarantee
An event of default under a Partnership Guarantee will occur upon the
failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Partnership
Preferred Securities relating to such Partnership Guarantee have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Special Representative in respect of the Partnership
Guarantee or to direct the exercise of any trust or power conferred upon the
Special Representative under such Guarantee. If the Special Representative
fails to enforce its rights under such Partnership Guarantee, after a holder
of Partnership Preferred Securities has made a written request, such holder
of Partnership Preferred Securities relating to such Partnership Guarantee may
institute a legal proceeding directly against the Company to enforce the
Special Representative's rights under such Partnership Guarantee, without
first instituting a legal proceeding against the relevant UDS Funding
Partnership, the Special Representative or any other person or entity.
Notwithstanding the foregoing, if the Company has failed to make a Partnership
Guarantee Payment, a holder of Partnership Preferred Securities may directly
institute a proceeding against the Company for enforcement of the Partnership
Guarantee for such payment.
Status of the Partnership Guarantees
The Partnership Guarantees will constitute unsecured obligations of the
Company and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Company, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company and with
any guarantee now or hereafter entered into by UDS in respect of any preferred
or preference stock of any affiliate of the Company; and (iii) senior to the
Company's common stock. The terms of the Partnership Preferred Securities
provide that each holder of Partnership Preferred Securities issued by the
applicable UDS Funding Partnership by acceptance thereof agrees to the
subordination provisions and other terms of the Partnership Guarantee relating
thereto.
The Partnership Guarantees will constitute a guarantee of payment and not
of collection (that is, the guaranteed party may institute a legal proceeding
directly against the guarantor to enforce its rights under the Partnership
Guarantee without instituting a legal proceeding against any other person or
entity).
Each Partnership Guarantee will be deposited with the General Partner of
the applicable UDS Funding Partnership to be held for the benefit or the
holders of the Partnership Preferred Securities of such UDS Funding
Partnership. In the event of an appointment of a Special Representative to,
among other things, enforce a Partnership Guarantee, the Special
Representative may take possession of the applicable Partnership Guarantee for
such purpose. If no Special Representative has been appointed to enforce such
Partnership Guarantee, the General Partner has the right to enforce such
Partnership Guarantee on behalf of the holders of the Partnership Preferred
Securities of the applicable UDS Funding Partnership.
Governing Law
The Partnership Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
DESCRIPTION OF CAPITAL STOCK OF UDS
The following summary does not purport to be complete and is subject in
all respects to the applicable provisions of the Delaware General Corporation
Law (the "DGCL"), the certificate of incorporation of UDS (the "UDS Charter")
and the terms of the UDS Rights Agreement (as defined below under "- UDS
Rights Plan").
UDS's authorized capital stock consists of 250,000,000 shares of common
stock (the "UDS Shares"), of which 74,814,610 shares were issued and
outstanding on May 30, 1997, and 25,000,000 preferred shares, of which
1,725,000 were issued and outstanding on May 30, 1997.
UDS Common Stock
Dividend Rights. Holders of UDS Shares are entitled to receive dividends
when, as and if declared by the UDS Board, out of funds legally available
therefor, subject, however, to the rights relating to any outstanding
preferred stock of UDS.
Voting Rights. Subject to the rights, if any, of the holders of any
series of preferred stock of UDS, all voting rights are vested in the holders
of UDS Shares, each share being entitled to one vote on each matter presented
for a vote, including the election of directors. The UDS Board, which
currently consists of 12 directors, is divided into three classes of directors
with the term of one class expiring at each annual meeting of stockholders.
Because holders of UDS Shares do not have cumulative voting rights, the
holders of a plurality of the UDS Shares represented at a meeting can elect
all the directors standing for election at such meeting.
Rights upon Liquidation. In the event of the liquidation, dissolution
or winding up of UDS, whether voluntary or involuntary, the holders of UDS
Shares will be entitled to share ratably in assets available for distribution
to holders of UDS Shares, subject, however, to the rights relating to any
outstanding preferred stock of UDS.
Miscellaneous. UDS Shares are not liable for further calls or
assessments by UDS and the holders of UDS Shares are not liable for any
liabilities of UDS. The UDS Shares do not have preemptive or other
subscription rights, any conversion rights or any redemption or sinking fund
provisions. Registrar & Transfer Company and The R-M Trust Company act as
transfer agent and registrar for the UDS Shares in the United States and
Canada, respectively.
UDS Rights. For a description of rights which are attached to each
outstanding UDS Share, see "- UDS Rights Plan."
UDS Convertible Preferred Stock
The following description of the terms of the 5% Cumulative Convertible
Preferred Stock of UDS (the "UDS Convertible Preferred Stock") is subject to
and qualified in its entirety by reference to the certificate of designations
(the "Certificate") relating to the UDS Convertible Preferred Stock.
General. The UDS Charter authorizes the UDS Board to provide for the
issuance, from time to time, of preferred stock in series, to establish the
number of shares to be included in any such series, to fix the designations,
powers, preferences and rights of the shares of each such series and any
qualifications, limitations or restrictions thereon. Because the UDS Board
has the power to establish the preferences and rights of the shares of any
such series of preferred stock, it may afford holders of any preferred stock
voting rights and preferences, powers and rights senior to the rights of the
holders of UDS Shares, which could adversely affect the rights of holders of
UDS Shares. As of May 30, 1997, UDS had issued and outstanding 1,725,000
shares of UDS Convertible Preferred Stock.
The holders of the UDS Convertible Preferred Stock do not have preemptive
rights with respect to any shares of capital stock of UDS or any other
securities of UDS convertible into or carrying rights or options to purchase
any such shares.
Dividend Rights. Holders of shares of the UDS Convertible Preferred
Stock are entitled to receive, when, as, and if declared by the UDS Board out
of funds of UDS legally available for payment, cash dividends at the annual
rate of $2.50 per share, payable in arrears quarterly on March 15, June 15,
September 15 and December 15, except that if any such date is a Saturday,
Sunday or legal holiday, then such dividend is payable on the next day that
is not a Saturday, Sunday or legal holiday. Dividends are cumulative and
payable to holders of record as they appear on the stock books of UDS on such
record dates as are fixed by the UDS Board. The amount of dividends payable
per share of UDS Convertible Preferred Stock for each quarterly dividend
period will be computed by dividing the annual dividend amount by four. The
amount of dividends payable for the initial dividend period and for any period
shorter than a full quarterly dividend period will be computed on the basis
of a 360-day year of twelve 30-day months. No interest will be payable in
respect of any dividend payment on the UDS Convertible Preferred Stock which
may be in arrears.
