<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1997
AMENDMENT NO. 1 TO REGISTRATION NO. 333-28737
POST-EFFECTIVE AMENDMENT NO. 2 TO REGISTRATION NO. 33-82662
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
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 specified in its (State or (I.R.S. Employer
charter) other Identification
jurisdiction No.)
of
incorporation
or
organization,
</TABLE>
------------------------
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)
------------------------------
COPY 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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 A FINAL PROSPECTUS SUPPLEMENT IS
DELIVERED. THIS 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.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT, DATED JUNE 17, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
6,000,000 TRUST PREFERRED SECURITIES
UDS CAPITAL I
% TRUST ORIGINATED PREFERRED SECURITIES-SM- ("TOPRS-SM-")
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
ULTRAMAR DIAMOND SHAMROCK CORPORATION
---------------
The % Trust Originated Preferred Securities-SM- (the "TOPrS-SM-" or "Trust
Preferred Securities") offered hereby represent preferred undivided beneficial
ownership interests in the assets of UDS Capital I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"). Ultramar Diamond
Shamrock Corporation, a Delaware corporation (the "Company" or "UDS"), will own
all the common securities (the "Trust Common Securities" and, together with the
Trust Preferred Securities, the "Trust Securities") representing undivided
beneficial ownership interests in the assets of the Trust. The Trust exists for
the sole purpose of issuing the Trust Securities and investing the proceeds as
described below and engaging in activities incident thereto. The proceeds from
the sale of the Trust Securities will be used by the Trust to purchase
Partnership Preferred Securities ("Partnership Preferred Securities"),
representing the limited partner interests of UDS Funding I, L.P., a Delaware
limited partnership (the "Partnership"). The general partner interest, which
constitutes all of the interest in the Partnership other than the limited
partner interests represented by the Partnership Preferred Securities, is owned
by the Company, which is the sole general partner of the Partnership (in such
capacity, the "General Partner"). Substantially all of the proceeds from the
sale of the Partnership Preferred Securities, together with the capital
contribution from the General Partner, will be used by the Partnership to
purchase Debentures (as defined herein), which consist of debt instruments of
the Company and two or more of its eligible controlled affiliates. In addition,
approximately one percent of the proceeds from the sale of the Partnership
Preferred Securities and the capital contribution from the General Partner will
be used to purchase Eligible Debt Securities (as defined herein). See
"Description of the Partnership Preferred Securities--Partnership Investments".
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE S-10 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TRUST
PREFERRED SECURITIES, INCLUDING CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES.
Application will be made to list the Trust Preferred Securities on the New
York Stock Exchange, Inc. (the "New York Stock Exchange"). If approved for
listing, trading of the Trust Preferred Securities on the New York Stock
Exchange is expected to commence within the 30-day period after the initial
delivery of the Trust Preferred Securities. See "Underwriting".
------------------------------
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 SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO THE
PRICE TO PUBLIC (1) COMMISSION (2) TRUST (3)(4)
<S> <C> <C> <C>
Per Trust Preferred Security.................... $25.00 (3) $25.00
Total........................................... $150,000,000 (3) $150,000,000
</TABLE>
(1) Plus accumulated distributions, if any, from , 1997.
(2) The Trust, the Partnership and the Company have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting".
(3) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be ultimately invested in investment instruments of the
Company and its subsidiaries, the Company has agreed to pay to the
Underwriters as compensation (the "Underwriters' Compensation") $ per
Trust Preferred Security (or $ in the aggregate); provided that such
compensation for sales of more than 10,000 Trust Preferred Securities to a
single purchaser will be $ per Trust Preferred Security. Therefore, to
the extent of such sales, the actual amount of Underwriters' Compensation
will be less than the aggregate amount specified in the preceding sentence.
See "Underwriting".
(4) Expenses of the offering payable by the Company are estimated to be
$ .
------------------------------
The Trust Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Trust Preferred Securities will be made only in book-entry
form through the facilities of The Depository Trust Company ("DTC") on or about
, 1997.
------------------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
INCORPORATED
SMITH BARNEY INC.
------------------------------
The date of this Prospectus Supplement is , 1997.
-SM-"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
(CONTINUED FROM COVER PAGE)
Holders of the Trust Preferred Securities will be entitled to receive
cumulative cash distributions accumulating from the date of original issuance
and payable quarterly in arrears on each March 31, June 30, September 30 and
December 31, commencing June 30, 1997, at an annual rate of % of the
liquidation amount of $25 per Trust Preferred Security (equivalent to $
per Trust Preferred Security per annum), if, as and when the Trust has funds
available for payment. See "Description of the Trust Preferred
Securities--Distributions." Distributions not paid on the scheduled payment date
will accumulate and compound quarterly at a rate per annum equal to %. The
distribution rate and the distribution payment dates and other payment dates for
the Trust Preferred Securities will correspond to the distribution rate and
distribution payment dates and other payment dates for the Partnership Preferred
Securities, which are the sole assets of the Trust. As described above, the
assets of the Partnership will initially consist only of the Debentures and, to
a limited extent, Eligible Debt Securities.
The payment of distributions by the Trust and payments on liquidation of the
Trust or the redemption of Trust Preferred Securities, as described below, are
guaranteed on a subordinated basis by the Company (the "Trust Guarantee") to the
extent the Trust has funds available therefor as described under "Description of
the Trust Guarantee". The payment of distributions by the Partnership (if, as
and when declared) and payments on liquidation of the Partnership or the
redemption of Partnership Preferred Securities, as described below, are also
guaranteed on a subordinated basis by the Company (the "Partnership Guarantee")
to the extent the Partnership has funds available therefor as described under
"Description of the Partnership Guarantee". In addition, payments in respect of
the Debentures (other than the Company Debenture (as defined herein)) will be
fully and unconditionally guaranteed, on a subordinated basis, by the Company
(the "Investment Guarantees") for the benefit of the holders of the Partnership
Preferred Securities. The Trust Guarantee, the Partnership Guarantee and the
Investment Guarantees (collectively, the "Guarantees"), when taken together with
the Company Debenture and the Company's obligations to pay all fees and expenses
of the Trust and the Partnership, constitute a guarantee to the extent set forth
herein by the Company of the distribution, redemption and liquidation payments
payable to the holders of the Trust Preferred Securities. The Guarantees do not
apply to current distributions by the Partnership unless and until such
distributions are declared by the Partnership out of funds legally available for
payment or to liquidating distributions unless there are assets available for
payment in the Partnership, each as more fully described in the next succeeding
paragraph and under "Risk Factors--Insufficient Income or Assets Available to
Partnership". The Company's obligations under the Guarantees are subordinate and
junior in right of payment to all other liabilities of the Company and rank PARI
PASSU with the most senior preferred stock issued from time to time by the
Company and with any guarantee now or hereafter entered into by the Company in
respect of any preferred stock of any Finance Subsidiary (as defined below). The
Company's obligations under the Company Debenture are subordinate and junior in
right of payment to all Senior Indebtedness of the Company. At April 30, 1997,
the Company had outstanding Senior Indebtedness aggregating approximately $1.6
billion, which would have ranked senior to the Company's obligations under the
Guarantees and the Company Debenture. See "Risk Factors-- Ranking of Subordinate
Obligations Under the Guarantees and the Company Debenture". The term "Senior
Indebtedness" means any indebtedness of the Company for money borrowed, except
for trade credit and any such indebtedness that is by its terms subordinated to
or PARI PASSU with the Company Debenture, as the case may be.
Distributions on the Partnership Preferred Securities will be declared and
paid only as determined in the sole discretion of the Company in its capacity as
the General Partner of the Partnership. In addition, the General Partner is not
obligated to declare distributions on the Partnership Preferred Securities at
any time, including upon or following a Partnership Enforcement Event (as
defined herein). To the extent that the issuers (including, where applicable,
the Company, as guarantor) of the securities in which the Partnership invests
defer or fail to make any payments in respect of such securities (or, if
applicable, guarantees), the Partnership will not have sufficient funds to pay
and will not declare or pay distributions
S-2
<PAGE>
on the Partnership Preferred Securities. In addition, as described under "Risk
Factors--Insufficient Income or Assets Available to Partnership", the
Partnership may not have sufficient funds to pay current or liquidating
distributions on the Partnership Preferred Securities if (i) at any time that
the Partnership is receiving current payments in respect of the securities held
by the Partnership (including the Debentures), the General Partner, in its sole
discretion, does not declare distributions on the Partnership Preferred
Securities and the Partnership receives insufficient amounts to pay the
additional compounded distributions that will accumulate in respect of the
Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds
received in respect of the Debentures upon their retirement or at their
maturities in Affiliate Investment Instruments (as defined herein) and Eligible
Debt Securities that do not generate income in an amount that is sufficient to
pay full distributions in respect of the Partnership Preferred Securities or
(iii) the Partnership invests in equity or debt securities of Investment
Affiliates that are not guaranteed by the Company and that cannot be liquidated
by the Partnership for an amount sufficient to pay such distributions in full.
The Debentures will provide that payments of interest may be deferred at any
time, and from time to time, by the relevant issuer for a period not exceeding
six consecutive quarters. If an issuer were to so defer the payment of interest,
interest would continue to accrue and compound at the stated interest rate on
such Debenture. If the Partnership does not declare and pay distributions on the
Partnership Preferred Securities out of funds legally available for
distribution, the Trust will not have sufficient funds to make distributions on
the Trust Preferred Securities, in which event the Trust Guarantee will not
apply to such distributions until the Trust has sufficient funds available
therefor. See "Risk Factors--Distributions Payable Only if Declared by General
Partner; Restrictions on Certain Payments; Tax Consequences", "--Insufficient
Income or Assets Available to Partnership", "Description of the Trust Preferred
Securities--Distributions" and "Description of the Partnership Preferred
Securities-- Distributions".
The Partnership may, from time to time and subject to the restrictions
described herein, reinvest payments received with respect to the Affiliate
Investment Instruments (including the Debentures) and the Eligible Debt
Securities, in additional Affiliate Investment Instruments and Eligible Debt
Securities. As of the date of this Prospectus Supplement, the Company, as the
General Partner, does not intend to cause the Partnership to reinvest regularly
scheduled periodic payments of interest or dividends received by the
Partnership, although there can be no assurance that the General Partner's
intention in respect of such reinvestments will not change in the future.
If (a) for any distribution period, full distributions on a cumulative basis
on any Trust Preferred Securities have not been paid, (b) an Investment Event of
Default by any Investment Affiliate in respect of any Affiliate Investment
Instrument has occurred and is continuing or (c) the Company is in default of
its obligations under any Guarantee, then during such period (i) the Company
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 or comparable equity interest (except for (x) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, its capital stock, and conversions or exchanges of common
stock of one class into common stock of another class and (y) redemptions or
purchases of any rights pursuant to the Rights Agreement dated as of June 25,
1992, as amended, between the Company and Registrar and Transfer Company, or any
successor to such Rights Agreement (the "Rights Agreement") and the issuance of
common stock pursuant to such rights) and (ii) the Company shall not make,
permit any Finance Subsidiary to make, or make any payments that would enable
any Finance Subsidiary to make, any payment of any dividends on, any
distribution with respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any preferred security or
comparable equity interest of any Finance Subsidiary. "Finance Subsidiary" means
any wholly-owned subsidiary of the Company the principal purpose of which is to
raise capital for the Company by issuing securities that are guaranteed by the
Company and the proceeds of which are loaned to or invested in the Company or
one or more of its affiliates.
S-3
<PAGE>
The Partnership Preferred Securities are redeemable by the Partnership, in
whole or in part, from time to time, on or after June 30, 2002 at an amount per
Partnership Preferred Security equal to $25 plus accumulated and unpaid
distributions thereon to the date fixed for redemption. The Partnership
Preferred Securities may also be redeemed, in whole but not in part, at any time
upon the occurrence of a Partnership Special Event (as defined herein). If the
Partnership redeems the Partnership Preferred Securities, the Trust must redeem
Trust Securities on a PRO RATA basis having an aggregate liquidation amount
equal to the aggregate liquidation preference of the Partnership Preferred
Securities so redeemed at a redemption price of $25 per Partnership Preferred
Security plus all accumulated and unpaid distributions thereon to the date fixed
for redemption (the "Redemption Price"). See "Description of the Trust Preferred
Securities--Mandatory Redemption". Neither the Partnership Preferred Securities
nor the Trust Preferred Securities have any scheduled maturity or are redeemable
at any time at the option of the holders thereof.
The Trust will be dissolved upon the occurrence of a Trust Special Event (as
defined herein). Upon dissolution of the Trust, the Partnership Preferred
Securities will be distributed to the holders of the Trust Securities, on a PRO
RATA basis, in lieu of any cash distribution, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described herein. If the
Partnership Preferred Securities are distributed to the holders of the Trust
Securities, the Company will use its best efforts to cause the Partnership
Preferred Securities to be listed on the New York Stock Exchange or such other
national securities exchange or similar organization as the Trust Preferred
Securities are then listed or quoted. See "Description of the Trust Preferred
Securities--Trust Special Event Redemption or Distribution" and "Description of
the Partnership Preferred Securities".
In the event of any liquidation, dissolution, winding up or termination of
the Trust, the holders of the Trust Preferred Securities will be entitled to
receive for each Trust Preferred Security a liquidation amount of $25 plus
accumulated and unpaid distributions thereon, except to the extent, in
connection with such dissolution, Partnership Preferred Securities are
distributed to the holders of the Trust Preferred Securities. Upon (i) the
occurrence of an Investment Event of Default by an Investment Affiliate in
respect of any Affiliate Investment Instrument or (ii) default by the Company on
any of its obligations under any Guarantee, the holders of the Trust Preferred
Securities will have a preference over the holders of the Trust Common
Securities with respect to payments upon liquidation of the Trust. Under no
circumstances will the investment instruments held by the Partnership be
distributed in kind to the holders of the Trust Preferred Securities or
Partnership Preferred Securities. See "Description of the Trust Preferred
Securities--Liquidation Distribution Upon Dissolution".
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Trust Preferred
Securities. Such transactions may include stabilizing, the purchase of Trust
Preferred Securities to cover syndicate short positions and the imposition of
penalty bids. For a description of these activities, see "Underwriting".
S-4
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. CERTAIN TERMS USED IN
THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT. SEE "INDEX OF
DEFINED TERMS" FOR A CROSS REFERENCE TO THE LOCATION IN THIS PROSPECTUS
SUPPLEMENT WHERE SUCH TERMS ARE DEFINED.