The UDS Convertible Preferred Stock has priority as to dividends over UDS
Shares and any other series or class of UDS's stock hereafter issued which
ranks junior as to dividends to the UDS Convertible Preferred Stock ("junior
dividend stock"), and no dividend (other than dividends payable solely in
junior dividend stock) may be paid on, and no purchase, redemption or other
acquisition may be made by UDS of, any junior dividend stock unless all
accrued and unpaid dividends on the UDS Convertible Preferred Stock have been
paid or declared and set apart for payment. UDS may not pay dividends on any
class or series of UDS stock having parity with the UDS Convertible Preferred
Stock as to dividends ("parity dividend stock"), unless it has paid or
declared and set apart for payment or contemporaneously pays or declares and
sets apart for payment all accrued and unpaid dividends for all prior periods
on the UDS Convertible Preferred Stock and may not pay dividends on the UDS
Convertible Preferred Stock unless it has paid or declared and set apart for
payment or contemporaneously pays or declares and sets apart for payment all
accrued and unpaid dividends for all prior periods on the parity dividend
stock. Whenever all accrued dividends are not paid in full on the UDS
Convertible Preferred Stock or any parity dividend stock, all dividends
declared on the UDS Convertible Preferred Stock and such parity dividend stock
will be declared or made pro rata so that the amount of dividends declared per
share on the UDS Convertible Preferred Stock and such parity dividend stock
will bear the same ratio that accrued and unpaid dividends per share on the
UDS Convertible Preferred Stock and such parity dividend stock bear to each
other. The UDS Convertible Preferred Stock will be junior as to dividends to
any series or class of UDS's stock hereafter issued which ranks senior as to
dividends to the UDS Convertible Preferred Stock ("senior dividend stock"),
and if at any time UDS has failed to pay or declare and set apart for payment
accrued and unpaid dividends on any senior dividend stock, UDS may not pay any
dividend on the UDS Convertible Preferred Stock.
See "- Redemption" below for information regarding restrictions on UDS's
ability to redeem the UDS Convertible Preferred Stock when dividends on the
UDS Convertible Preferred Stock are in arrears.
Under Delaware law, UDS may declare and pay dividends on its shares of
capital stock out of its surplus or, in case there is no such surplus, out of
net income for the fiscal year in which the dividend is declared and/or the
preceding fiscal year. In addition, certain covenants in credit agreements
to which UDS is a party have the effect of limiting the payment of cash
dividends in certain circumstances.
Voting Rights. The holders of UDS Convertible Preferred Stock have no
voting rights except as described below or as required by Delaware law. In
exercising any such vote, each outstanding share of UDS Convertible Preferred
Stock will be entitled to one vote.
Whenever dividends on UDS Convertible Preferred Stock or on any
outstanding shares of parity dividend stock have not been paid in an aggregate
amount equal to at least six quarterly dividends on such shares (whether or
not consecutive) the holders of the UDS Convertible Preferred Stock, voting
separately as a class with the holders of parity dividend stock on which like
voting rights have been conferred and are exercisable, will be entitled to
elect two directors to the UDS Board (which directors will be in addition to
those directors then serving on the UDS Board to the extent that the total
number of directors permitted by the UDS Charter is greater than the number
of directors then serving on the UDS Board) at any meeting of stockholders of
UDS at which directors are to be elected held during the period such dividends
remain in arrears. Whenever the right of the holders of UDS Convertible
Preferred Stock to elect directors shall have accrued, the proper officers of
UDS will call a meeting for the election of such directors to be held not more
than 90 nor fewer than 45 days after the accrual of such right. Such voting
right will terminate when all such dividends accrued and in default have been
paid in full or set apart for payment. The term of office of all directors
so elected will terminate immediately upon the termination of the right of the
holders of UDS Convertible Preferred Stock and such parity dividend stock to
vote for such two directors.
So long as any shares of UDS Convertible Preferred Stock are outstanding,
UDS will not, without the affirmative vote or consent of the holders of at
least two-thirds of the outstanding shares of UDS Convertible Preferred Stock,
voting separately as a class with holders of any other class of UDS's
preferred stock entitled to vote in the circumstances, create, authorize, or
issue any shares of any other class of senior dividend stock or senior
liquidation stock or amend the Certificate in a manner adversely affecting the
rights of such stockholders.
Rights upon Liquidation. In case of the voluntary or involuntary
liquidation, dissolution or winding up of UDS, holders of shares of UDS
Convertible Preferred Stock are entitled to receive the liquidation price of
$50.00 per share, plus any accrued and unpaid dividends to the payment date,
before any payment or distribution is made to the holders of UDS Shares or any
other series or class of UDS stock hereafter issued which ranks junior as to
liquidation rights to the UDS Convertible Preferred Stock, but the holders of
the shares of the UDS Convertible Preferred Stock will not be entitled to
receive the liquidation price of such shares until the liquidation price of
any other series or class of UDS stock hereafter issued which ranks senior as
to liquidation rights to the UDS Convertible Preferred Stock ("senior
liquidation stock") has been paid in full. The holders of UDS Convertible
Preferred Stock and all series or classes of UDS stock hereafter issued which
rank on a parity as to liquidation rights with the UDS Convertible Preferred
Stock are entitled to share ratably, in accordance with the respective
preferential amounts payable on such stock, in any distribution (after payment
of the liquidation price of the senior liquidation stock) which is not
sufficient to pay in full the aggregate of the amounts payable thereon. After
payment in full of the liquidation price of the shares of the UDS Convertible
Preferred Stock, the holders of such shares will not be entitled to any
further participation in any distribution of assets by UDS. Neither a
consolidation or merger of UDS with another corporation nor a sale or transfer
of all or part of UDS assets for cash, securities or other property will be
considered a liquidation, dissolution or winding up of UDS.
Redemption. From time to time and until June 14, 2000, the UDS
Convertible Preferred Stock will be redeemable at the option of UDS, in whole
or in part, for such number of UDS shares as equals the $50.00 per share
liquidation price of the UDS Convertible Preferred Stock divided by the
Conversion Price (as defined below). UDS may exercise this option only if,
for 20 of any 30 consecutive trading days, including the last trading day of
such period, the closing price of the UDS Shares on the NYSE exceeds $33.77,
subject to adjustment in certain circumstances. To exercise this redemption
right, UDS must issue a press release announcing the redemption prior to 9:00
a.m., New York City time, on the second trading day after the end of any such
30-trading-day period. The date for the redemption will be a date selected
by UDS not fewer than 15 nor more than 60 days after the date on which UDS
mails the required notice of redemption.
On or after June 15, 2000, the UDS Convertible Preferred Stock will be
redeemable for cash, in whole or in part, at any time at the option of UDS,
at a redemption price of $50.00 per share plus accrued and unpaid dividends
to the redemption date. If UDS redeems the UDS Convertible Preferred Stock
for cash, it will pay any accrued and unpaid dividends on the UDS Convertible
Preferred Stock, in arrears, for any dividend period ending on or prior to the
redemption date. If the redemption date falls after a dividend payment record
date but prior to the related payment date, the record holders of the UDS
Convertible Preferred Stock on that record date will be entitled to receive
the dividend payable on the UDS Convertible Preferred Stock notwithstanding
the redemption thereof. Except as provided in this paragraph, no payment or
allowance will be made for accrued dividends on any shares of UDS Convertible
Preferred Stock called for redemption.
Notice of redemption for UDS Convertible Preferred Stock prior to June
15, 2000 will be mailed not more than four days after UDS issues the press
release announcing such redemption to each holder of record of shares of UDS
Convertible Preferred Stock to be redeemed at the address shown on the books
of UDS. Notice of redemption for cash on or after June 15, 2000 will be
mailed at least 15 days but not more than 60 days before the redemption date
to each holder of record of shares of UDS Convertible Preferred Stock to be
redeemed at the address shown on the books of UDS. Shares of UDS Convertible
Preferred Stock redeemed by UDS will be restored to the status of authorized
but unissued shares of preferred stock, without designation as to class, and
may thereafter be issued, but not as shares of UDS Convertible Preferred
Stock.
If less than all of the outstanding shares of UDS Convertible Preferred
Stock are to be redeemed, UDS will select those to be redeemed pro rata or by
lot or in such other manner as the UDS Board may determine. There is no
mandatory redemption or sinking fund obligation with respect to the UDS
Convertible Preferred Stock.
Provided that UDS has made available at the office of the Transfer Agent
(as defined below) a sufficient number of UDS Shares, if applicable, and a
sufficient amount of cash to effect the redemption, on and after the
redemption date, dividends will cease to accrue on the UDS Convertible
Preferred Stock called for redemption, such shares will no longer be deemed
to be outstanding, and all rights of the holders of such shares of UDS
Convertible Preferred Stock will cease, other than the right to receive any
UDS Shares issuable, and any cash payable, upon such redemption, without
interest. If the UDS Convertible Preferred Stock is to be redeemed for UDS
Shares, each holder of UDS Convertible Preferred Stock designated for
redemption will be, without further action, deemed a holder of the UDS Shares
for which such UDS Convertible Preferred Stock is redeemable (unless UDS
defaults in the delivery of the UDS Shares).
Fractional UDS Shares will not be issued upon redemption of the UDS
Convertible Preferred Stock, but, in lieu thereof, UDS will pay a cash
adjustment based on the then-current market price (as determined in the
Certificate) of UDS Shares.
Conversion and Exchange Rights; Preemptive Rights. Holders of UDS
Convertible Preferred Stock are entitled to convert their shares of UDS
Convertible Preferred Stock into UDS Shares at the conversion price of $25.98
per UDS Share (the "Conversion Price"), subject to adjustment as described
below, except that, with respect to shares of UDS Convertible Preferred Stock
called for redemption, conversion rights will expire at the close of business
on the redemption date (unless UDS defaults in the payment of the redemption
price). No payment or adjustment will be made in respect of dividends on UDS
Shares or UDS Convertible Preferred Stock that may be accrued or unpaid or in
arrears upon conversion of shares of UDS Convertible Preferred Stock. No
fractional shares will be issued and, in lieu of any fractional share, UDS
will pay a cash adjustment based on the then-current market price (as
determined in the Certificate) of UDS Shares.
The Conversion Price is subject to adjustment in certain circumstances,
including the issuance of UDS Shares as a stock dividend, combinations and
subdivisions of UDS Shares, certain reclassifications of UDS Shares, the
issuance to UDS's stockholders of rights or warrants to subscribe for or
purchase shares of UDS Shares at a price per share less than the then-current
market price of UDS Shares (as determined in the Certificate), and certain
distributions to UDS's stockholders of evidences of indebtedness or assets.
No adjustment in the Conversion Price is required unless it would result in
at least a 1% increase or decrease in the Conversion Price; however, any
adjustment not made is carried forward.
In case of any consolidation or merger of UDS with any other corporation
(other than a wholly owned subsidiary), or in case of a sale or transfer of
all or substantially all of the assets of UDS, or in the case of any share
exchange whereby UDS Shares are converted into other securities or property,
UDS will be required to make proper provision so that the holder of each share
of UDS Convertible Preferred Stock then outstanding will have the right
thereafter to convert such share of UDS Convertible Preferred Stock into the
kind and amount of shares of stock and other securities and property
receivable upon such consolidation, merger, sale, transfer or share exchange
by a holder of the number of UDS Shares into which such share of UDS
Convertible Preferred Stock might have been converted immediately prior to
such consolidation, merger, sale, transfer or share exchange.
Transfer Agent and Registrar. The transfer agent, conversion agent, and
registrar for the UDS Convertible Preferred Stock and the transfer agent and
registrar for the UDS Shares issuable upon conversion or redemption thereof
is Registrar and Transfer Company (the "Transfer Agent").
UDS Rights
UDS has entered into a rights agreement with Registrar and Transfer
Company, as rights agent. Pursuant to the Rights Agreement, a right initially
representing the right to purchase one UDS Share (a "UDS Right") at a price
of $75 (the "UDS Rights Purchase Price"), exercisable only in certain
circumstances, was issued with respect to each UDS Share outstanding on
June 25, 1992 and will be issued with respect to each UDS Share issued by UDS
until the earliest of the UDS Distribution Date (as defined below), the
redemption of the UDS Rights or the UDS Rights Expiration Date (as defined
below). UDS Rights may also be issued with respect to UDS Shares issued after
the UDS Distribution Date in certain circumstances. A UDS Right was issued
with respect to each UDS Share issued to holders of common stock of Diamond
Shamrock, Inc. in the merger of Diamond Shamrock, Inc. with and into the
Company. Until a UDS Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of UDS, including, without limitation, the
right to vote or to receive dividends.
Until the earlier of (i) such time as UDS learns that a person has become
a UDS Acquiring Person (as defined below) and (ii) the close of business on
such date, if any, as may be designated by the UDS Board following the
commencement of, or first public disclosure of an intent to commence, a tender
or exchange offer by any person (subject to certain exceptions) for
outstanding UDS Shares, if upon consummation of such tender or exchange offer
such person's beneficial ownership of outstanding UDS Shares could equal or
exceed such person's Ownership Threshold (as defined below) (the earlier of
such dates being the "UDS Distribution Date"), the UDS Rights will be
evidenced by the certificates for UDS Shares registered in the names of the
holders thereof and not by separate right certificates. Therefore, until the
UDS Distribution Date, the UDS Rights will be transferred with and only with
the UDS Shares.
For purposes of the UDS Rights Agreement, (i) the term "UDS Acquiring
Person" means, subject to certain exceptions set forth in the UDS Rights
Agreement, any person, alone or together with all affiliates and associates
of such person, whose beneficial ownership of outstanding UDS Shares equals
or exceeds such person's Ownership Threshold and (ii) the term "Ownership
Threshold" means, with respect to any person, beneficial ownership of the
greater of (a) 10% of the outstanding UDS Shares or (b) 3% plus the percentage
of the outstanding UDS Shares beneficially owned by such person on May 10,
1994.
Pursuant to its terms and with certain limited exceptions, the Rights
Agreement may be amended or supplemented by UDS without the approval of any
holder of UDS Rights.
In the event a person becomes a UDS Acquiring Person, the UDS Rights will
entitle each holder thereof (other than the UDS Acquiring Person (or any
affiliate or associate of such UDS Acquiring Person)) to purchase, for the UDS
Rights Purchase Price, that number of UDS Shares equivalent to the number of
UDS Shares which at the time of the transaction would have a market value of
twice the UDS Rights Purchase Price. Any UDS Rights that are at any time
beneficially owned by a UDS Acquiring Person (or any affiliate or associate
of a UDS Acquiring Person) will be null and void and nontransferable and any
holder of any such UDS Right (including any purported transferee or subsequent
holder) will be unable to exercise or transfer any such UDS Right.
After there is a UDS Acquiring Person, the UDS Board may elect to
exchange each UDS Right (other than UDS Rights that have become null and void
and nontransferable as described above) for consideration per UDS Right
consisting of one-half of the securities that would be issuable at such time
upon the exercise of one UDS Right pursuant to the terms of the UDS Rights
Agreement, and without payment of the UDS Rights Purchase Price.