<TABLE>
<S> <C>
The Trust..................... UDS Capital I, a Delaware statutory business trust. The sole
assets of the Trust will be the Partnership Preferred
Securities.
The Partnership............... UDS Funding I, L.P., a Delaware limited partnership. The
assets of the Partnership will initially consist of
Debentures and certain Eligible Debt Securities.
Securities Offered............ 6,000,000 of % Trust Preferred Securities.
Distributions................. Distributions on the Trust Preferred Securities will
accumulate from the date of original issuance of the Trust
Preferred Securities and will be payable at the annual rate
of % of the liquidation amount of $25.00 per Trust Preferred
Security (or $ for each $25.00 Trust Preferred
Security) if, as and when the Trust has funds available for
payment. Distributions will be payable quarterly in arrears
on each March 31, June 30, September 30 and December 31,
commencing June 30, 1997. Distributions not made on the
scheduled payment date will accumulate and compound
quarterly at a rate per annum equal to %.
The ability of the Trust to pay distributions on the Trust
Preferred Securities is entirely dependent on its receipt of
corresponding distributions with respect to the Partnership
Preferred Securities. The ability of the Partnership to pay
distributions on the Partnership Preferred Securities is, in
turn, dependent on its receipt of payments with respect to
the Debentures and the Eligible Debt Securities held by the
Partnership. The Debentures will provide that payments of
interest may be deferred at any time, and from time to time,
by the relevant issuer for a period not exceeding six
consecutive quarters. Distributions on the Partnership
Preferred Securities will be declared and paid only as
determined in the sole discretion of the Company in its
capacity as the General Partner of the Partnership. See
"Risk Factors--Distributions Payable Only if Declared by
General Partner; Restrictions on Certain Payments; Tax
Consequences," "Description of the Trust Preferred
Securities--Distributions" and "Description of the
Partnership Preferred Securities--Distributions" and "--
Partnership Investments".
Rights Upon Non-Payment of
Distributions and Certain
Defaults; Covenants of the
Company..................... If, at any time, (i) arrearages on distributions on the
Trust Preferred Securities shall exist for six consecutive
quarterly distribution periods, (ii) an Investment Event of
Default occurs and is continuing on any Affiliate Investment
Instrument or (iii) the Company is in default on any of its
obligations under the Trust Guarantee or the Partnership
Guarantee, then (a) the Property Trustee, as the holder
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
of the Partnership Preferred Securities, will have the right
to enforce the terms of the Partnership Preferred
Securities, including the right to direct the Special
Representative (as defined herein) to enforce (1) the
Partnership's creditors' rights and other rights with
respect to the Affiliate Investment Instruments and the
Investment Guarantees and (2) the rights of the holders of
the Partnership Preferred Securities to receive
distributions (only if, as and when declared) on the
Partnership Preferred Securities, and (b) the Trust
Guarantee Trustee or the Special Representative, as the
holders of the Trust Guarantee and the Partnership
Guarantee, respectively, shall have the right to enforce
such Guarantees, including the right to enforce the covenant
restricting certain payments by the Company and Finance
Subsidiaries described below.
Under no circumstances, however, shall the Special
Representative have authority to cause the General Partner
to declare distributions on the Partnership Preferred
Securities. If the Partnership does not declare and pay
distributions on the Partnership Preferred Securities out of
funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust
Preferred Securities. See "Risk Factors--Insufficient Income
or Assets Available to Partnership", "Description of the
Trust Preferred Securities--Trust Enforcement Events" and
"Description of the Partnership Preferred
Securities--Partnership Enforcement Events".
The Company has agreed that if (a) for any distribution
period, full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid, (b) an
Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred
and is continuing or (c) the Company is in default of its
obligations under the Trust Guarantee, the Partnership
Guarantee or any Investment Guarantee, then, during such
period (i) the Company 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 or comparable equity interest
(except for (x) dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase
shares of, its capital stock and conversions or exchanges of
common stock of one class into common stock of another class
and (y) redemptions or purchases of any rights pursuant to
the Rights Agreement and the issuance of common stock
pursuant to such rights) and (ii) the Company shall not
make, permit any Finance Subsidiary to make, nor make any
payments that would enable any Finance Subsidiary to make,
any payment of any dividends on, any distribution with
respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any
preferred security or comparable equity interest of any
Finance Subsidiary.
Liquidation Amount............ In the event of any liquidation of the Trust, holders will
be entitled to receive $25.00 per Trust Preferred Security
plus an amount equal to any accumulated and unpaid
distributions thereon to the date of
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
payment (such amount being the "Trust Liquidation
Distribution"), unless Partnership Preferred Securities are
distributed to such holders in connection with a Trust
Special Event. If upon a liquidation of the Trust (in which
the Partnership Preferred Securities are not distributed to
holders of the Trust Securities), the Trust Liquidation
Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate
Trust Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Preferred Securities
shall be paid on a PRO RATA basis. The holders of the Trust
Common Securities will be entitled to receive distributions
upon any such liquidation pro rata with the holders of the
Trust Preferred Securities, except that upon (i) the
occurrence of an Investment Event of Default by an
Investment Affiliate (including the Company) in respect of
any Affiliate Investment Instrument or (ii) default by the
Company on any of its obligations under any Guarantee, the
holders of the Trust Preferred Securities will have a
preference over the holders of the Trust Common Securities
with respect to payments upon liquidation of the Trust. See
"Description of the Trust Preferred Securities-- Liquidation
Distribution Upon Dissolution".
Optional Redemption........... The Partnership Preferred Securities will be redeemable for
cash, at the option of the Partnership, in whole or in part,
from time to time, after June 30, 2002 at an amount per
Partnership Preferred Security equal to $25.00 plus
accumulated and unpaid distributions thereon. Upon any
redemption of the Partnership Preferred Securities, the
Trust Preferred Securities will be redeemed, in whole or in
part, as applicable, at the Redemption Price. See
"Description of the Partnership Preferred
Securities--Optional Redemption" and "Description of the
Trust Preferred Securities--Mandatory Redemption". Neither
the Partnership Preferred Securities nor the Trust Preferred
Securities have any scheduled maturity or are redeemable at
any time at the option of the holders thereof.
Guarantees.................... The Company will irrevocably guarantee, on a subordinated
basis, the payment in full of (i) any accumulated and unpaid
distributions on the Trust Preferred Securities to the
extent of funds of the Trust legally available therefor,
(ii) the amount payable upon redemption of the Trust
Preferred Securities to the extent of funds of the Trust
legally available therefor and (iii) generally, the
liquidation amount of the Trust Preferred Securities to the
extent of the assets of the Trust legally available for
distribution to holders of Trust Preferred Securities. See
"Description of the Trust Guarantee".
The Company will also irrevocably guarantee, on a
subordinated basis and to the extent set forth herein, the
payment in full of (i) any accumulated and unpaid
distributions on the Partnership Preferred Securities if, as
and when declared out of funds legally available therefor,
(ii) the amount payable upon redemption of the Partnership
Preferred Securities to the extent of funds of the
Partnership legally available therefor and (iii) generally,
the liquidation preference of the Partnership Preferred
Securities to the extent of the assets of the
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
Partnership legally available for distribution to holders of
Partnership Preferred Securities. See "Description of the
Partnership Guarantee".
The Company will fully and unconditionally guarantee, on a
subordinated basis, payments in respect of the Debentures
(other than the Company Debenture) for the benefit of the
holders of the Partnership Preferred Securities, to the
extent described under "Description of the Partnership
Preferred Securities--Investment Guarantees". The
Guarantees, when taken together with the Company Debenture
and the Company's obligations to pay all fees and expenses
of the Trust and the Partnership, constitute a guarantee to
the extent set forth herein by the Company of the
distribution, redemption and liquidation amounts payable to
the holders of the Trust Preferred Securities. The
Guarantees do not apply, however, to current distributions
by the Partnership unless and until such distributions are
declared by the Partnership out of funds legally available
for payment or to liquidating distributions unless there are
assets available for payment in the Partnership, each as
more fully described under "Risk Factors--Insufficient
Income or Assets Available to Partnership". The Company's
obligations under the Guarantees are subordinate and junior
in right of payment to all other liabilities of the Company
and rank PARI PASSU with the most senior preferred stock
issued from time to time by the Company and with any
guarantee now or hereafter entered into by the Company in
respect of any preferred stock of any Finance Subsidiary.
Voting Rights................. Generally, holders of the Trust Preferred Securities will
not have any voting rights. The holders of a majority in
liquidation amount of the Trust Preferred Securities,
however, have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the
Property Trustee, or direct the exercise of any trust or
power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property
Trustee, as holder of the Partnership Preferred Securities,
(i) to exercise its rights in the manner described above
under "Rights Upon Non-Payment of Distributions and Certain
Defaults; Covenants of the Company" and (ii) to consent to
any amendment, modification or termination of the Limited
Partnership Agreement or the Partnership Preferred
Securities where such consent shall be required. See
"Description of the Trust Preferred Securities--Voting
Rights".
Special Event Redemptions or
Distributions............... Upon the occurrence of a Trust Tax Event (which event will
generally be triggered upon the occurrence of certain
adverse tax consequences or the denial of an interest
deduction on the Debentures held by the Partnership) or a
Trust Investment Company Event (which event will generally
be triggered if the Trust is considered an "investment
company" under the Investment Company Act of 1940, as
amended (the "1940 Act")), except in certain limited
circumstances, the Regular Trustees (as defined herein) will
have the right to liquidate the Trust and cause
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
Partnership Preferred Securities to be distributed to the
holders of the Trust Preferred Securities. In certain
circumstances involving a Partnership Tax Event (which event
will generally be triggered upon the occurrence of certain
adverse tax consequences or the denial of an interest
deduction on the Debentures held by the Partnership) or a
Partnership Investment Company Event (which event will
generally be triggered if the Partnership is considered an
"investment company" under the 1940 Act), the Partnership
will have the right to redeem the Partnership Preferred
Securities, in whole (but not in part), at $25.00 per
Partnership Preferred Security plus accumulated and unpaid
distributions thereon, regardless of the occurrence of any
Trust Tax Event or Trust Investment Company Event and in
lieu of any distribution of the Partnership Preferred
Securities required in connection therewith, in which event
the Trust Securities will be redeemed at the Redemption
Price. See "Description of the Trust Preferred
Securities--Trust Special Event Redemption or Distribution"
and "Description of the Partnership Preferred
Securities--Partnership Special Event Redemption".
Form of Trust Preferred
Securities.................. The Trust Preferred Securities will be represented by a
global certificate or certificates registered in the name of
Cede & Co., as nominee for DTC. Beneficial interests in the
Trust Preferred Securities will be evidenced by, and
transfers thereof will be effected only through, records
maintained by the participants in DTC. Except as described
herein, Trust Preferred Securities in certificated form will
not be issued in exchange for the global certificate or
certificates. See "Description of the Trust Preferred
Securities--Book-Entry Only Issuance--The Depository Trust
Company".
Use of Proceeds............... All of the proceeds from the sale of the Trust Securities
will be invested by the Trust in the Partnership Preferred
Securities. The Partnership will use the funds to make
investments in Debentures and certain Eligible Debt
Securities. See "Use of Proceeds".
</TABLE>
S-9
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED SECURITIES SHOULD CONSIDER
CAREFULLY THE RISK FACTORS SET FORTH BELOW, AS WELL AS ALL OTHER INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS, IN EVALUATING AN INVESTMENT IN THE TRUST PREFERRED
SECURITIES.
DISTRIBUTIONS PAYABLE ONLY IF DECLARED BY GENERAL PARTNER; RESTRICTIONS ON
CERTAIN PAYMENTS; TAX CONSEQUENCES
Distributions on the Partnership Preferred Securities will be payable only
if, as and when declared by the General Partner in its sole discretion. The
Company is the sole General Partner of the Partnership, and the Debentures will
constitute obligations of the Company and its affiliates. If interest payments
on the Debentures are deferred as permitted thereby, or if such interest
payments are not paid to the Partnership according to their terms (and guarantee
payments on the Investment Guarantees are not made by the Company), the
Partnership will generally lack funds to pay distributions on the Partnership
Preferred Securities. If the Partnership does not make current distributions on
the Partnership Preferred Securities, either because the General Partner does
not declare distributions to be made or because the Partnership lacks sufficient
funds, the Trust will not have funds available to make current distributions on
the Trust Preferred Securities. As described under "Description of the Trust
Guarantee--Covenants of the Company", in certain circumstances, the Company will
be restricted from, among other things, paying any dividends on its Common
Stock.
Should the Partnership fail to pay current distributions on the Partnership
Preferred Securities, each holder of Trust Preferred Securities will generally
be required to accrue income, for United States federal income tax purposes, in
respect of the cumulative deferred distributions (including interest thereon)
allocable to its proportionate share of the Partnership Preferred Securities. As
a result, each holder of Trust Preferred Securities will recognize income for
United States federal income tax purposes in advance of the receipt of cash and
will not receive the cash from the Trust related to such income if such holder
disposes of its Trust Preferred Securities prior to the record date for the date
on which distributions of such amounts are made by the Trust. See "Certain
Federal Income Tax Considerations".
INSUFFICIENT INCOME OR ASSETS AVAILABLE TO PARTNERSHIP
The Trust Preferred Securities are subject to the risk of a current or
liquidating distribution rate mismatch between the rate paid on the Trust
Preferred Securities and the rate paid on the securities held by the
Partnership, including the Debentures and any additional securities acquired by
the Partnership in the future. Such mismatch could occur if (i) at any time that
the Partnership is receiving current payments in respect of the securities held
by the Partnership (including the Debentures), the General Partner, in its sole
discretion, does not declare distributions on the Partnership Preferred
Securities and the Partnership receives insufficient amounts to pay the
additional compounded distributions that will accumulate in respect of the
Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds
received in respect of the Debentures upon their retirement or at their
maturities in Affiliate Investment Instruments or Eligible Debt Securities that
do not generate income in an amount that is sufficient to pay full distributions
in respect of the Partnership Preferred Securities at a rate of % per annum or
(iii) the Partnership invests in equity or debt securities of Investment
Affiliates that are not guaranteed by the Company and that cannot be liquidated
by the Partnership for an amount sufficient to pay such distributions in full.