In the event that, following a UDS Distribution Date, UDS is acquired in
a merger by, or other business combination with, or 50% or more of its assets
or assets representing 50% or more of its earning power are sold, leased,
exchanged or otherwise transferred (in one or more transactions) to, a
publicly traded corporation, or such corporation merges with and into UDS (in
certain circumstances), each UDS Right will entitle its holder (subject to the
next paragraph) to purchase, for the UDS Rights Purchase Price, that number
of common shares of such corporation which at the time of the transaction
would have a market value of twice the UDS Rights Purchase Price. In the
event UDS is acquired in a merger by, or other business combination with, or
50% or more of its assets or assets representing 50% or more of the earning
power of UDS are sold, leased, exchanged or otherwise transferred (in one or
more transactions) to, an entity that is not a publicly traded corporation or
such corporation merges with and into UDS (in certain circumstances), each UDS
Right will entitle its holder (subject to the next paragraph) to purchase, for
the UDS Rights Purchase Price, at such holder's option, (i) that number of
shares of such entity (or, at such holder's option, of the surviving
corporation in such acquisition, which could be UDS) which at the time of the
transaction would have a book value of twice the UDS Rights Purchase Price or
(ii) if such entity has an affiliate which has publicly traded common shares,
that number of common shares of such affiliate which at the time of the
transaction would have a market value of twice the UDS Rights Purchase Price.
The UDS Rights are not exercisable until the UDS Distribution Date and
will expire on July 6, 2002 (the "UDS Rights Expiration Date") unless earlier
redeemed or canceled by UDS as described below. At any time prior to the
earlier of (i) such time as a person becomes an UDS Acquiring Person and (ii)
the UDS Rights Expiration Date, the UDS Board may redeem the UDS Rights in
whole, but not in part, at a price (in cash or UDS Shares or other securities
of UDS deemed by the UDS Board to be at least equivalent in value) of $.01 per
UDS Right, subject to adjustment as provided in the UDS Rights Agreement (the
"UDS Rights Redemption Price"); provided that, for the 120-day period after
any date of a change (resulting from a proxy or consent solicitation) in a
majority of the UDS Board in office at the commencement of such solicitation,
the UDS Rights may only be redeemed if (a) there are directors then in office
who were in office at the commencement of such solicitation and (b) the UDS
Board, with the concurrence of a majority of such directors then in office,
determines that such redemption is, in its judgment, in the best interests of
UDS and its stockholders. Immediately upon the action of the UDS Board
electing to redeem the UDS Rights, the right to exercise the UDS Rights will
terminate and within ten business days, UDS will give notice thereof to
holders of UDS Rights.
The Delaware Business Combination Act
Section 203 of the General Corporation Law of the State of Delaware (the
"DGCL") imposes a three-year moratorium on business combinations (as defined)
between a Delaware corporation and an "interested stockholder" (in general,
a stockholder owning 15 percent or more of a corporation's outstanding voting
stock) or an affiliate or associate thereof unless (a) prior to an interested
stockholder becoming such, the Board of Directors of the corporation approved
either the business combination or the transaction resulting in the interested
stockholder becoming such, (b) upon consummation of the transaction resulting
in an interested stockholder becoming such, the interested stockholder owns
85 percent of the voting stock outstanding at the time the transaction
commenced (excluding, from the calculation of outstanding shares, shares
beneficially owned by management, directors and certain employee stock plans)
or (c) on or after an interested stockholder becomes such, the business
combination is approved by (i) the board of directors and (ii) holders of at
least 66-2/3 percent of the outstanding shares (other than those shares
beneficially owned by the interested stockholder) at a meeting of
stockholders.
Business combinations include (a) mergers or consolidations, (b) sales,
leases, exchanges or other transfers of ten percent or more of the aggregate
assets of the company, (c) issuance or transfers by the corporation of any
stock of the corporation which would have the effect of increasing the
interested stockholder's proportionate share of the stock of any class or
series of the corporation, (d) any other transaction which has the effect of
increasing the proportionate share of the stock of any class or series of the
corporation which is owned by an interested stockholder and (e) receipt by an
interested stockholder of the benefit (except proportionately as stockholder)
of loans, advances, guarantees, pledges or other financial benefits provided
by the corporation.
Certain Provisions of the Certificate of Incorporation and By-laws
The Certificate of Incorporation of the Company (the "Certificate") and
By-laws of the Company (the "By-laws") contain certain provisions that may
delay, defer or prevent a change in control of the Company and make removal
of management of the Company more difficult.
The Certificate provides that the Board of Directors of the Company is
divided into three classes that are elected for staggered three-year terms,
with the number of directors in each class to be as nearly equal as possible.
The Certificate provides that stockholder action may be taken only at an
annual or special meeting of stockholders, and may not be taken by written
consent of the stockholders. The Certificate also provides that special
meetings may be called only by the Chairman of the Board, if there be one, the
President or the Board of Directors.
The Certificate also contains certain "fair price provisions" designed
to provide safeguards for stockholders when an "interested stockholder"
(defined as a stockholder owning ten percent or more of the Company's voting
stock) or its affiliate or associate attempts to effect a "business
combination" with the Company. The term "business combination" includes any
merger or consolidation of the Company involving the interested stockholder,
certain dispositions of assets of the Company, any issuance of securities of
the Company, meeting certain threshold amounts, to the interested stockholder,
adoption of any plan of liquidation or dissolution of the Company proposed by
the interested stockholder and any reclassification of securities of the
Company having the effect of increasing the proportionate share of ownership
of the interested stockholder. In general, a business combination between the
Company and the interested stockholder must be approved by the affirmative
vote of 80% of the outstanding voting stock, excluding voting stock owned by
such interested stockholder, unless the transaction is approved by a majority
of the members of the Board of Directors who are not affiliated with the
interested stockholder or certain minimum price and form of consideration
requirements are satisfied. See also "The Delaware Business Combination Act."
The By-laws provide that the Board of Directors shall fix the number of
directors and that a stockholder may nominate directors only if written notice
is delivered to the Company by such stockholder 60 days in advance of an
annual meeting or within ten days after the date of notice by the Company of
a special meeting involving the election of directors. The By-laws and
Certificate also provide that any newly created directorship resulting from
an increase in the number of directors or a vacancy on the Board shall be
filled by vote of a majority of the remaining directors then in office, even,
in the case of a vacancy other than a newly created directorship, if less than
a quorum. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. A director elected by reason of
an increase in the number of directors shall be elected until the next
election of one or more directors by the stockholders. Directors may be
removed from office but only for cause and only by the affirmative vote of a
majority of the then outstanding shares of stock entitled to vote on the
matter. "Cause" is defined in the Certificate to mean the "wilful and
continuous failure of a director to substantially perform such director's
duties to the Corporation (including any such failure resulting from
incapacity due to physical or mental illness) or the wilful engaging by a
director in gross misconduct materially and demonstrably injurious to the
Corporation". The Certificate provides that the By-laws and Certificate may
not be amended without the approval of at least 80% of the voting power of all
shares of the Company entitled to vote generally in the election of directors,
voting together as a single class.
The foregoing provisions, together with the ability of the Board to issue
Preferred Stock without further stockholder action, could delay or frustrate
the removal of incumbent directors or the assumption of control by the holder
of a large block of the Company's Common Stock even if such removal or
assumption would be beneficial, in the short term, to stockholders of the
Company. The provisions could also discourage or make more difficult a merger,
tender offer or proxy contest even if such event would be favorable to the
interests of stockholders.