If the reinvestments in the securities of the Investment Affiliates contemplated
by the General Partner do not meet the eligibility criteria for Affiliate
Investment Instruments described under "Description of the Partnership Preferred
Securities--Partnership Investments," the Partnership shall invest funds
available for reinvestment in Eligible Debt Securities. To the extent that the
Partnership lacks sufficient funds to make current or liquidating distributions
on the Partnership Preferred Securities in full,
S-10
<PAGE>
the Trust will not have sufficient funds available to pay full current or
liquidating distributions on the Trust Preferred Securities.
DEPENDENCE ON AFFILIATE INVESTMENT INSTRUMENTS
Approximately 99% of the proceeds from the issuance of the Partnership
Preferred Securities and the General Partner's capital contribution will be
invested in Debentures, which consist of debt instruments of the Company and two
or more eligible controlled affiliates. See "Description of the Partnership
Preferred Securities--Partnership Investments".
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal 1998 budget proposal submitted to
Congress, the Clinton Administration proposed certain changes to federal income
tax law which would, among other things, deny an issuer an interest deduction,
for federal income tax purposes, on certain instruments that are "issued on or
after the date of first Congressional Committee action" (the "Clinton
Proposal"). On June 9, 1997, House Ways and Means Committee Chairman Bill Archer
released the Chairman's Mark Relating to Revenue Reconciliation Provisions that
are proposed to be included in 1997 tax legislation (the "Chairman's Mark"). The
Chairman's Mark constitutes "first Congressional Committee action" with respect
to the provisions contained therein. The Chairman's Mark does not include any
provision that would deny an issuer an interest deduction, for federal income
tax purposes, on instruments with terms similar to the Debentures.
There can be no assurance, however, that the Clinton Proposal or other
legislation that affects the Debentures will not ultimately be enacted into law.
Although it is currently anticipated that any modifications or additions to the
Chairman's Mark would have an effective date after the date hereof, as well as
transitional rules, no assurance can be given that the effective date and
transitional rules relating thereto would be enacted as anticipated, or that
other developments will not occur after the date hereof that would adversely
affect the tax treatment of the Debentures, or whether such tax treatment would
cause a Partnership Tax Event that may result in the redemption of the
Partnership Preferred Securities and, consequently, the Trust Preferred
Securities.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Trust Special Event or a Partnership Special Event
(each of which will generally be triggered either upon (i) the occurrence of
certain adverse tax consequences to the Trust or the Partnership, as the case
may be, or the denial of an interest deduction by the related Investment
Affiliate on the Debentures held by the Partnership or (ii) the Trust or
Partnership being considered an "investment company" under the 1940 Act) (each,
a "Special Event"), the Trust will be dissolved with the result that, except in
the limited circumstances described below, the Partnership Preferred Securities
would be distributed to the holders of the Trust Securities in connection with
the liquidation of the Trust. In certain circumstances, the Partnership shall
have the right to redeem the Partnership Preferred Securities, in whole (but not
in part), in lieu of a distribution of the Partnership Preferred Securities by
the Trust, in which event the Trust will redeem the Trust Preferred Securities
for cash. See "Description of the Trust Preferred Securities--Trust Special
Event Redemption or Distribution" and "Description of the Partnership Preferred
Securities--Partnership Special Event Redemption".
Unless the liquidation of the Trust occurs as a result of the Trust being
subject to United States federal income tax with respect to income on the
Partnership Preferred Securities, a distribution of the Partnership Preferred
Securities upon the dissolution of the Trust would not be a taxable event to
holders of the Trust Preferred Securities. If, however, the liquidation of the
Trust were to occur because the Trust is subject to United States federal income
tax with respect to income accrued or received on the Partnership Preferred
Securities, the distribution of Partnership Preferred Securities to holders by
the Trust would likely be a
S-11
<PAGE>
taxable event to each such holder, and a holder would recognize gain or loss as
if the holder had exchanged its Trust Preferred Securities for the Partnership
Preferred Securities it received upon the liquidation of the Trust. Similarly,
the holders of the Trust Preferred Securities would recognize gain or loss if
the Trust dissolves upon an occurrence of a Partnership Special Event and the
holders of Trust Preferred Securities receive cash in exchange for their Trust
Preferred Securities. See "Certain Federal Income Tax Considerations--Redemption
of Trust Preferred Securities for Cash".
There can be no assurance as to the market prices for the Partnership
Preferred Securities that may be distributed in exchange for Trust Preferred
Securities if a dissolution or liquidation of the Trust were to occur.
Accordingly, the Partnership Preferred Securities that a holder of Trust
Preferred Securities may receive upon dissolution and liquidation of the Trust
may trade at a discount to the price that the investor paid to purchase the
Trust Preferred Securities offered hereby. Because holders of Trust Preferred
Securities may receive Partnership Preferred Securities upon the occurrence of a
Special Event, prospective purchasers of Trust Preferred Securities also are
making an investment decision with regard to the Partnership Preferred
Securities and should carefully review all the information regarding the
Partnership Preferred Securities contained herein. See "Description of the
Partnership Preferred Securities--Partnership Special Event Redemption" and
"--General".
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEES AND THE COMPANY
DEBENTURE
The Company's obligations under the Trust Guarantee, the Partnership
Guarantee and the Investment Guarantees are subordinate and junior in right of
payment to all liabilities of the Company and will rank PARI PASSU with the most
senior preferred stock, if any, issued from time to time by the Company and with
any guarantee now or hereafter entered into by the Company in respect of any
preferred stock of any Finance Subsidiary, and the Company's obligations under
the Company Debenture are subordinate and junior in right of payment to all
Senior Indebtedness. At April 30, 1997, the Company had outstanding Senior
Indebtedness aggregating approximately $1.6 billion which would have ranked
senior to the Company's obligations under the Guarantees and the Company
Debenture. There are no terms in the Trust Preferred Securities, the Partnership
Preferred Securities, the Guarantees or the Debentures that limit the Company's
ability to incur additional indebtedness, including indebtedness that ranks
senior to the Guarantees. See "Description of the Partnership Preferred
Securities--Partnership Investments" and "--Investment Guarantees", "Description
of the Trust Guarantee" and "Description of the Partnership Guarantee".
ENFORCEMENT OF CERTAIN RIGHTS BY OR ON BEHALF OF HOLDERS OF TRUST PREFERRED
SECURITIES
If a Trust Enforcement Event occurs and is continuing, then (a) the holders
of Trust Preferred Securities would rely on the enforcement by the Property
Trustee of its rights, as a holder of the Partnership Preferred Securities,
against the Company, including the right to direct the Special Representative to
enforce (i) the Partnership's creditors' rights and other rights with respect to
the Affiliate Investment Instruments and the Investment Guarantees, (ii) the
rights of the holders of the Partnership Preferred Securities under the
Partnership Guarantee, and (iii) the rights of the holders of the Partnership
Preferred Securities to receive distributions (only if and to the extent
declared out of funds legally available therefor) on the Partnership Preferred
Securities, and (b) the Trust Guarantee Trustee shall have the right to enforce
the terms of the Trust Guarantee, including the right to enforce the covenant
restricting certain payments by the Company and Finance Subsidiaries. Under no
circumstances, however, shall the Special Representative have authority to cause
the General Partner to declare distributions on the Partnership Preferred
Securities. As a result, although the Special Representative may be able to
enforce the Partnership's creditors' rights to accelerate and receive payments
in respect of the Affiliate Investment Instruments and the Investment
Guarantees, the Partnership would be entitled to reinvest such payments in
additional Affiliate Investment Instruments, subject to satisfying the
reinvestment criteria described under "Description of the Partnership Preferred
Securities--Partnership Investments", and the Eligible
S-12
<PAGE>
Debt Securities, rather than declaring and making distributions on the
Partnership Preferred Securities. See "Description of the Trust Preferred
Securities--Trust Enforcement Events".
LIMITED VOTING RIGHTS
Holders of the Trust Preferred Securities will have limited voting rights
and will not be entitled to vote to appoint, remove or replace, or to increase
or decrease the number of, Trustees, which voting rights are vested exclusively
in the holder of the Trust Common Securities. See "Description of the Trust
Preferred Securities--Voting Rights".
TRADING CHARACTERISTICS OF TRUST PREFERRED SECURITIES
The price at which the Trust Preferred Securities may trade may not fully
reflect the value of the accumulated but unpaid distributions on the Trust
Preferred Securities (which will equal the accumulated but unpaid distributions
on the Partnership Preferred Securities). In addition, as a result of the right
of the General Partner not to declare current distributions on the Partnership
Preferred Securities, the market price of the Trust Preferred Securities (which
represent undivided beneficial ownership interests in the Partnership Preferred
Securities) may be more volatile than other similar securities where there is no
such right to defer current distributions. A holder who disposes of its Trust
Preferred Securities will be required to include in income as ordinary income
for United States federal income tax purposes accumulated but unpaid
distributions on the Partnership Preferred Securities through the date of
disposition, and to add such amount to its adjusted tax basis in its pro rata
share of the Partnership Preferred Securities deemed disposed of. To the extent
the selling price is less than the holder's adjusted tax basis (which will
include all accumulated but unpaid distributions), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "Certain Federal Income Tax Considerations".
NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities constitute a new issue of securities with no
established trading market. Application has been made to list the Trust
Preferred Securities on the New York Stock Exchange. There can be no assurance
that an active market for the Trust Preferred Securities will develop or be
sustained in the future on the New York Stock Exchange. Although the
Underwriters have indicated to the Company that they intend to make a market in
the Trust Preferred Securities, as permitted by applicable laws and regulations,
they are not obligated to do so and may discontinue any such market-making at
any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Trust Preferred Securities.
The Trust Preferred Securities will only be sold to those investors for whom
such Trust Preferred Securities are considered suitable in light of their
particular circumstances.
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. ("Diamond Shamrock"),
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
S-13
<PAGE>
merchandise in the Southwest United States under the Diamond
Shamrock-Registered Trademark-, Beacon-Registered Trademark- and
Ultramar-Registered Trademark- 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. 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, Texas 78230 and its telephone number is (210) 641-6800.
USE OF PROCEEDS
The proceeds to be received by the Trust from the sale of the Trust
Preferred Securities and the Trust Common Securities will be used by the Trust
to purchase Partnership Preferred Securities, and will be applied by the
Partnership to invest in Debentures and Eligible Debt Securities. See
"Description of the Partnership Preferred Securities--Partnership Investments".
The Company and the subsidiaries of the Company which are the issuers of the
Debentures will use the proceeds from the sale of such Debentures to the
Partnership for general corporate purposes, including capital expenditures,
repayment or repurchases of outstanding 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.
S-14
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of UDS as of April 30,
1997 and is adjusted to reflect the issuance and sale of the Trust Preferred
Securities offered hereby and the application of the proceeds therefrom as
described in "Use of Proceeds". The table is unaudited and should be read in
conjunction with UDS's Report on Form 10-K for the year ended December 31, 1996
(the "UDS 10-K") and Report on Form 10-Q for the Quarter ended March 31, 1997
(the "UDS 10-Q") each of which is incorporated by reference herein. See
"Documents Incorporated by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
----------- -----------
<S> <C> <C>
APRIL 30, 1997
------------------------
(DOLLARS IN MILLIONS)
LONG TERM DEBT (INCLUDING CURRENT PORTION)
8.75% Debentures....................................................................... $ 75.0 $ 75.0
8.625% Note............................................................................ 275.0 275.0
8.25% Note............................................................................. 175.0 175.0
8.00% Debentures....................................................................... 100.0 100.0
7.65% Debentures....................................................................... 100.0 100.0
7.25% Debentures....................................................................... 25.0 25.0
Medium-Term Notes...................................................................... 295.0 295.0
Senior Notes........................................................................... 60.0 60.0
Other.................................................................................. 93.2 93.2
Working Capital Debt (a)............................................................... 407.3 257.3
----------- -----------
Total Long-Term Debt................................................................. $ 1,605.5 $ 1,455.5
Company Obligated Preferred Stock of Subsidiaries (b).................................. -- 150.0
STOCKHOLDERS' EQUITY
Preferred Stock........................................................................ $ 0.0 $ 0.0
Common Stock........................................................................... 0.7 0.7
Paid-in Capital........................................................................ 1,138.4 1,138.4
ESOP Stock & Stock Held in Treasury.................................................... (32.2) (32.2)
Retained Earnings...................................................................... 214.7 214.7
Foreign Currency Translation Adjustment................................................ (66.7) (66.7)
----------- -----------
Total Stockholders' Equity............................................................. $ 1,254.9 $ 1,254.9
----------- -----------
----------- -----------
</TABLE>
- ------------------------
(a) Working Capital Debt includes outstanding commercial paper and borrowing
under uncommitted credit facilities that the Company has classified as Long
Term Debt based upon the intent and ability of UDS to refinance such
indebtedness on a long term basis by drawing on its existing revolving
credit facilities.
(b) As described herein, the assets of the Trust will be comprised of the
Partnership Preferred Securities issued by the Partnership, and the assets
of the Partnership will initially be comprised of the Debentures and the
Eligible Debt Securities. Except to the extent described under "Risk
Factors--Insufficient Income or Assets Available to Partnership," the
Guarantees, when taken together with the Company Debenture and the Company's
obligations to pay all fees and expenses of the Trust and the Partnership,
constitute a guarantee by the Company of the distribution, redemption and
liquidation payments payable to the holders of the Trust Preferred
Securities.
S-15
<PAGE>
TOTAL ACQUISITION AND PRO FORMA FINANCIAL DATA
On April 15, 1997, UDS entered into a definitive Arrangement Agreement (the
"Arrangement") to acquire Total Petroleum (North America) Ltd. ("Total"), a
Denver, Colorado based petroleum refining and marketing company. The Agreement
provides for the issuance of 0.322 shares of UDS Common Stock for each
outstanding share of Total Common Stock. UDS expects to issue approximately 13.0
million shares of UDS Common Stock and will assume approximately $490.0 million
of Total debt. The transaction is subject to the approval of Total shareholders,
completion of due diligence and customary approvals, including approval by the
Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976. The transaction is expected to be completed by the end of the third
quarter of 1997. Total has approximately 6,000 employees and operates refineries
in Ardmore, Oklahoma, Alma, Michigan, and Denver, Colorado. The three refineries
have a combined throughput capacity of approximately 150,000 barrels of crude
oil per day. Total distributes gasoline and merchandise through approximately
2,100 branded outlets concentrated around its refineries in the central United
States, of which approximately 560 are company-operated.