PLAN OF DISTRIBUTION
UDS may sell the Senior Debt Securities, the Subordinated Debt Securities
or the Common Stock, any UDS Funding Partnership may sell the Partnership
Preferred Securities and any UDS Capital Trust may sell Trust Preferred
Securities in any of, or any combination of, the following ways: (i) directly
to purchasers; (ii) through agents, (iii) through underwriters, and (iv)
through dealers.
Offers to purchase Offered Securities may be solicited directly by UDS,
any UDS Funding Partnership and/or any UDS Capital Trust, as the case may be,
or by agents designated by UDS, any UDS Funding Partnership and/or any UDS
Capital Trust, as the case may be, from time to time. Any such agent, who may
be deemed to be an underwriter as that term is defined in the Securities Act
of 1933, involved in the offer or sale of the Offered Securities in respect
of which this Prospectus is delivered will be named, and any commissions
payable by UDS to such agent will be set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agency will
be acting in a best efforts basis for the period of its appointment
(ordinarily five business days or less). Agents, dealers and underwriters may
be customers of, engage in transactions with, or perform services for the
Company in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale, UDS will
execute an underwriting agreement with such underwriters at the time of sale
to them and the names of the underwriters and the terms of the transaction
will be set forth in the Prospectus Supplement, which will be used by the
underwriters to make releases of the Offered Securities in respect of which
this Prospectus is delivered to the public.
If a dealer is utilized in the sale of the Offered Securities in respect
of which this Prospectus is delivered, UDS, any UDS Funding Partnership and/or
any UDS Capital Trust, as the case may be, will sell such Offered Securities
to the dealer, as principal. The dealer may then resell such Offered
Securities to the public at varying prices to be determined by such dealer at
the time of resale. The name of the dealer and the terms of the transaction
will be set forth in the Prospectus Supplement.
Agents, underwriters, and dealers may be entitled under the relevant
agreements to indemnification by UDS, any UDS Funding Partnership and/or any
UDS Capital Trust, as the case may be, against certain liabilities, including
liabilities under the Securities Act of 1933.
The place and time of delivery for the Offered Securities in respect of
which this Prospectus is delivered are set forth in the accompanying
Prospectus Supplement.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities and the Partnership Preferred Securities will be passed
upon on behalf of the UDS Capital Trusts and the UDS Funding Partnerships by
Skadden, Arps, Slate, Meagher & Flom, LLP special Delaware counsel to the UDS
Capital Trusts and the UDS Funding Partnerships. The validity of the Senior
Debt Securities, Subordinated Debt Securities, Common Stock, and the
Guarantees and certain matters relating thereto will be passed upon for UDS
by Patrick J. Guarino, Esq., Executive Vice President, General Counsel and
Secretary. Certain United States federal income taxation matters will be
passed upon for UDS and the UDS Capital Trusts by Skadden, Arps, Slate,
Meagher & Flom, LLP special tax counsel to UDS, the UDS Capital Trusts, and
the UDS Funding Partnerships.
EXPERTS
The consolidated financial statements and schedule of Ultramar Diamond
Shamrock Corporation appearing in the Company's Annual Report (Form 10-K) for
the year ended December 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference which, as to all periods presented, is
based in part on the report of Price Waterhouse LLP, independent accountants,
also included therein, and incorporated herein by reference. Such financial
statements are incorporated by reference herein in reliance upon such reports
of Ernst & Young LLP and Price Waterhouse LLP given upon the authority of such
firms as experts in accounting and auditing.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee $257,576
Fees and expenses of the Trustee 5,000
Printing and engraving expenses 20,000
Rating agency fees 50,000
Accounting fees 10,000
NYSE listing fees 60,000
Legal fees 50,000
Qualification under state securities laws 10,000
Miscellaneous 37,424
$500,000
* Estimated.
Item 15. Indemnification of Directors and Officers.
The By-Laws of the Registrant provide that the Registrant shall indemnify
its officers and directors to the fullest extent permitted by applicable law.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides, in
general, that each director and officer of a corporation may be indemnified
against expenses (including attorneys' fees, judgments, fines and amounts paid
in settlement) actually and reasonably incurred in connection with the defense
or settlement of any threatened, pending or completed legal proceedings in
which he is involved by reason of the fact that he is or was a director or
officer, if he acted in good faith and in a manner that he reasonably believed
to be in or not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, if he had no reasonable cause
to believe that his conduct was unlawful. If the legal proceeding, however,
is by or in the right of the corporation, the director or officer may not be
indemnified in respect of any claim, issue or matter as to which he shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the company unless a court determines otherwise.
The Certificate of Incorporation of the Registrant provides that the
personal liability of the directors of the Registrant shall be eliminated to
the fullest extent permitted by applicable law. The DGCL permits a
corporation's certificate of incorporation to provide that no director of the
corporation shall be personally liable to the corporation or its stockholders
for monetary damages for any breach of his fiduciary duty as a director;
provided, however, that such provision shall not apply to any liability of a
director (1) for any breach of a director's duty of loyalty to the corporation
or its stockholders, (2) for acts or omissions that are not in good faith or
involve intentional misconduct or a knowing violation of the law, (3) under
Section 174 of the DGCL or (4) for any transaction from which the director
derived an improper personal benefit.
The Registrant also maintains insurance for officers and directors
against certain liabilities, including liabilities under the Securities Act
of 1933. The effect of this insurance is to indemnify any officer or director
of the Registrant against expenses, including, without limitation, attorneys'
fees, judgments, fines and amounts paid in settlement, incurred by an officer
or director upon a determination that such person acted in good faith. The
premiums for such insurance are paid by the Registrant.
The above discussion of the Registrant's By-laws, its Certificate of
Incorporation, its employment and the DGCL is not intended to be exclusive and
is respectively qualified in its entirety by such By-laws, Certificate of
Incorporation, employment agreements and statute.
Item 16. Exhibits
Unless otherwise indicated, each of the following exhibits has been previously
filed with the Securities and Exchange Commission by the Company under File
No. 1-11154. Where indicated as being filed by Diamond Shamrock, Inc., such
filings were filed under File No. 1-9409 unless otherwise specified.