PRO FORMA FINANCIAL DATA REFLECTING TOTAL ACQUISITION
The following pro forma consolidated financial data, which was included in
the May 26, 1997 Management Proxy Circular (the "Proxy Circular") furnished by
Total to its shareholders in connection with the Special Meeting of Shareholders
called for the purpose of obtaining approval of the Arrangement, gives effect to
the Arrangement as if it occurred on March 31, 1997 or December 31, 1996, in the
case of the pro forma balance sheet data, and on January 1, 1996, in the case of
the pro forma income statement data.
The Arrangement will be accounted for by UDS using the purchase method of
accounting. In connection therewith, the purchase price will be allocated to the
assets and liabilities of Total as of the effective date of the acquisition, and
the results of operations of Total will be included in UDS's results of
operations thereafter. The purchase price has been allocated in the pro forma
entries based on Total management's estimates of the fair values of the assets
and liabilities of Total available as of the date of the Proxy Circular and, in
some instances, the effects of conforming Total accounting practices to those of
UDS. Following the consummation of the Arrangement, such allocation will be
reflected in the consolidated balance sheet of UDS in accordance with
information then available, which could be materially different from the
estimates reflected herein. Among other things, based on information available
to UDS as of the date of the Proxy Circular, UDS anticipated that the
application of its accounting practices would require that it establish certain
additional reserves (estimated at approximately $50 million on a pre-tax basis),
principally relating to future environmental costs for the acquired properties.
As additional information becomes available, adjustments to UDS's consolidated
financial statements may be necessary which could, among other things, result in
an increased allocation of costs to assets acquired in the Arrangement,
including goodwill.
The financial data should be read in conjunction with the historical
financial statements of Total including the notes thereto included in Total's
Report on Form 10-K for the year ended December 31, 1996 and Total's Report on
Form 10-Q for the Quarter ended March 31, 1997, each of which is on file with
the Securities and Exchange Commission and the historical financial statements
of UDS including the notes thereto included in the UDS 10-K and the UDS 10-Q
each of which is incorporated by reference herein. The pro forma financial data
is based on various assumptions and is not necessarily indicative of the results
that actually would have occurred had the Arrangement been consummated on the
dates indicated or that may occur in the future.
S-16
<PAGE>
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
UDS TOTAL PRO FORMA UDS PRO
HISTORICAL HISTORICAL ADJUSTMENTS FORMA
--------- --------- ------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents........................................ $ 99.4 $ 12.4 $ -- $ 111.8
Accounts and notes receivable.................................... 434.9 204.1 -- 639.0
Inventories...................................................... 543.4 178.3 17.0 738.7
Deferred income taxes............................................ 32.0 -- 19.1 51.1
Prepaid expenses and other current assets........................ 39.3 39.8 (19.3) 59.8
--------- --------- ------ ---------
Total current assets......................................... 1,149.0 434.6 16.8 1,600.4
Property, plant and equipment, net............................... 2,697.3 829.8 (11.7) 3,515.4
Other assets..................................................... 282.0 32.3 69.9 384.2
--------- --------- ------ ---------
$ 4,128.3 $ 1,296.7 $ 75.0 $ 5,500.0
--------- --------- ------ ---------
--------- --------- ------ ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable................................................. $ 397.2 $ 287.0 $ -- $ 684.2
Accrued liabilities.............................................. 287.7 28.1 47.0 362.8
Notes payable and current portion of long-term debt.............. 9.9 -- -- 9.9
Taxes other than income taxes.................................... 194.4 46.8 -- 241.2
Income taxes..................................................... 30.3 -- -- 30.3
--------- --------- ------ ---------
Total current liabilities.................................... 919.5 361.9 47.0 1,328.4
Long-term debt................................................... 1,579.8 486.1 -- 2,065.9
Deferred income taxes............................................ 80.3 11.1 (17.3) 74.1
Other............................................................ 304.7 68.4 18.5 391.6
--------- --------- ------ ---------
Total liabilities............................................ 2,884.3 927.5 48.2 3,860.0
--------- --------- ------ ---------
Stockholders' equity:
Common Stock................................................... 0.7 353.2 (353.1) 0.8
Additional paid-in capital..................................... 1,138.1 79.7 316.2 1,534.0
ESOP, treasury stock and other................................. (32.2) -- -- (32.2)
Foreign currency translation adjustments....................... (62.2) -- -- (62.2)
Retained earnings.............................................. 199.6 (63.7) 63.7 199.6
--------- --------- ------ ---------
Total stockholders' equity................................... 1,244.0 369.2 26.8 1,640.0
--------- --------- ------ ---------
$ 4,128.3 $ 1,296.7 $ 75.0 $ 5,500.0
--------- --------- ------ ---------
--------- --------- ------ ---------
</TABLE>
See accompanying Notes to Pro Forma Financial Data.
S-17
<PAGE>
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
UDS TOTAL PRO FORMA UDS
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
--------- --------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents........................................ $ 197.9 $ 13.0 $ -- $ 210.9
Accounts and notes receivable.................................... 503.1 188.3 -- 691.4
Inventories...................................................... 633.3 161.7 47.0 842.0
Deferred income taxes............................................ 30.0 -- 6.5 36.5
Prepaid expenses and other current assets........................ 35.0 38.4 (19.3) 54.1
--------- --------- ------ -----------
Total current assets......................................... 1,399.3 401.4 34.2 1,834.9
Property, plant and equipment, net............................... 2,730.8 835.2 (11.7) 3,554.3
Other assets..................................................... 289.9 31.7 37.8 359.4
--------- --------- ------ -----------
$ 4,420.0 $ 1,268.3 $ 60.3 $ 5,748.6
--------- --------- ------ -----------
--------- --------- ------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable................................................. $ 540.7 $ 282.9 $ -- $ 823.6
Accrued liabilities.............................................. 328.9 38.2 43.9 411.0
Notes payable and current portion of long-term debt.............. 3.2 -- -- 3.2
Taxes other than income taxes.................................... 191.3 49.7 -- 241.0
Income taxes..................................................... 32.1 -- -- 32.1
--------- --------- ------ -----------
Total current liabilities.................................... 1,096.2 370.8 43.9 1,510.9
Long-term debt................................................... 1,646.3 428.0 -- 2,074.3
Deferred income taxes............................................ 87.0 20.1 (15.9) 91.2
Other............................................................ 349.6 67.2 18.5 435.3
--------- --------- ------ -----------
Total liabilities............................................ 3,179.1 886.1 46.5 4,111.7
--------- --------- ------ -----------
Stockholders' equity:
Common Stock................................................... 0.7 353.1 (353.0) 0.8
Additional paid-in capital..................................... 1,137.0 79.7 316.2 1,532.9
ESOP, treasury stock and other................................. (32.2) -- -- (32.2)
Foreign currency translation adjustments....................... (58.3) -- -- (58.3)
Retained earnings.............................................. 193.7 (50.6) 50.6 193.7
--------- --------- ------ -----------
Total stockholders' equity................................... 1,240.9 382.2 13.8 1,636.9
--------- --------- ------ -----------
$ 4,420.0 $ 1,268.3 $ 60.3 $ 5,748.6
--------- --------- ------ -----------
--------- --------- ------ -----------
</TABLE>
See accompanying Notes to Pro Forma Financial Data.
S-18
<PAGE>
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
MARCH 31, 1997
(UNAUDITED, IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UDS TOTAL PRO FORMA UDS
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales and other revenues........................................ $ 2,550.2 $ 554.2 $ 165.1 $$3,269.5
---------- ----------- ----------- -----------
Operating costs and expenses:
Costs of products sold and operating.......................... -- 540.5 (540.5) --
Costs of products sold........................................ 1,649.7 -- 458.8 2,108.5
Operating expenses............................................ 210.2 -- 68.6 278.8
Selling, general and administrative expenses.................. 72.0 11.6 4.4 88.0
Taxes other than income taxes................................. 509.2 -- 170.7 679.9
Depreciation and amortization................................. 44.2 15.8 1.9 61.9
---------- ----------- ----------- -----------
Total operating costs and expenses.......................... 2,485.3 567.9 163.9 3,217.1
---------- ----------- ----------- -----------
Operating income................................................ 64.9 (13.7) 1.2 52.4
Interest income................................................. 2.4 -- -- 2.4
Interest expense................................................ (32.5) (7.1) -- (39.6)
Gain on sale of assets.......................................... 11.0 -- -- 11.0
---------- ----------- ----------- -----------
Income (loss) before income taxes............................... 45.8 (20.8) 1.2 26.2
Income tax (benefit) expense.................................... 18.2 (8.9) 0.5 9.8
---------- ----------- ----------- -----------
Net (loss) income............................................... 27.6 (11.9) 0.7 16.4
Dividend requirement on preferred stock......................... 1.1 -- -- 1.1
---------- ----------- ----------- -----------
Net income (loss) applicable to common shares................... $ 26.5 $ (11.9) $ 0.7 $ 15.3
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Earnings (loss) per share
Income (loss) per common share:
Primary:
Net income (loss)........................................... $ 0.35 $ (0.30) $ 0.17
Fully diluted:
Net income (loss)........................................... $ 0.35 $ (0.30) $ 0.17
Weighted average number of shares used in computation (IN
THOUSANDS)
Primary....................................................... 75,561 39,114 88,156
Fully diluted................................................. 79,049 39,114 91,644
</TABLE>
See accompanying Notes to Pro Forma Financial Data.
S-19
<PAGE>
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
DECEMBER 31, 1996
(UNAUDITED, IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UDS TOTAL PRO FORMA UDS
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Sales and other revenues....................................... $ 10,208.4 $ 2,614.3 $ 719.1 $ 13,541.8
---------- --------- ----------- ----------
Operating costs and expenses:
Costs of products sold and operating......................... -- 2,486.8 (2,486.8) --
Costs of products sold....................................... 6,550.0 -- 2,143.0 8,693.0
Operating expenses........................................... 928.1 -- 290.8 1,218.9
Selling, general and administrative expenses................. 302.0 52.3 17.2 371.5
Taxes other than income taxes................................ 2,101.1 -- 738.1 2,839.2
Depreciation and amortization................................ 179.9 60.8 6.2 246.9
Merger and integration costs................................. 77.4 -- -- 77.4
---------- --------- ----------- ----------
Total operating costs and expenses......................... 10,138.5 2,599.9 708.6 13,447.0
---------- --------- ----------- ----------
Operating income............................................... 69.9 14.4 10.5 94.8
Interest income................................................ 18.4 18.4
Interest expense............................................... (128.5) (26.6) -- (155.1)
---------- --------- ----------- ----------
Income (loss) before income taxes.............................. (40.2) (12.2) 10.5 (41.9)
Income tax (benefit) expense................................... (4.3) (6.8) 4.0 (7.1)
---------- --------- ----------- ----------
Net (loss) income.............................................. (35.9) (5.4) 6.5 (34.8)
Dividend requirement on preferred stock........................ 4.3 -- -- 4.3
---------- --------- ----------- ----------
Net income (loss) applicable to common shares.................. $ (40.2) $ (5.4) $ 6.5 $ (39.1)
---------- --------- ----------- ----------
---------- --------- ----------- ----------
Earnings (loss) per share
Income (loss) per common share:
Primary:
Net income (loss).......................................... $ (0.54) $ (0.14) $ (0.45)
Fully diluted:
Net income (loss).......................................... $ (0.54) $ (0.14) $ (0.45)
Weighted average number of shares used in computation (IN
THOUSANDS)
Primary........................................................ 74,427 38,913 86,957
Fully diluted.................................................. 74,427 38,913 86,957
</TABLE>
See accompanying Notes to Pro Forma Financial Data.
S-20
<PAGE>
NOTES TO PRO FORMA FINANCIAL DATA
NOTE 1--BASIS OF PRESENTATION
The unaudited income statement data were prepared using UDS's and Total's
audited income statements for the year ended December 31, 1996 and unaudited
income statements for the three month period ended March 31, 1997 and the
reclassifications and adjustments described below. The unaudited pro forma
balance sheet data were prepared using UDS's and Total's audited balance sheets
dated December 31, 1996 and unaudited balance sheets dated March 31, 1997 and
the adjustments and assumptions described below.
NOTE 2--RECLASSIFICATIONS
Certain pro forma reclassifications have been made to the audited
consolidated financial statements of Total to conform with the financial
presentation of UDS.
For the unaudited pro forma income statement data, federal excise and state
motor fuel taxes of Total have been included in sales and other revenues and
taxes other than income taxes. Additionally, cost of products sold and operating
expenses of Total have been reclassified to appropriate categories used by UDS.
NOTE 3--PRO FORMA ADJUSTMENTS
INVENTORIES--Total's inventories of crude oil and products have been
adjusted from the lower of cost or net realizable value as determined by the
last-in, first-out method of accounting to fair market value.
PROPERTY, PLANT AND EQUIPMENT--Pro forma adjustments have been made for
Total to account for refinery maintenance turnaround costs under the deferral
and amortization method versus the accrual method, to conform to the financial
presentation of UDS.
RETIREE HEALTH CARE BENEFITS--Total adopted Statement of Financial
Accounting Standards ("SFAS") No. 106, "Employer's Accounting for Postretirement
Benefits other than Pensions," by recognizing an unfunded obligation and a
corresponding asset for the actuarial present value of estimated benefits
attributed to participant service rendered through January 1, 1993. Total was
amortizing this transition asset over 20 years. For the unaudited pro forma
financial data, this transition asset has been eliminated and the corresponding
expense has been appropriately adjusted.
OTHER BALANCE SHEET ADJUSTMENTS--Pro forma adjustments to various assets and
liabilities have been made for the effect of UDS's intentions of merging the
operations of Total into UDS. Valuation adjustments have been provided for
anticipated changes in operations and brands, as well as duplicate information
technology and facilities.
EXPENSES OF THE MERGER--Expenses incurred in connection with the Arrangement
are considered part of the cost of Total being purchased and will be
capitalized. These expenses primarily consist of financial advisory fees,
outside legal, accounting and professional fees, and one-time costs of severance
and other benefit payments to employees of Total that will result from the
elimination of certain operational and administrative functions. These expenses
are estimated to be approximately $30.0 million and have been reflected in the
pro forma financial data. The pro forma financial data do not include any cost
savings expected to occur as a result of the Arrangement.
INCOME TAXES--A deferred income tax benefit has been provided in the
unaudited pro forma financial data, representing the income tax effect on the
pro forma financial data adjustments, calculated at a combined federal and state
rate of 38%.
GOODWILL--The aggregate effect of the pro forma balance sheet adjustments
resulted in pro forma increases of $44.9 million and $80.6 million in goodwill
at December 31, 1996 and March 31, 1997,
S-21
<PAGE>
respectively, which is included in other assets. Goodwill will be amortized over
20 years and the pro forma income statement data include an adjustment to
reflect such amortization.
STOCKHOLDERS' EQUITY--Pro forma adjustments to stockholders' equity provide
for the acquisition of each issued and outstanding Total Common Share by a
Canadian subsidiary of UDS in exchange for 0.322 of a share of UDS common stock
under the Arrangement.
EARNINGS PER SHARE--Pro forma earnings per share for UDS are based on the
historical weighted average number of common and common equivalent shares
outstanding for each company during the respective period adjusted to reflect
the changes in shares due to the Arrangement.
S-22
<PAGE>
SELECTED FINANCIAL DATA
The consolidated selected financial data for the five year period ended
December 31, 1996 has been derived from the audited consolidated financial
statements of the Company for the four years and six months ended December 31,
1996 and, with the exception of cash dividends per share on Common Stock, has
been restated on a pooling-of-interests basis to include the results of Diamond
Shamrock for all periods presented prior to the UDS Merger on December 3, 1996.
Net loss for the year ended December 31, 1996 includes UDS Merger and
integration costs of $77.4 million and approximately $50.4 million of one time
non-cash charges principally to conform accounting practices between Diamond
Shamrock and Ultramar, including the accrual of estimated future environmental
and other obligations.
The consolidated selected financial data as of December 31, 1996 and 1995
and for each of the three years in the period ended December 31, 1996 should be
read in conjunction with the audited consolidated financial statements and
related notes thereto and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" each of which is contained in the
UDS 10-K which is incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1996(2) 1995(2)(3) 1994 1993(4) 1992(5)(6)
--------- ----------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA) PRO FORMA
STATEMENT OF OPERATIONS DATA:
Sales and other revenues(1):............................ $10,208.4 $ 8,083.5 $ 7,418.3 $ 7,056.3 $ 5,746.6
Operating income........................................ 69.9 226.8 299.2 279.2 233.7
(Loss) Income before cumulative effect of accounting
change................................................ (35.9) 95.0 136.8 119.1 82.7
Net (loss) income....................................... (35.9) 117.0 136.8 104.9 65.0
(Loss) income per common and common equivalant share:
Primary:
(Loss) income before cumulative effect of accounting
change............................................ (.54) 1.30 1.93 1.71 1.23
Net (loss) income................................... (.54) 1.61 1.93 1.50 .97
Fully diluted:
(Loss) income before cumulative effect of accounting
change............................................ (.54) 1.29 1.90 1.71 1.23
Net (loss) income................................... (.54) 1.59 1.90 1.50 .97
Cash dividends per share
Common................................................ 1.10 1.10 1.10 1.10 .55
Preferred............................................. 2.50 2.50 2.50 1.28 --
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents............................... $ 197.9 $ 175.5 $ 82.5 $ 110.2 $ 151.8
Working capital......................................... 265.4 385.7 361.3 395.3 518.8
Total assets............................................ 4,420.0 4,216.7 3,384.4 3,073.9 3,089.9
Long-term debt.......................................... 1,646.3 1,557.8 1,042.5 980.5 1,111.8
Stockholders' equity.................................... 1,240.9 1,328.0 1,122.3 1,069.3 949.3
</TABLE>
(1) During 1996, the Company changed its presentation of sales and other
revenues to include Federal excise and state motor vehicle fuel taxes
collected on the sale of product which were previously reported as a
reduction of the corresponding tax expense. Sales and other revenues for the
four years ended December 31, 1995 has been adjusted to conform to the
presentation used in 1996.
(2) On December 14, 1995, Diamond Shamrock acquired National Convenience Stores
("NCS"), which operated 661 specialty convenience stores, for a net cost of
approximately $280.0 million. The acquisition (the "NCS Acquisition") was
accounted for using the purchase method of accounting and, accordingly, the
results of operations of NCS are included from the date of acquisition.
(3) During the second quarter of 1995, the Company changed its method of
accounting for refinery maintenance turnaround costs from an accrual method
to a deferral method. The change resulted in a cumulative adjustment through
December 31, 1994 of $22.0 million (after income taxes of $13.4 million) or
$.31 per share, which is included in net income for the year ended December
31, 1995. The effect of the change on the year ended December 31, 1995 was
to increase income before cumulative effect of accounting change by
approximately $3.5 million ($.05 per share) and net income by $25.5 million
($.36 per share). Had the change in accounting for refinery maintenance
turnaround costs been in effect since the beginning of 1992, net income for
the years ended December 31, 1994, 1993 and 1992 would have been $143.4
million ($2.03 per share), $115.0 million ($1.65 per share) and $77.0
million ($1.15 per share), respectively.
(4) In 1993, Diamond Shamrock changed its method of accounting for certain
liabilities resulting from an agreement with its former parent. The change
resulted in a cumulative adjustment through December 31, 1992 of $14.2
million (after income tax benefit of $9.4 million), or $.14 per share, which
is reflected in net income for the year ended December 31, 1993.
(5) In 1992, Diamond Shamrock changed its method of accounting for
post-retirement benefits other than pensions and its method of accounting
for income taxes. The aggregate cumulative effect of these changes as of
January 1, 1992 of $17.7 million (after income tax benefit of $10.3
million), or $.15 per share, is included in net income for the year ended
December 31, 1992.
(6) Historical data for the year ended December 31, 1992 has been adjusted to
reflect the Company's initial public offering of Common Stock and debt and
acquisitions of Ultramar Inc. ("UI") and Canadian Ultramar Company ("CUC",
formerly Canadian Ultramar Limited) in June 1992 as if such transactions had
been completed on January 1, 1992.
S-23
<PAGE>
UDS CAPITAL I
UDS Capital I (the "Trust") is a statutory business trust formed under the
Delaware Business Trust Act, as amended (the "Trust Act"), pursuant to a
declaration of trust and the filing of a certificate of trust with the Secretary
of State of the State of Delaware on June 5, 1997; such declaration will be
amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part. The Declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of
the Trust Preferred Securities, the purchasers thereof will own all the Trust
Preferred Securities. See "Description of the Trust Preferred Securities". The
Company will acquire Trust Common Securities in an amount equal to at least 3%
of the total capital of the Trust. The Trust will use all the proceeds derived
from the issuance of the Trust Securities to purchase the Partnership Preferred
Securities from the Partnership and, accordingly, the assets of the Trust will
consist solely of the Partnership Preferred Securities. The Trust exists for the
exclusive purpose of (i) issuing the Trust Securities representing undivided
beneficial ownership interests in the assets of the Trust, (ii) investing the
gross proceeds of the Trust Securities in the Partnership Preferred Securities,
and (iii) engaging in only those other activities necessary or incidental
thereto.
Pursuant to the Declaration, there will initially be five trustees (the
"Trustees") for the Trust. Three of the Trustees will be individuals who are
employees or officers of or who are affiliated with the Company (the "Regular
Trustees"). The fourth trustee will be a financial institution that is
unaffiliated with the Company and is indenture trustee for purposes of
compliance with the provisions of the Trust Indenture Act (the "Property
Trustee"). The fifth trustee will be an entity that maintains its principal
place of business in the State of Delaware (the "Delaware Trustee"). Initially,
The Bank of New York, a New York banking corporation, will act as Property
Trustee, and its affiliate, The Bank of New York (Delaware), a Delaware
corporation, will act as Delaware Trustee until, in each case, removed or
replaced by the holder of the Trust Common Securities. For purposes of
compliance with the Trust Indenture Act, The Bank of New York will also act as
trustee under the Trust Guarantee (the "Trust Guarantee Trustee"), as Property
Trustee under the Declaration and as trustee under the indenture applicable to
the Company Debenture.
The Property Trustee will hold title to the Partnership Preferred Securities
for the benefit of the holders of the Trust Securities, and the Property Trustee
will have the power to exercise all rights, powers and privileges with respect
to the Partnership Preferred Securities under the Amended and Restated Agreement
of Limited Partnership to be entered into by the Company and the Trust (the
"Limited Partnership Agreement") as the holder of the Partnership Preferred
Securities. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account") to hold
all payments made in respect of the Partnership Preferred Securities for the
benefit of the holders of the Trust Securities. The Trust Guarantee Trustee will
hold the Trust Guarantee for the benefit of the holders of the Trust Preferred
Securities. The Company, as the holder of all the Trust Common Securities, will
have the right to appoint, remove or replace any of the Trustees and to increase
or decrease the number of trustees, provided that at least one trustee shall be
a Delaware Trustee, at least one trustee shall be the Property Trustee and at
least one Trustee shall be a Regular Trustee. The Company will pay all fees and
expenses related to the organization and operations of the Trust (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 Trust) and the offering of the Trust Preferred
Securities and will be responsible for all debts and obligations of the Trust
(other than with respect to the Trust Securities).
For so long as the Trust Preferred Securities remain outstanding, the
Company will covenant (i) to maintain directly 100% ownership of the Trust
Common Securities, (ii) to cause the Trust to remain a statutory business trust
and not to voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the Declaration of the Trust and (iii) to use its commercially
reasonable efforts to ensure that
S-24
<PAGE>
the Trust will not be (A) an "investment company" for purposes of the 1940 Act
or (B) classified as other than a grantor trust for United States federal income
tax purposes.
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are as set forth in
the Declaration and the Trust Act. See "Description of the Trust Preferred
Securities". The Declaration and the Trust Guarantee also incorporate by
reference the terms of the Trust Indenture Act.
The location of the principal executive office of the Trust is c/o Ultramar
Diamond Shamrock Corporation, 9830 Colonnade Boulevard, San Antonio, Texas 78230
and its telephone number is (210) 641-6800.
UDS FUNDING I, L.P.
UDS Funding I, L.P. (the "Partnership") is a limited partnership that was
formed under the Delaware Revised Uniform Limited Partnership Act, as amended
(the "Partnership Act"), on June 5, 1997 for the exclusive purposes of
purchasing certain eligible securities of the Company and wholly-owned
subsidiaries of the Company (the "Affiliate Investment Instruments") and
Eligible Debt Securities with the proceeds from the sale of Partnership
Preferred Securities to the Trust and a capital contribution from the Company in
exchange for the general partner interest in the Partnership. Pursuant to the
certificate of limited partnership, as amended, and the Limited Partnership
Agreement, the Company is the sole general partner of the Partnership (in such
capacity the "General Partner"). Upon the issuance of the Partnership Preferred
Securities, which securities represent limited partner interests in the
Partnership, the Trust will be the sole limited partner of the Partnership.
Contemporaneously with the issuance of the Partnership Preferred Securities, the
General Partner will contribute capital to the 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 Partnership.
The Partnership is managed by the General Partner and exists for the sole
purpose of (i) issuing its partnership interests, (ii) investing the proceeds
thereof in Affiliate Investment Instruments and Eligible Debt Securities and
(iii) engaging in only those other activities necessary or incidental thereto.
To the extent that aggregate payments to the Partnership on the Affiliate
Investment Instruments and on Eligible Debt Securities exceed distributions
accumulated or payable with respect to the Partnership Preferred Securities, the
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.
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 Partnership and to maintain directly 100%
ownership of the General Partner's interest in the Partnership, which interest
will at all times represent at least 1% of the total capital of the Partnership,
(ii) to cause the 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 and (iii) to use its commercially
reasonable efforts to ensure that the Partnership will not be (A) an "investment
company" for purposes of the 1940 Act or (B) an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes. The Company or the then General Partner may transfer its obligations
as General Partner to a wholly-owned direct or indirect subsidiary of the
Company provided that (i) such successor entity expressly accepts such transfer
of the obligations as General Partner and (ii) prior to such transfer, the
Company has received an opinion of independent tax counsel experienced in such
matters to the effect that (A) the Partnership will be treated as a partnership
for United States federal income tax purposes, (B) such transfer would not cause
the Trust to be classified as an association taxable as a corporation for United
States federal income tax purposes, (C) following such transfer, the Company and
such successor entity will be in compliance with the 1940 Act without
registering thereunder as an
S-25
<PAGE>
investment company, and (D) such transfer will not adversely affect the limited
liability of the holders of the Partnership Preferred Securities.
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 be
responsible 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 Partnership) and for all debts and obligations of the
Partnership (other than with respect to the Partnership Preferred Securities).
Under Delaware law, assuming a limited partner in a Delaware limited partnership
such as the 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 Partnership's
business and affairs will be conducted by the General Partner.
The location of the principal executive offices of the Partnership is c/o
Ultramar Diamond Shamrock Corporation, 9830 Colonnade Boulevard, San Antonio,
Texas 78230 and its telephone number is (210) 641-6800.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, The Bank of New York, will act as trustee
for the Trust Preferred Securities under the Declaration for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Trust Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the material terms and provisions of the Trust Preferred Securities
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus is a part, the Trust Act and the Trust Indenture Act.
GENERAL
The Trust Preferred Securities will be issued in fully registered form
without coupons. Trust Preferred Securities will not be issued in bearer form.
See "--Book-Entry Only Issuance--The Depository Trust Company".
The Declaration authorizes the Regular Trustees of the Trust to issue the
Trust Securities, which represent undivided beneficial ownership interests in
the assets of the Trust. Title to the Partnership Preferred Securities will be
held by the Property Trustee for the benefit of the holders of the Trust
Securities. The Declaration does not permit the Trust to acquire any assets
other than the Partnership Preferred Securities or the issuance by the Trust of
any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust. The payment of distributions out of money held by the
Trust, and payments out of money held by the Trust upon redemption of the Trust
Preferred Securities or liquidation of the Trust, are guaranteed by the Company
to the extent described under "Description of the Trust Guarantee". The Trust
Guarantee will be held by The Bank of New York, the Trust Guarantee Trustee, for
the benefit of the holders of the Trust Preferred Securities. The Trust
Guarantee does not cover payment of distributions when the Trust does not have
sufficient available funds to pay such distributions. In such event, holders of
Trust Preferred Securities will have the remedies described below under "--Trust
Enforcement Events".