Exhibit Incorporated by Reference
Number Description to the Following Documents
1.1 Form of Underwriting Agreement To be filed by UDS as exhibit
to Current Report on Form
8-K in connection with
specific offering
3.1 Certificate of Incorporation Registration Statement on Form
dated April 27, 1992, as amended S-1 (File No. 33-47586),
on April 28, 1992 Exhibit 3.1
3.2 Certificate of Merger of Diamond Registration Statement on Form
Shamrock, Inc. with and into S-8 (File No. 333-19131),
the Company, amending the Exhibit 4.2
Company's Articles of Incorporation
3.3 Certificate of Designations of Registration Statement on Form
the Company's 5% Cumulative Con- S-8 (File No. 333-19131),
vertible Preferred Stock Exhibit 4.3
3.4 By-laws dated April 28, 1992 Registration Statement on Form
S-1 (File No. 33-47586),
Exhibit 3.2
3.5 Amendment dated July 22, 1993 Annual Report on Form 10-K
to By-laws for the Year Ended
December 31, 1995, Exhibit 3.3
3.6 Amendment dated December 3, 1996 Registration Statement on Form
to By-laws S-8 (File No. 333-19131),
Exhibit 4.6
4.1 Indenture dated March 15, 1994 Annual Report on Form 10-K
between Ultramar Diamond for the Year Ended December
Shamrock Corporation, as issuer, 31, 1995, Exhibit 4.7
and The Bank of New York,
as trustee
4.2 Rights Agreement dated Registration Statement on Form
June 25, 1992, as amended S-1 (File No. 33-47586, Exhi-
bit 4.2; Quarterly Report on
Form 10-Q for quarter
ended September 30, 1992,
Exhibit 4.2; Annual Report
on Form 10-K for year
ended December 31, 1994,
Exhibit 4.3
4.3 Certificate of Trust of UDS +
Capital I
4.4 Certificate of Trust of UDS +
Capital II
4.5 Form of Amended and Restated *
Declaration of Trust of UDS
Capital I (including form of
Trust Preferred Security)
4.6 Form of Amended and Restated *
Declaration of Trust of
UDS Capital II (including
form of Trust Preferred Security)
4.7 Certificate of Limited Partner- +
ship of UDS Funding I, L.P.
4.8 Certificate of Limited Partner- +
ship of UDS Funding II, L.P.
4.9 Form of Amended and Restated *
Limited Partnership Agreement
of UDS Funding I, L.P. (including
Form of Partnership Preferred
Security)
4.10 Form of Amended and Restated *
Limited Partnership Agreement
of UDS Funding II, L.P.
(including Form of Part-
nership Preferred Security)
4.11 Form of Trust Preferred Securi- *
ties Guarantee Agreement
by UDS and The Bank of
New York as Guaranty Trustee
for the benefit of the
holders of Trust Preferred
Securities of UDS Capital I
4.12 Form of Trust Preferred Securi- *
ties Guarantee Agreement
by UDS and The Bank of
New York as Guaranty Trustee
for the benefit of the
holders of Trust Preferred
Securities of UDS Capital II
4.13 Form of Partnership Preferred *
Securities Guarantee Agreement
by UDS and The Bank of New York
as Guaranty Trustee for
the benefit of the holders
of partnership Preferred Securities
of UDS Funding I, L.P.
4.14 Form of Partnership Preferred *
Securities Guarantee Agreement
by UDS and The Bank of New York
as Guaranty Trustee for
the benefit of the holders
of partnership Preferred Securities
of UDS Funding II, L.P.
4.15 Form of Subordinated Indenture *
between UDS and The Bank
of New York (including
form of Subordinated Debenture)
4.16 Form of Affiliate Debenture *
Guarantee Agreement by UDS
5.1 Opinion of Patrick J. Guarino +
as to the validity of the
Common Stock, Senior Debt
Securities, Subordinated Debt
Securities, and Guarantees
5.2 Opinion of Skadden, Arps, Slate, *
Meagher & Flom LLP as to
validity of Trust Preferred
Securities, Partnership Preferred
Securities
8.1 Opinion of Skadden Arps Slate To be filed by UDS as exhibit
Meagher & Flom as to to Current Report on 8-K in
certain federal income tax matters connection with specific
offering
12.1 Computations of Ratios of Earnings +
to Fixed Charges
23.1 Consent of Ernst & Young LLP +
23.2 Consent of Price Waterhouse LLP +
23.3 Consent of Patrick J. Guarino Included in Exhibit 5.1
23.4 Consent of Skadden Arps Slate Included in Exhibits 5.2
Meagher & Flom and 8.1
24.1 Power of Attorney of Company +
24.2 Powers of Attorney of Officers and +
Directors
25.1 Form T-1 Statement of Eligibility +
under the Trust Indenture
Act of 1939 of The Bank of
New York as trustee under
the Senior Debt Indenture
25.2 Form T-1 Statement of Eligibility *
under the Trust Indenture
Act of 1939 of The Bank
of New York, as trustee
under Subordinated Debt
Indenture
25.3 Form T-1 Statement of Eligibility *
under the Trust Indenture
Act of 1939 of The Bank
of New York, as Property
Trustee under UDS Capital
I Declaration of Trust
25.4 Form T-1 Statement of Eligibility *
under the Trust Indenture
Act of 1939 of The Bank of
New York, as Property Trustee
under UDS Capital II
Declaration of Trust
25.5 Form T-1 Statement of Eligibility *
under the Trust Indenture Act
of 1939 of The Bank of
New York, as Preferred
Guarantee Trustee under
the Trust Guarantee per-
taining to UDS Capital I
25.6 Form T-1 Statement of Eligibility *
under the Trust Indenture Act
of 1939 of The Bank of
New York, as Preferred
Guarantee Trustee under the
Trust Guarantee pertaining to
UDS Capital II
25.7 Form T-1 Statement of Eligibility
under the Trust Indenture Act
of 1939 of The Bank of
New York, as Preferred
Guarantee Trustee under
the Partnership Guarantee
pertaining to UDS Funding, I, L.P.
25.8 Form T-1 Statement of Eligibility
under the Trust Indenture Act
of 1939 of The Bank of
New York, as Preferred
Guarantee Trustee under
the Partnership Guarantee
pertaining to UDS Funding, II, L.P.
25.9 Form T-1 Statement of Eligibility
under the Trust Indenture Act
of 1939 of The Bank of
New York, as Guarantee Trustee
under the Guarantee pertaining
to the Affiliated Debentures
________________
+ Filed herewith.
* To be filed by amendment.
Item 17. Undertakings.
A. Undertaking Pursuant to Rule 415.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if the
Registration Statement is on Form S-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 (the "Exchange Act") that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
B. Undertaking Regarding Filings Incorporating Subsequent Exchange Act
Documents by Reference.
The Registrants hereby undertake that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Undertaking in Respect of Indemnification.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrants
pursuant to the provisions described and the documents referenced under Item
15 above, or otherwise, the Registrants have been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the adjudication of
such issue.
D. Undertaking regarding Post-Effective Amendments.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement or amendment thereto to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Antonio and State of Texas on June 6, 1997.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ Todd Walker
Name: Todd Walker
Title: Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on June 6, 1997, by the following
persons in the capacities indicated with respect to Ultramar Diamond Shamrock
Corporation:
Signature Capacity
*
Roger R. Hemminghaus Chief Executive Officer
and Chairman of the Board
of Directors (Principal
Executive Officer)
*
Jean Gaulin President, Chief Operating
Officer and Vice Chairman
of the Board of Directors
*
H. Pete Smith Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
*
Byron Allumbaugh Director
*
E. Glenn Biggs Director
*
W. E. Bradford Director
*
H. Frederick Christie Director
W. H. Clark Director
Bob Marbut Director
*
Katherine D. Ortega Director
*
Madeleine Saint-Jacques Director
*
C. Barry Schaefer Director
*
Russel H. Herman Director
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed by
the above-named officers and directors and previously filed with the
Securities and Exchange Commission.
/s/ Todd Walker Attorney-in-Fact
Todd Walker
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned Registrants certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement or amendment thereto to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Antonio and State of Texas on June 6, 1997.