S-26
<PAGE>
DISTRIBUTIONS
The distribution rate on Trust Preferred Securities will be fixed at a rate
per annum of % of the stated liquidation amount of $25 per Trust Preferred
Security and will be paid if, as and when the Trust has funds available for
payment. Distributions not paid on the scheduled payment date will accumulate
and compound quarterly at a rate per annum equal to %. The term "distribution"
as used herein includes any such compounded amounts unless otherwise stated or
the context otherwise requires. The amount of distributions payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Trust Preferred Securities will be cumulative, will
accumulate from the date of initial issuance and will be payable quarterly in
arrears on each March 31, June 30, September 30 and December 31, commencing June
30, 1997, if, as and when available for payment, by the Property Trustee, except
as otherwise described below. If distributions are not paid when scheduled, the
accumulated distributions shall be paid to the holders of record of Trust
Preferred Securities as they appear on the books and records of the Trust on the
record date with respect to the payment date for the Trust Preferred Securities
which corresponds to the payment date fixed by the Partnership with respect to
the payment of cumulative distributions on the Partnership Preferred Securities.
Distributions on the Trust Preferred Securities will be made to the extent
that the Trust has funds available for the payment of such distributions in the
Property Account. Amounts available to the Trust for distribution to the holders
of the Trust Preferred Securities will be limited to payments received by the
Trust from the Partnership with respect to the Partnership Preferred Securities
or from the Company on the Partnership Guarantee or the Trust Guarantee.
Distributions on the Partnership Preferred Securities will be paid only if, as
and when declared in the sole discretion of the Company, as the General Partner
of the Partnership. Pursuant to the Limited Partnership Agreement, the General
Partner is not obligated to declare distributions on the Partnership Preferred
Securities at any time, including upon or following a Partnership Enforcement
Event. See "Description of Partnership Preferred Securities--Partnership
Enforcement Events".
The assets of the Partnership will consist only of Affiliate Investment
Instruments (which initially will be Debentures) and Eligible Debt Securities.
To the extent that the issuers (and, where applicable, the Company, as
guarantor) of the securities in which the Partnership invests defer or fail to
make any payment in respect of such securities (or, if applicable, such
guarantees), the Partnership will not have sufficient funds to pay and will not
declare or pay distributions on the Partnership Preferred Securities. If the
Partnership does not declare and pay distributions on the Partnership Preferred
Securities out of funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust Preferred Securities,
in which event the Trust Guarantee will not apply to such distributions until
the Trust has sufficient funds available therefor. See "Description of the
Partnership Preferred Securities--Distributions" and "Description of the Trust
Guarantee". In addition, as described under "Risk Factors-- Insufficient Income
or Assets Available to Partnership", the Partnership may not have sufficient
funds to pay current or liquidating distributions on the Partnership Preferred
Securities if (i) at any time that the Partnership is receiving current payments
in respect of the securities held by the Partnership (including the Debentures),
the General Partner, in its sole discretion, does not declare distributions on
the Partnership Preferred Securities and the Partnership receives insufficient
amounts to pay the additional compounded distributions that will accumulate in
respect of the Partnership Preferred Securities, (ii) the Partnership reinvests
the proceeds received in respect of the Debentures upon their retirement or at
their maturities in Affiliate Investment Instruments that do not generate income
in an amount that is sufficient to pay full distributions in respect of the
Partnership Preferred Securities or (iii) the Partnership invests in equity or
debt securities of Investment Affiliates that are not guaranteed by the Company
and that cannot be liquidated by the Partnership for an amount sufficient to pay
such distributions in full.
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Distributions on the Trust Preferred Securities will be payable to the
holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which will be one Business Day (as defined herein) prior
to the relevant payment dates. Such distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Partnership
Preferred Securities in the Property Account for the benefit of the holders of
the Trust Securities. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment will be made as described under
"--Book-Entry Only Issuance--The Depository Trust Company" below. In the event
that the Trust Preferred Securities do not remain in book-entry only form, the
relevant record dates shall be the 15th day of the month of the relevant payment
dates. In the event that any date on which distributions are payable on the
Trust Preferred Securities is not a Business Day, payment of the distribution
payable on such date will be made on the next succeeding day which is a Business
Day (without any interest or other payment in respect of the distribution
subject to such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by law
to close.
TRUST ENFORCEMENT EVENTS
The occurrence, at any time, of (i) arrearages on distributions on the Trust
Preferred Securities that shall exist for six consecutive quarterly distribution
periods, (ii) a default by the Company in respect of any of its obligations
under the Trust Guarantee or (iii) a Partnership Enforcement Event under the
Limited Partnership Agreement, will constitute an enforcement event under the
Declaration with respect to the Trust Securities (a "Trust Enforcement Event");
PROVIDED, that pursuant to the Declaration, the holder of the Trust Common
Securities will be deemed to have waived any Trust Enforcement Event with
respect to the Trust Common Securities until all Trust Enforcement Events with
respect to the Trust Preferred Securities have been cured, waived or otherwise
eliminated. Until such Trust Enforcement Events with respect to the Trust
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the holders of
the Trust Preferred Securities and only the holders of the Trust Preferred
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration and, in the case of a Partnership
Enforcement Event, the Special Representative with respect to certain matters
under the Limited Partnership Agreement. See "Description of the Partnership
Preferred Securities--Partnership Enforcement Events" for a description of the
events which will trigger the occurrence of a Partnership Enforcement Event.
Upon the occurrence of a Trust Enforcement Event, (a) the Property Trustee,
as the holder of the Partnership Preferred Securities, shall have the right to
enforce the terms of the Partnership Preferred Securities, including the right
to direct the Special Representative to enforce (i) the Partnership's creditors'
rights and other rights with respect to the Affiliate Investment Instruments and
the Investment Guarantees, (ii) the rights of the holders of the Partnership
Preferred Securities under the Partnership Guarantee and (iii) the rights of the
holders of the Partnership Preferred Securities to receive distributions (only
if and to the extent declared out of funds legally available therefor) on the
Partnership Preferred Securities, and (b) the Trust Guarantee Trustee shall have
the right to enforce the terms of the Trust Guarantee, including the right to
enforce the covenant restricting certain payments by the Company and Finance
Subsidiaries.
If the Property Trustee fails to enforce its rights under the Partnership
Preferred Securities after a holder of Trust Preferred Securities has made a
written request, such holder of record of Trust Preferred Securities may
directly institute a legal proceeding against the Partnership and the Special
Representative to enforce the Property Trustee's rights under the Partnership
Preferred Securities without first instituting any legal proceeding against the
Property Trustee, the Trust or any other person or entity. In addition, for so
long as the Trust holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership under
the Affiliate Investment Instruments after a holder of
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Trust Preferred Securities has made a written request, a holder of record of
Trust Preferred Securities may on behalf of the Partnership directly institute a
legal proceeding against the Investment Affiliates under the Affiliate
Investment Instruments, without first instituting any legal proceeding against
the Property Trustee, the Trust, the Special Representative or the Partnership.
In any event, for so long as the Trust is the holder of any Partnership
Preferred Securities, if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument or the failure of the Company to make any required payment when due
on any Investment Guarantee, then a holder of Trust Preferred Securities may on
behalf of the Partnership directly institute a proceeding against such
Investment Affiliate with respect to such Affiliate Investment Instrument or
against the Company with respect to any such Investment Guarantee, in each case
for enforcement of payment.
Under no circumstances, however, shall the Special Representative have
authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities. As a result, although the Special
Representative may be able to enforce the Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, the Partnership would be entitled to
reinvest such payments in additional Affiliate Investment Instruments, subject
to satisfying the reinvestment criteria described under "Description of the
Partnership Preferred Securities-- Partnership Investments", and Eligible Debt
Securities, rather than declaring and making distributions on the Partnership
Preferred Securities.
The Company and the Trust are each required to file annually with the
Property Trustee an officer's certificate as to its compliance with all
conditions and covenants under the Declaration.
MANDATORY REDEMPTION
The Partnership Preferred Securities may be redeemed by the Partnership at
the option of the General Partner, in whole or in part, at any time on or after
June 30, 2002 or at any time in certain circumstances upon the occurrence of a
Partnership Special Event. Upon such redemption of the Partnership Preferred
Securities (either at the option of the General Partner or pursuant to a
Partnership Special Event), the proceeds from such repayment shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the Partnership Preferred Securities so redeemed at
an amount per Trust Security equal to $25 plus accumulated and unpaid
distributions thereon; PROVIDED, that holders of the Trust Securities shall be
given not less than 30 nor more than 60 days notice of such redemption. See
"Description of the Partnership Preferred Securities--General" and "--Optional
Redemption".
TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Trust Tax Event or a Trust Investment Company Event (each
as hereinafter defined, and each, a "Trust Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described below, within 90
days following the occurrence of such Trust Special Event elect to either (i)
dissolve the Trust upon not less than 30 nor more than 60 days notice with the
result that, after satisfaction of creditors of the Trust, if any, Partnership
Preferred Securities would be distributed on a PRO RATA basis to the holders of
the Trust Preferred Securities and the Trust Common Securities in liquidation of
such holders' interests in the Trust; PROVIDED, HOWEVER, that if at the time
there is available to the Trust the opportunity to eliminate, within such 90-day
period, the Trust Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure which in the sole judgment of the Company has or will cause no adverse
effect on the Trust, the Partnership, the Company or the holders of the Trust
Securities and will involve no material cost, the Trust will pursue such measure
in lieu of dissolution or (ii) cause the Trust Preferred Securities to remain
outstanding, provided that in the case of this clause (ii), the Company shall
pay any and all expenses incurred by or payable by the Trust attributable to the
Trust
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Special Event. Furthermore, if in the case of the occurrence of a Trust Tax
Event, the Regular Trustees have received an opinion (a "Trust Redemption Tax
Opinion") of independent tax counsel experienced in such matters that there is
more than an insubstantial risk that interest payable by one or more of the
Investment Affiliates with respect to the Debentures issued by such Investment
Affiliate is not, or will not be, deductible by such Investment Affiliate for
United States federal income tax purposes even if the Partnership Preferred
Securities were distributed to the holders of the Trust Securities in
liquidation of such holders' interests in the Trust as described above, then the
General Partner shall have the right, within 90 days following the occurrence of
such Trust Tax Event, to elect to cause the Partnership to redeem the
Partnership Preferred Securities in whole (but not in part) for cash upon not
less than 30 nor more than 60 days notice and promptly following such
redemption, the Trust Preferred Securities and Trust Common Securities will be
redeemed by the Trust at the Redemption Price.
"Trust Tax Event" means that the Company shall have requested and received
and shall have delivered to the Regular Trustees an opinion of independent tax
counsel experienced in such matters (a "Trust Dissolution Tax Opinion") to the
effect that there has been (a) an amendment to, change in or announced proposed
change in the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) a judicial
decision interpreting, applying, or clarifying such laws or regulations, (c) an
administrative pronouncement or action that represents an official position
(including a clarification of an official position) of the governmental
authority or regulatory body making such administrative pronouncement or taking
such action, or (d) a threatened challenge asserted in connection with an audit
of the Company or any of its subsidiaries, the Partnership, or the Trust, or a
threatened challenge asserted in writing against any other taxpayer that has
raised capital through the issuance of securities that are substantially similar
to the Debentures, the Partnership Preferred Securities, or the Trust Preferred
Securities, which amendment or change is adopted or which proposed change,
decision or pronouncement is announced or which action, clarification or
challenge occurs on or after the date of this Prospectus Supplement
(collectively a "Tax Action"), which Tax Action relates to any of the items
described in (i) through (iii) below, and that following the occurrence of such
Tax Action there is more than an insubstantial risk that (i) the Trust is, or
will be, subject to United States federal income tax with respect to income
accrued or received on the Partnership Preferred Securities, (ii) the Trust is,
or will be, subject to more than a DE MINIMIS amount of other taxes, duties or
other governmental charges or (iii) interest payable by an Investment Affiliate
with respect to the Debenture issued by such Investment Affiliate is not, or
will not be, deductible by such Investment Affiliate for United States federal
income tax purposes.
"Trust Investment Company Event" means that the Company shall have requested
and received and shall have delivered to the Regular Trustees an opinion of
independent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), the Trust is or will be considered an "investment
company" which is required to be registered under the 1940 Act.
If the Partnership Preferred Securities are distributed to the holders of
the Trust Preferred Securities, the Company will use its best efforts to cause
the Partnership Preferred Securities to be listed on the New York Stock Exchange
or on such other national securities exchange or similar organization as the
Trust Preferred Securities are then listed or quoted.
On the date fixed for any distribution of Partnership Preferred Securities,
upon dissolution of the Trust, (i) the Trust Preferred Securities and the Trust
Common Securities will no longer be deemed to be outstanding and (ii)
certificates representing Trust Securities will be deemed to represent the
Partnership Preferred Securities having a liquidation preference equal to the
stated liquidation amount of such Trust Securities until such certificates are
presented to the Company or its agent for transfer or reissuance.
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There can be no assurance as to the market price for the Partnership
Preferred Securities which may be distributed in exchange for Trust Preferred
Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the Partnership Preferred Securities which an investor may
subsequently receive on dissolution and liquidation of the Trust may trade at a
discount to the price of the Trust Preferred Securities exchanged.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Trust Preferred
Securities unless all accumulated and unpaid distributions have been paid on all
Trust Preferred Securities for all quarterly distribution periods terminating on
or prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Trust Preferred
Securities (which notice will be irrevocable), and if the Company has paid to
the Property Trustee a sufficient amount of cash in connection with the related
redemption of the Partnership Preferred Securities, then, by 12:00 noon, New
York time, on the redemption date, the Trust will irrevocably deposit with DTC
funds sufficient to pay the amount payable on redemption of all book-entry
certificates and will give DTC irrevocable instructions and authority to pay
such amount to holders of the Trust Preferred Securities. See "--Book-Entry Only
Issuance--The Depository Trust Company". If notice of redemption shall have been
given and funds are deposited as required, then upon the date of such deposit,
all rights of holders of such Trust Preferred Securities so called for
redemption will cease, except the right of the holders of such Trust Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price. In the event that any date fixed for redemption of Trust
Preferred Securities is not a Business Day, then payment of the amount payable
on such date will be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of the amount payable subject
to such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Trust Preferred
Securities is improperly withheld or refused and not paid either by the Trust or
by the Company pursuant to the Trust Guarantee described under "Description of
the Trust Guarantee", distributions on such Trust Preferred Securities will
continue to accumulate from the original redemption date to the date of payment.
In the event that fewer than all of the outstanding Trust Preferred
Securities are to be redeemed, the Trust Preferred Securities will be redeemed
in accordance with the procedures of DTC. See "--Book-Entry Only Issuance--The
Depository Trust Company". In the event that the Trust Preferred Securities do
not remain in book-entry only form and fewer than all of the outstanding Trust
Preferred Securities are to be redeemed, the Trust Preferred Securities shall be
redeemed on a pro rata basis based on the liquidation amount of the Trust
Preferred Securities or pursuant to the rules of any securities exchange on
which the Trust Preferred Securities are listed.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its subsidiaries may at
any time and from time to time purchase outstanding Trust Preferred Securities
by tender, in the open market or by private agreement.
SUBORDINATION OF TRUST COMMON SECURITIES
Payment of amounts upon liquidation of the Trust Securities shall be made
PRO RATA based on the liquidation amount of the Trust Securities; PROVIDED,
HOWEVER, that upon (i) the occurrence of an Investment Event of Default by an
Investment Affiliate (including the Company) in respect of any Affiliate
Investment Instrument or (ii) default by the Company on any of its obligations
under any Guarantee, the holders of the Trust Preferred Securities will have a
preference over the holders of the Trust Common Securities with respect to
payments upon liquidation of the Trust.
In the case of any Trust Enforcement Event, the holder of Trust Common
Securities will be deemed to have waived any such Trust Enforcement Event until
all such Trust Enforcement Events with respect to the
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Trust Preferred Securities have been cured, waived or otherwise eliminated.
Until all Trust Enforcement Events with respect to the Trust Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the holders of the Trust Preferred
Securities and not on behalf of the holder of the Trust Common Securities, and
only the holders of the Trust Preferred Securities will have the right to direct
the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Trust Liquidation"), the holders
of the Trust Preferred Securities will be entitled to receive out of the assets
of the Trust, after satisfaction of liabilities to creditors, distributions in
cash or other immediately available funds in an amount equal to the aggregate of
the stated liquidation amount of $25 per Trust Preferred Security plus
accumulated and unpaid distributions thereon to the date of payment (the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities have been distributed on a PRO RATA basis to
the holders of the Trust Securities.
If, upon any such Trust Liquidation, the Trust Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Trust Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Preferred Securities shall be paid on a PRO
RATA basis. The holders of the Trust Common Securities will be entitled to
receive distributions upon any such liquidation PRO RATA with the holders of the
Trust Preferred Securities, except in the limited circumstances described above
under "--Subordination of Trust Common Securities".
Pursuant to the Declaration, the Trust shall terminate (i) upon the
bankruptcy of the Company, (ii) upon the filing of a certificate of dissolution
or the equivalent with respect to the Company, the filing of a certificate of
cancellation with respect to the Trust after having obtained the consent of at
least a majority in liquidation amount of the Trust Securities, voting together
as a single class, to file such certificate of cancellation, or the revocation
of the charter of the Company and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iii) upon the distribution of all
of the Partnership Preferred Securities upon the occurrence of a Trust Special
Event, (iv) upon the entry of a decree of a judicial dissolution of the Company
or the Trust, or (v) upon the redemption of all the Trust Securities.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act and
under "Description of the Trust Guarantee--Amendments and Assignment", and as
otherwise required by law and the Declaration, the holders of the Trust
Preferred Securities will have no voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion
as set forth in the last sentence of this paragraph, the holders of a majority
in liquidation amount of the Trust Preferred Securities have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Property Trustee, or direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee, as holder of the Partnership Preferred Securities, to (i)
exercise the remedies available to it under the Limited Partnership Agreement as
a holder of the Partnership Preferred Securities, including the right to direct
the Special Representative to exercise its rights in the manner described above
under "--Trust Enforcement Events" and (ii) consent to any amendment,
modification, or termination of the Limited Partnership Agreement or the
Partnership Preferred Securities where such consent shall be required; PROVIDED,
HOWEVER, that where a consent or action under the Limited Partnership Agreement
would require the consent or act of the holders of more than a majority of the
aggregate liquidation preference of Partnership Preferred Securities affected
thereby, only the holders of the percentage of the aggregate stated liquidation
amount of the Trust Securities which is at least equal to the percentage
required under the Limited Partnership Agreement may
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direct the Property Trustee to give such consent or take such action on behalf
of the Trust. See "Description of the Partnership Preferred Securities--Voting
Rights". The Property Trustee shall notify all holders of the Trust Preferred
Securities of any notice of any Partnership Enforcement Event received from the
General Partner with respect to the Partnership Preferred Securities and the
Affiliate Investment Instruments. Such notice shall state that such Partnership
Enforcement Event also constitutes a Trust Enforcement Event. Except with
respect to directing the time, method, and place of conducting a proceeding for
a remedy as described above, the Property Trustee shall be under no obligation
to take any of the actions described in clauses (i) or (ii) above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that as a result of such action, the Trust will not fail to be classified
as a grantor trust for United States federal income tax purposes and that after
such action each holder of Trust Securities will continue to be treated as
owning an undivided beneficial ownership interest in the Partnership Preferred
Securities.
A waiver of a Partnership Enforcement Event with respect to the Partnership
Preferred Securities held by the Property Trustee will constitute a waiver of
the corresponding Trust Enforcement Event.
Any required approval or direction of holders of Trust Preferred Securities
may be given at a separate meeting of holders of Trust Preferred Securities
convened for such purpose, at a meeting of all of the holders of Trust
Securities or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be mailed to each holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Trust
Preferred Securities will be required for the Trust to redeem and cancel Trust
Preferred Securities or distribute Partnership Preferred Securities in
accordance with the Declaration.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
Securities that are beneficially owned at such time by the Company or any entity
directly or indirectly controlled by, or under direct or indirect common control
with, the Company, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Trust Securities were
not outstanding, except for Trust Preferred Securities purchased or acquired by
the Company or its affiliates in connection with transactions effected by or for
the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such Trust Preferred Securities;
PROVIDED, HOWEVER, that persons (other than affiliates of the Company) to whom
the Company or any of its subsidiaries have pledged Trust Preferred Securities
may vote or consent with respect to such pledged Trust Preferred Securities
pursuant to the terms of such pledge.
The procedures by which holders of Trust Preferred Securities represented by
the global certificates may exercise their voting rights are described below.
See "--Book-Entry Only Issuance--The Depository Trust Company".
Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Regular Trustees, who may be appointed, removed or replaced solely by
the Company, as the holder of all of the Trust Common Securities.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other entity, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the Trust Securities, the
Property Trustee or the Delaware Trustee consolidate,
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amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State of the United States; PROVIDED, that (i) if the
Trust is not the survivor, such successor entity either (x) expressly assumes
all of the obligations of the Trust under the Trust Securities or (y)
substitutes for the Trust Preferred Securities other securities having
substantially the same terms as the Trust Preferred Securities (the "Successor
Securities"), so long as the Successor Securities rank the same as the Trust
Securities rank with respect to distributions, assets and payments, (ii) the
Company expressly acknowledges a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Partnership
Preferred Securities, (iii) the Trust Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with another
organization on which the Trust Preferred Securities are then listed or quoted,
(iv) such merger, consolidation, amalgamation or replacement does not cause the
Trust Preferred Securities (including any Successor Securities) to be downgraded
by any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Preferred Securities
(including any Successor Securities) in any material respect, (vi) such
successor entity has a purpose substantially identical to that of the Trust,
(vii) the Company guarantees the obligations of such successor entity under the
Successor Securities to the same extent as provided by the Trust Guarantee and
(viii) prior to such merger, consolidation, amalgamation or replacement, the
Company has received an opinion of an independent legal counsel to the Trust
experienced in such matters to the effect that: (A) such merger, consolidation,
amalgamation or replacement will not adversely affect the rights, preferences
and privileges of the holders of the Trust Preferred Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such successor
entity will be required to register as an investment company under the 1940 Act,
(C) following such merger, consolidation, amalgamation or replacement, the Trust
(or such successor trust) will not be classified as an association or a publicly
traded partnership taxable as a corporation for United States federal income tax
purposes and (D) following such merger, consolidation, amalgamation or
replacement, the Partnership will not be classified as an association or a
publicly traded partnership taxable as a corporation for United States federal
income tax purposes. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in liquidation amount of the Trust Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it, if such consolidation, amalgamation, merger or
replacement would cause the Trust or the successor entity to be classified as an
association or a publicly traded partnership taxable as a corporation for United
States federal income tax purposes.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by a majority of the
Regular Trustees (and in certain circumstances the Property Trustee and the
Delaware Trustee), PROVIDED, that if any proposed amendment provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of the Trust other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby; PROVIDED, FURTHER, that if any amendment or proposal referred
to in clause (i) above would adversely affect only the Trust Preferred
Securities or the Trust Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a majority in liquidation
amount of such class of Trust Securities.
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The Declaration may be amended without the consent of the holders of the
Trust Securities to (i) cure any ambiguity, (ii) correct or supplement any
provision in the Declaration that may be defective or inconsistent with any
other provision of the Declaration, (iii) add to the covenants, restrictions or
obligations of the Sponsor, (iv) conform to any change in the 1940 Act, the
Trust Indenture Act or the rules or regulations of either such Act and (v)
modify, eliminate and add to any provision of the Declaration to such extent as
may be necessary or desirable; PROVIDED that no such amendment shall have a
material adverse effect on the rights, preferences or privileges of the holders
of the Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
fail to be classified as a grantor trust for United States federal income tax
purposes, (ii) cause the Partnership to be classified as an association or
publicly traded partnership taxable as a corporation for such purposes, (iii)
reduce or otherwise adversely affect the powers of the Property Trustee or (iv)
cause the Trust or the Partnership to be deemed an "investment company" which is
required to be registered under the 1940 Act.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depository (the
"Depository") for the Trust Preferred Securities and, to the extent distributed
to the holders of Trust Preferred Securities, the Partnership Preferred
Securities. The Trust Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Trust Preferred Securities
certificates ("Global Certificates"), representing the total aggregate number of
Trust Preferred Securities, will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Participants and by the New York Stock Exchange, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Purchases of Trust Preferred Securities within the DTC system must be made
by or through Participants, which will receive a credit for the Trust Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Trust Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Participants or Indirect Participants through which the Beneficial Owners
purchased Trust Preferred Securities. Transfers of ownership interests in the
Trust Preferred Securities are to be accomplished by entries made on the books
of Participants and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Trust Preferred Securities, except in the event that use of the
book-entry system for the Trust Preferred Securities is discontinued.
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DTC has no knowledge of the actual Beneficial Owners of the Trust Preferred
Securities; DTC's records reflect only the identity of the Participants to whose
accounts such Trust Preferred Securities are credited, which may or may not be
the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Trust Preferred Securities represented thereby
for all purposes under the Declaration and the Trust Preferred Securities. No
beneficial owner of an interest in a Global Certificate will be able to transfer
that interest except in accordance with DTC's applicable procedures, in addition
to those provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Trust Preferred Securities (including the presentation of
Trust Preferred Securities for exchange as described below) only at the
direction of one or more Participants to whose account the DTC interests in the
Global Certificates are credited and only in respect of such portion of the
aggregate liquidation amount of Trust Preferred Securities as to which such
Participant or Participants has or have given such direction. Also, if there is
a Trust Enforcement Event under the Trust Preferred Securities, DTC will
exchange the Global Certificates for Certificated Securities, which it will
distribute to its Participants in accordance with its customary procedures.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Trust Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Trust
Preferred Securities are being redeemed, DTC will determine the amount of the
interest of each Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Trust Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Trust Preferred
Securities are allocated on the record date (identified in a listing attached to
the Omnibus Proxy).
Distributions on the Trust Preferred Securities held in book-entry form will
be made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, the Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of any distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.
Except as described, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Trust Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Trust Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trust will have any responsibility for the performance by DTC or its
Participants or Indirect
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Participants under the rules and procedures governing DTC. DTC may discontinue
providing its services as securities depository with respect to the Trust
Preferred Securities at any time by giving notice to the Trust. Under such
circumstances, in the event that a successor securities depository is not
obtained, Trust Preferred Security certificates are required to be printed and
delivered to the Property Trustee. Additionally, the Trust (with the consent of
the Company) may decide to discontinue use of the system of book-entry transfers
through DTC or any successor depository. In that event, certificates for the
Trust Preferred Securities will be printed and delivered to the Property
Trustee. In each of the above circumstances, the Company will appoint a paying
agent with respect to the Trust Preferred Securities.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Trust Preferred
Securities as represented by a Global Certificate.
PAYMENT
Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to DTC, which shall credit the relevant
accounts at DTC on the scheduled payment dates or, in the case of certificated
securities, if any, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days written
notice to the Regular Trustees. In the event that The Bank of New York shall no
longer be the Paying Agent, the Regular Trustees shall appoint a successor to
act as Paying Agent (which shall be a bank or trust company).
REGISTRAR, TRANSFER AGENT, AND PAYING AGENT
The Property Trustee will act as Registrar, Transfer Agent and Paying Agent
for the Trust Preferred Securities.
Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the giving
of such indemnity as the Trust or the Company may require) in respect of any tax
or other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Trust Preferred Securities after such Trust Preferred Securities
have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration 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 Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Trust Preferred Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Trust Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their voting rights,
direct the Property Trustee to take any action following a Trust Enforcement
Event.
GOVERNING LAW
The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
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MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the 1940 Act or
characterized as other than a grantor trust for United States federal income tax
purposes. In this connection, the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust or the
Declaration that the Regular Trustees determine in their discretion to be
necessary or desirable for such purposes as long as such action does not
adversely affect the interests of the holders of the Trust Preferred Securities.
Holders of the Trust Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE TRUST GUARANTEE
Set forth below is a summary of information concerning the Trust Guarantee
which will be executed and delivered by the Company for the benefit of the
holders from time to time of Trust 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 Trust Guarantee, which is
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus is a part. The Trust Guarantee
incorporates by reference the terms of, and will be qualified as an indenture
under, the Trust Indenture Act. The Bank of New York, as the Trust Guarantee
Trustee, will hold the Trust Guarantee for the benefit of the holders of the
Trust Preferred Securities and will act as indenture trustee for the purposes of
compliance with the Trust Indenture Act.