UDS CAPITAL I
By: /s/ H. Pete Smith
H. Pete Smith, Trustee
By: /s/ Steve Blank
Name: Steve Blank, Trustee
UDS CAPITAL II
By: /s/ H. Pete Smith
H. Pete Smith, Trustee
By: /s/ Steve Blank
Name: Steve Blank, Trustee
UDS FUNDING I, L.P.
By: Ultramar Diamond Shamrock
Corporation, General Partner
By: /s/ H. Pete Smith
Name: H. Pete Smith
Title: Executive Vice
President and Chief
Financial Officer
UDS FUNDING II, L.P.
By: Ultramar Diamond Shamrock
Corporation, General Partner
By: /s/ H. Pete Smith
Name: H. Pete Smith
Title: Executive Vice
President
Exhibit 4.3
CERTIFICATE OF TRUST
The undersigned, the trustees of UDS Capital I, desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 Del. C. Section
3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "UDS Capital I."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is as follows:
The Bank of new York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
3. This Certificate of Trust shall be effective as of the date of
filing.
Dated: June 5, 1997
/s/ H. Pete Smith
Name: H. Pete Smith
Title: Trustee
/s/ Steve Blank
Name: Steve Blank
Title: Trustee
The Bank of New York (Delaware),
as Trustee
By: /s/ Walter N. Gitlin
Name: Walter N. Gitlin
Title: Authorized Signatory
W5122.tw
Exhibit 4.4
CERTIFICATE OF TRUST
The undersigned, the trustees of UDS Capital II, desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 Del. C. Section 3810,
hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "UDS Capital I."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is as follows:
The Bank of new York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
3. This Certificate of Trust shall be effective as of the date of
filing.
Dated: June 5, 1997
/s/ H. Pete Smith
Name: H. Pete Smith
Title: Trustee
/s/ Steve Blank
Name: Steve Blank
Title: Trustee
The Bank of New York (Delaware),
as Trustee
By: /s/ Walter N. Gitlin
Name: Walter N. Gitlin
Title: Authorized Signatory
W5123.tw
Exhibit 4.7
CERTIFICATE OF LIMITED PARTNERSHIP
OF
UDS FUNDING I, L.P.
This Certificate of Limited Partnership of UDS Funding I, L.P. (the
"Partnership"), dated as June 5, 1997, is being duly executed and filed by
Ultramar Diamond Shamrock Corporation, a Delaware corporation, as general
partner, to form a limited partnership under the Delaware Revised Uniform
Limited Partnership Act (6 Del. C. Section 17-101, et seq.).
1. Name. The name of the limited partnership formed hereby is UDS
Funding I, L.P.
2. Registered Office. The address of the registered office of the
Partnership in the State of Delaware is c/o The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801.
3. Registered Agent. The name and address of the registered agent
for service of process on the Partnership in the State of Delaware is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
4. General Partner. The name and the business mailing address of the
sole general partner of the Partnership is: Ultramar Diamond Shamrock
Corporation, 9830 Colonnade Boulevard, San Antonio, Texas 78230.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Limited Partnership as of the date first written above.
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
as sole general partner
By: /s/ H. Pete Smith
Name: H. Pete Smith
Title: Executive Vice President
and Chief Financial Officer
W5124.TW
Exhibit 4.8
CERTIFICATE OF LIMITED PARTNERSHIP
OF
UDS FUNDING II, L.P.
This Certificate of Limited Partnership of UDS Funding II, L.P. (the
"Partnership"), dated as June 5, 1997, is being duly executed and filed by
Ultramar Diamond Shamrock Corporation, a Delaware corporation, as general
partner, to form a limited partnership under the Delaware Revised Uniform
Limited Partnership Act (6 Del. C. Section 17-101, et seq.).
1. Name. The name of the limited partnership formed hereby is UDS
Funding II, L.P.
2. Registered Office. The address of the registered office of the
Partnership in the State of Delaware is c/o The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801.
3. Registered Agent. The name and address of the registered agent
for service of process on the Partnership in the State of Delaware is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
4. General Partner. The name and the business mailing address of
the sole general partner of the Partnership is: Ultramar Diamond Shamrock
Corporation, 9830 Colonnade Boulevard, San Antonio, Texas 78230.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Limited Partnership as of the date first written above.
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
as sole general partner
By: /s/ H. Pete Smith
Name: H. Pete Smith
Title: Executive Vice President
and Chief Financial Officer
W5125.TW
Exhibit 5.1
June 6, 1997
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Re: Registration Statement on Form S-3 of Ultramar Diamond Shamrock
Corporation (Registration No. ______)
Gentlemen:
I am Executive Vice President, General Counsel, and Corporate Secretary of
Ultramar Diamond Shamrock Corporation (the "Company"). This letter is
delivered in connection with the registration, issuance, and sale of up to an
aggregate amount of $850,000,000 of Senior Debt Securities, Subordinated Debt
Securities, Common Stock, and Guarantees (collectively the "Offered
Securities") pursuant to the resolutions authorizing the issuance and sale of
the Offered Securities, and such other acts as are necessarily incident to
the registration, issuance, and sale of the Offered Securities (the
"Authorizing Resolutions") adopted by the Company's Board of Directors at a
meeting of the Company's Board of Directors held on June 4, 1997. The Senior
Debt Securities will be issued pursuant to the terms of an indenture (the
"Indenture") dated as of March 15, 1995, between the Company and The Bank of
New York acting as trustee (the "Trustee"). The Subordinated Debt Securities
will be issued pursuant to the terms of an indenture (the "Subordinated Debt
Indenture") between the Trustee and the Company to be entered into.
I have examined such documents, records, and matters of law as I have deemed
necessary for the purposes of this opinion, and based thereon I am of the
opinion that the Offered Securities have been duly authorized and will be
valid and binding obligations of the Company (except as enforcement thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and subject to general equitable principles) when
the Offered Securities are issued, authenticated or countersigned, and
delivered by the Company for valid consideration in accordance with the
Authorizing Resolutions and (i) in the case of the Senior Debt Securities,
the terms of the Indenture, (ii) in the case of the Subordinated Debt
Securities, the terms of the Subordinated Debt Indenture, and (iii) in the
case of Common Stock, the Company's Certificate of Incorporation.
This opinion is based on the Company's Certificate of Incorporation and
Bylaws and applicable law as of the date hereof. No assurance can be
provided as to the effect on this opinion of any amendment or other change to
the Company's Certificate of Incorporation or Bylaws or applicable law after
the date hereof.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-3 filed by the Company to effect
registration under the Securities Act of 1933, as amended, of the Offered
Securities and to the reference to me under the caption "Legal Matters" in
the Prospectus comprising part of such Registration Statement.
Very truly yours,
/s/ Patrick J. Guarino
Patrick J. Guarino
PJG/hw
W5117.ASC
Exhibit 12.1
ULTRAMAR DIAMOND SHAMROCK CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in millions, except ratios)
Three Months
"Ended "Year Ended December 31,"
March 31,"
1996 1995 1996 1995 1994 1993 1992
Earnings:
Income before taxes 45.8 36.8 37.2 (1) 141.1 220.7 197.3 133.4
Add: Fixed Charges 36.2 35.6 141.3 151.6 108.6 118.0 120.1
Amortization of interest
previously capitalized 0.3 0.2
Losses of investees 0.5 1.1
Less: Capitalized
interest (1.1) (5.8) (10.6) (16.4) (7.8) (6.1) (6.1)
Undistributed earnings
of investees (0.2)
Earnings as adjusted 80.9 66.6 168.2 277.0 321.5 309.0 248.5
Computation of Fixed
Charges:
Interest expense 30.1 24.8 110.1 113.9 87.1 93.1 93.5
Capitalized interest 1.1 5.8 10.6 16.4 7.8 6.1 6.1
Interest portion of
lease commitments 5.0 5.0 20.6 21.3 13.7 18.8 20.5
Total Fixed Charges 36.2 35.6 141.3 151.6 108.6 118.0 120.1
Ratio of Earnings to
Fixed Charges (2) 2.2 1.9 1.2 1.8 3.0 2.6 2.1
(1) Excludes merger and integration costs of $77.4 million.
(2) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings as adjusted" consist of income before income taxes after adding
certain fixed charges as noted above. "Fixed charges" consist of interest
expense, amortization of debt discount and a portion of rent expense
representative of the interest factor.
W5120.tw
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Ultramar Diamond
Shamrock Corporation, UDS Capital I, UDS Capital II, UDS Funding I, L.P., and
UDS Funding II, L.P. for the registration of up to $850,000,000 of debt or
equity securities and to the incorporation by reference therein of our report
dated February 7, 1997 with respect to the consolidated financial statements
and schedule of Ultramar Diamond Shamrock Corporation (formerly Ultramar
Corporation) included in its Annual Report (Form 10-K) for the year ended
December 31, 1996, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
San Antonio, Texas
June 5, 1997
W5118.TW
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
consisting part of this Registration Statement on Form S-3 of our report
dated February 7, 1997 with respect to the consolidated financial statement
and financial statement schedule of the Diamond Shamrock operations of
Ultramar Diamond Shamrock Corporation included in Ultramar Diamond Shamrock
Corporation's Annual Report on Form 10-K for the year ended December 31,
1996. We also consent to the references to us under the heading "Experts"
in such Registration Statement.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Antonio, Texas
June 5, 1997
W5126.tw
Exhibit 24.1
Power of Attorney
Ultramar Diamond Shamrock Corporation (the "Corporation") hereby constitutes
and appoints Patrick J. Guarino, Curtis V. Anastasio, Harold D. Mallory, and
Todd Walker, or any of them, its true and lawful attorneys-in-fact and agents,
each with full power of substitution and resubstitution, to do any and all
acts and things in its name and behalf, and to execute any and all instruments
for it and in its name which the said attorneys-in-fact and agents, or any of
them, may deem necessary or advisable to enable the Corporation to comply with
the Securities Act of 1933, as amended, and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with a Registration Statement on Form S-3, including without
limitation power and authority to sign for it such Registration Statement and
any and all amendments (including post-effective amendments) thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith with the Commission, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, or any of
them, shall do or cause to be done by virtue hereof.
Ultramar Diamond Shamrock Corporation
/s/ R. R. Hemminghaus
R. R. Hemminghaus, Chairman of the Board
and Chief Executive Officer
Dated: June 3, 1997
w5112.tw
Exhibit 24.2
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned hereby constitute
and appoint Patrick J. Guarino, Curtis V. Anastasio, Harold D. Mallory, and
Todd Walker, and each of them, his or her true and lawful attorney or
attorneys-in-fact, with full power of substitution and revocation, for the
undersigned and in the undersigned's name, place, and stead, in the
undersigned's capacity as an officer and/or director of ULTRAMAR DIAMOND
SHAMROCK CORPORATION (the "Corporation"), to sign a Registration Statement
on Form S-3, as promulgated by the Securities and Exchange Commission (the
"Commission"), for the purposes of registering, pursuant to the Securities
Act of 1933, as amended, debt and equity of the Corporation and one or more
of its subsidiaries in amounts not to exceed $900,000,000 in the aggregate,
and to sign any or all amendments and any or all post-effective amendments
to such Registration Statements, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Commission
granting unto said attorney or attorneys-in-fact, and each of them, full
power and authority to do and perform each and every act and thing requisite
and necessary to be done in connection with such registration, as fully to
all intents and purposes as he or she could do in person, hereby ratifying
and confirming all that said attorney or attorneys-in-fact or any of them or
their substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
/s/ R. R. Hemminghaus /s/ Jean Gaulin
R. R. Hemminghaus Jean Gaulin
/s/ H. Pete Smith /s/ Russel H. Herman
H. Pete Smith Russel H. Herman
/s/ Byron Allumbaugh /s/ Bob Marbut
Byron Allumbaugh Bob Marbut
/s/ E. Glenn Biggs /s/ Katherine D. Ortega
E. Glenn Biggs Katherine D. Ortega
/s/ W. E. Bradford /s/ Madeleine Saint-Jacques
W. E. Bradford Madeleine Saint-Jacques
/s/ H. Frederick Christie /s/ C. Barry Schaefer
H. Frederick Christie C. Barry Schaefer
/s/ W. H. Clark
W. H. Clark
Dated: June 4, 1997
W5119.tw
Exhibit 25.1
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
ULTRAMAR DIAMOND SHAMROCK CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-3663331
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
9830 Colonnade Boulevard
San Antonio, Texas 78230
(Address of principal executive offices) (Zip code)
Senior Debt Securities
(Title of the indenture securities)
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. 33-6215, Exhibits
1a and 1b to Form T-1 filed with Registration Statement No.
33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 5th day of June, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin $ 6,024,605
Interest-bearing balances 808,821
Securities:
Held-to-maturity securities 1,071,747
Available-for-sale securities 3,105,207
Federal funds sold in domestic offices
of the bank: 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned
income 31,962,915
LESS: Allowance for loan and
lease losses 635,084
LESS: Allocated transfer risk
reserve 429
Loans and leases, net of unearned
income, allowance, and reserve 31,327,402
Assets held in trading accounts 1,539,612
Premises and fixed assets (including
capitalized leases) 692,317
Other real estate owned 22,123
Investments in unconsolidated
subsidiaries and associated
companies 213,512
Customers' liability to this bank on
acceptances outstanding 985,297
Intangible assets 590,973
Other assets 1,487,903
Total assets $52,120,460
LIABILITIES
Deposits:
In domestic offices $25,929,642
Noninterest-bearing 11,245,050
Interest-bearing 14,684,592
In foreign offices, Edge and
Agreement subsidiaries, and IBFs 12,852,809
Noninterest-bearing 552,203
Interest-bearing 12,300,606
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the
bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased 1,360,877
Securities sold under agreements
to repurchase 226,158
Demand notes issued to the U.S.
Treasury 204,987
Trading liabilities 1,437,445
Other borrowed money:
With original maturity of one year
or less 2,312,556
With original maturity of more than
one year 20,766
Bank's liability on acceptances exe-
cuted and outstanding 1,014,717
Subordinated notes and debentures 1,014,400
Other liabilities 1,721,291
Total liabilities 48,095,648
EQUITY CAPITAL
Common stock 942,284
Surplus 731,319
Undivided profits and capital
reserves 2,354,095
Net unrealized holding gains
(losses) on available-for-sale
securities 7,030
Cumulative foreign currency transla-
tion adjustments ( 9,916)
Total equity capital 4,024,812
Total liabilities and equity
capital $52,120,460
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best of my
knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of
our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