GENERAL
Pursuant to the Trust Guarantee, the Company will irrevocably agree, on a
subordinated basis and to the extent set forth therein, to pay in full to the
holders of the Trust Preferred Securities (except to the extent paid by the
Trust), as and when due, regardless of any defense, right of set off or
counterclaim which the Trust may have or assert, the following payments (the
"Trust Guarantee Payments"), without duplication: (i) any accumulated and unpaid
distributions on the Trust Preferred Securities to the extent the Trust has
funds available therefor, (ii) the Redemption Price with respect to any Trust
Preferred Securities called for redemption by the Trust, to the extent the Trust
has funds available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Partnership Preferred Securities 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
accumulated and unpaid distributions on the Trust Preferred Securities and (b)
the amount of assets of the Trust remaining available for distribution to
holders of Trust Preferred Securities upon the liquidation of the 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 Trust to pay such amounts to such
holders.
The Trust Guarantee will be a guarantee on a subordinated basis with respect
to the Trust Preferred Securities from the time of issuance of such Trust
Preferred Securities but will only apply to any payment of distributions or
Redemption Price, or to payments upon the dissolution, winding-up or termination
of the Trust, to the extent the Trust shall have funds available therefor. If
the Partnership fails to declare distributions on Partnership Preferred
Securities, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Trust Preferred Securities
or otherwise, and in such event holders of the Trust Preferred Securities would
not be able to rely upon the Trust Guarantee for payment of such amounts.
Instead, holders of the Trust Preferred Securities will have the remedies
described herein under "Description of the Trust Preferred Securities--Trust
Enforcement Events", including the right to direct the Trust Guarantee Trustee
to enforce the covenant restricting certain payments by the Company and Finance
Subsidiaries. See "--Covenants of the Company" below.
The Guarantees, when taken together with the Company Debenture and the
Company's obligations to pay all fees and expenses of the Trust and the
Partnership, constitute a guarantee to the extent set forth herein by the
Company of the distribution, redemption and liquidation payments payable to the
holders of the Trust Preferred Securities. The Guarantees do not apply, however,
to current distributions by the Partnership unless and until such distributions
are declared by the Partnership out of funds legally available for payment or to
liquidating distributions unless there are assets available for payment in the
Partnership, each as more fully described under "Risk Factors--Insufficient
Income or Assets Available to Partnership".
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COVENANTS OF THE COMPANY
The Company will covenant in the Trust Guarantee that, if (a) for any
distribution period, full distributions on a cumulative basis on any Trust
Preferred Securities have not been paid, (b) an Investment Event of Default by
any Investment Affiliate in respect of any Affiliate Investment Instrument has
occurred and is continuing or (c) the Company is in default of its obligations
under the Trust Guarantee, the Partnership Guarantee or any Investment
Guarantee, then, during such period (i) the Company 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
or comparable equity interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock, and conversions or exchanges of common stock of one class
into common stock of another class and (y) redemptions or purchases of any
rights pursuant to the Rights Agreement and the
issuance of common stock pursuant to such rights) and (ii) the Company shall not
make, permit any Finance Subsidiary to make, or make any payments that would
enable any Finance Subsidiary to make, any payment of any dividends on, any
distribution with respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any preferred security or
comparable equity interest of any Finance Subsidiary.
EVENTS OF DEFAULT; ENFORCEMENT OF TRUST GUARANTEE
An event of default under the 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 have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trust Guarantee Trustee or to direct
the exercise of any trust or power conferred upon the Trust Guarantee Trustee
under the Trust Guarantee. If the Trust Guarantee Trustee fails to enforce its
rights under the Trust Guarantee after a holder of Trust Preferred Securities
has made a written request, such holder may institute a legal proceeding
directly against the Company to enforce the Trust Guarantee Trustee's rights
under the Trust Guarantee, without first instituting a legal proceeding against
the Trust, the Trust Guarantee Trustee or any other person or entity. In any
event, if the Company has failed to make a guarantee payment under the Trust
Guarantee, a holder of Trust Preferred Securities may directly institute a
proceeding in such holder's own name against the Company for enforcement of the
Trust Guarantee for such payment.
STATUS OF THE TRUST GUARANTEE; SUBORDINATION
The Trust Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all other
liabilities of the Company and will rank PARI PASSU with the most senior
preferred stock, if any, issued from time to time by the Company, and with any
guarantee now or hereafter entered into by the Company in respect of any
preferred stock of any Finance Subsidiary. Accordingly, the rights of the
holders of Trust Preferred Securities to receive payments under the Trust
Guarantee will be subject to the rights of the holders of any obligations of the
Company that are senior in priority to the obligations under the Trust
Guarantee. Furthermore, the holders of obligations of the Company that are
senior to the obligations under the Trust Guarantee (including, but not limited
to, obligations constituting Senior Indebtedness) will be entitled to the same
rights upon payment default or dissolution, liquidation and reorganization in
respect of the Trust Guarantee that inure to the holders of Senior Indebtedness
as against the holders of the Company Debenture. The terms of the Trust
Preferred Securities, provide that each holder of Trust Preferred Securities, by
acceptance thereof, agrees to the subordination provisions and other terms of
the Trust Guarantee.
The Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the Trust Guarantee
without instituting a legal proceeding against any other person or entity).
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Trust Preferred Securities (in which case no vote will
be required), the Trust Guarantee may be amended only with the prior approval of
the holders of at least a majority in liquidation amount of all the outstanding
Trust Preferred Securities. The manner of obtaining any such approval of holders
of the Trust Preferred Securities will be as set forth under "Description of the
Trust Preferred Securities--Voting Rights". All guarantees and agreements
contained in the 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 then outstanding. Except in
connection with permitted merger or consolidation of the Company with or into
another entity or permitted sale, transfer or lease of the Company's assets to
another entity in which the surviving corporation (if other than the Company)
assumes the Company's obligations under the Trust Guarantee, the Company may not
assign its rights or delegate its obligations under the Trust Guarantee without
the prior approval of the holders of at least a majority of the aggregate stated
liquidation amount of the Trust Preferred Securities then outstanding.
TERMINATION OF THE TRUST GUARANTEE
The Trust Guarantee will terminate as to each holder of Trust Preferred
Securities upon (i) full payment of the Redemption Price of all Trust Preferred
Securities, (ii) distribution of the Partnership Preferred Securities held by
the Trust to the holders of the Trust Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Declaration upon liquidation of
the Trust. The 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 must restore payment of any sum paid under such Trust Preferred
Securities or such Trust Guarantee.
INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE
The Trust Guarantee Trustee, prior to the occurrence of a default with
respect to the Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in the Trust Guarantee and, after default with respect to
the Trust Guarantee, shall exercise the same degree of care as a prudent man
would exercise in the conduct of his own affairs. Subject to such provision, the
Trust Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Guarantee at the request of any holder of Trust
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
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DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES
GENERAL
All of the partnership interests in the Partnership, other than the
Partnership Preferred Securities acquired by the Trust, are owned directly by
the Company. Initially, the Company will be the sole General Partner of the
Partnership. The Limited Partnership Agreement authorizes and creates the
Partnership Preferred Securities, which represent limited partner interests in
the Partnership. 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 the Partnership. Except as otherwise described herein or provided in the
Limited Partnership Agreement, the Limited Partnership Agreement does not permit
the issuance of any additional partnership interests, or the incurrence of any
indebtedness by the Partnership.
The summary of certain material terms and provisions of the Partnership
Preferred Securities set forth below does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Limited
Partnership Agreement, which is filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus is
a part, and the Partnership Act.
DISTRIBUTIONS
Holders of Partnership Preferred Securities will be entitled to receive
cumulative cash distributions, if, as and when declared by the General Partner
in its sole discretion out of assets of the Partnership legally available for
payment. The distributions payable on each Partnership Preferred Security will
be fixed at a rate per annum of % of the stated liquidation preference of $25
per Partnership Preferred Security. Distributions not paid on the scheduled
payment date will accumulate and compound quarterly at the rate per annum equal
to %. The amount of distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
Distributions on the Partnership Preferred Securities will be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing June 30, 1997. If distributions are not declared and paid when
scheduled, the accumulated distributions shall be paid to the holders of record
of Partnership Preferred Securities as they appear on the books and records of
the Partnership on the record date with respect to the payment date for the
Partnership Preferred Securities.
The Partnership's earnings available for distribution to the holders of the
Partnership Preferred Securities will be limited to payments made on the
Affiliate Investment Instruments and Investment Guarantees and payments on
Eligible Debt Securities in which the Partnership has invested from time to
time. See "--Partnership Investments". To the extent that the issuers (and,
where applicable, the Company, as guarantor) of the securities in which the
Partnership invests fail to make any payment in respect of such securities (or,
if applicable, such guarantees), the Partnership will not have sufficient funds
to pay and will not declare or pay distributions on the Partnership Preferred
Securities, in which event the Partnership Guarantee will not apply to such
distributions until the Partnership has sufficient funds available therefor. See
"Description of the Partnership Guarantee". In addition, distributions on the
Partnership Preferred Securities may be declared and paid only as determined in
the sole discretion of the General Partner of the Partnership. If the
Partnership fails to declare and pay distributions on the Partnership Preferred
Securities out of funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust Preferred Securities,
in which event the Trust Guarantee will not apply to such distributions until
the Trust has sufficient funds available therefor. In addition, as described
under "Risk Factors--Insufficient Income or Assets Available to Partnership",
the Partnership may not have sufficient funds to pay current or liquidating
distributions on the Partnership Preferred Securities if (i) at any time that
the Partnership is receiving current payments in respect of the securities held
by the Partnership (including the Debentures), the General Partner, in its sole
discretion, does not declare distributions on the Partnership Preferred
Securities and the Partnership receives insufficient amounts to pay the
additional compounded distributions that will accumulate in respect of the
Partnership
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Preferred Securities, (ii) the Partnership reinvests the proceeds received in
respect of the Debentures upon their retirement or at their maturities in
Affiliate Investment Instruments that do not generate income in an amount that
is sufficient to pay full distributions in respect of the Partnership Preferred
Securities or (iii) the Partnership invests in equity or debt securities of
Investment Affiliates that are not guaranteed by the Company and that cannot be
liquidated by the Partnership for an amount sufficient to pay such distributions
in full.
Distributions on the Partnership Preferred Securities will be payable to the
holders thereof as they appear on the books and records of the Partnership on
the relevant record dates, which, as long as the Trust Preferred Securities
remain (or, in the event that the Trust is liquidated in connection with a Trust
Special Event, as long as the Partnership Preferred Securities remain) in
book-entry-only form, will be one Business Day prior to the relevant payment
dates. In the event the Trust Preferred Securities (or in the event that the
Trust is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities) shall not continue to remain in book-entry only form, the
relevant record dates shall be the 15th day of the month of the relevant payment
dates. In the event that any date on which distributions are payable on the
Partnership Preferred Securities is not a Business Day, then payment of the
distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
PARTNERSHIP ENFORCEMENT EVENTS
If one or more of the following events shall occur and be continuing (each a
"Partnership Enforcement Event"): (i) arrearages on distributions on the
Partnership Preferred Securities shall exist for six consecutive quarterly
distribution periods, (ii) the Company is in default on any of its obligations
under the Partnership Guarantee or any Investment Guarantee or (iii) an
Investment Event of Default occurs and is continuing on any Affiliate Investment
Instrument, then the Property Trustee, for so long as the Partnership Preferred
Securities are held by the Property Trustee, will have the right, or holders of
the Partnership Preferred Securities will be entitled by the vote of a majority
in aggregate liquidation preference of such holders (a) under the Limited
Partnership Agreement to enforce the terms of the Partnership Preferred
Securities, including the right to appoint and authorize a special
representative of the Partnership and the limited partners (a "Special
Representative") to enforce (1) the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments and the Investment
Guarantees, (2) the rights of the holders of the Partnership Preferred
Securities under the Partnership Guarantee and (3) the rights of the holders of
the Partnership Preferred Securities to receive distributions (only if and to
the extent declared out of funds legally available therefor) on the Partnership
Preferred Securities, and (b) under the Partnership Guarantee to enforce the
terms of the Partnership Guarantee, including the right to enforce the covenant
restricting certain payments by the Company and Finance Subsidiaries.
If the Special Representative fails to enforce its rights under the
Affiliate Investment Instruments after a holder of Partnership Preferred
Securities has made a written request, such holder of record of Partnership
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the rights of the Special Representative and the Partnership
under the Affiliate Investment Instruments without first instituting any legal
proceeding against the Special Representative, the Partnership or any other
person or entity. In any event, if a Partnership Enforcement Event has occurred
and is continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument, then a holder of Partnership Preferred Securities may on behalf of
the Partnership directly institute a proceeding against such Investment
Affiliate with respect to such Affiliate Investment Instrument for enforcement
of payment. A holder of Partnership Preferred Securities may also bring a direct
action against the Company to enforce such holder's right under the Partnership
Guarantee. See "Description of the Partnership Guarantee--Events of Default;
Enforcement of Partnership Guarantee".
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Under no circumstances, however, shall the Special Representative have
authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities. As a result, although the Special
Representative may be able to enforce the Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, the Partnership would be entitled to
reinvest such payments in additional Affiliate Investment Instruments, subject
to satisfying the reinvestment criteria described under "--Partnership
Investments", and Eligible Debt Securities, rather than declaring and making
distributions on the Partnership Preferred Securities. The Special
Representative shall not, by virtue of acting in such capacity, be admitted as a
general partner in the Partnership or otherwise be deemed to be a general
partner in the Partnership and shall have no liability for the debts,
obligations or liabilities of the Partnership.
PARTNERSHIP INVESTMENTS
Approximately 99% of the proceeds from the issuance of the Partnership
Preferred Securities and the General Partner's contemporaneous capital
contribution (the "Initial Partnership Proceeds") will be used by the
Partnership to purchase the Debentures and the remaining 1% of the Initial
Partnership Proceeds will be used to purchase Eligible Debt Securities. The
purchase of the Debentures by the Partnership will occur contemporaneously with
the issuance of the Partnership Preferred Securities.
The initial Affiliate Investment Instruments purchased by the Partnership
will consist of two or more debt instruments (the "Debentures"). The Company
anticipates that approximately 85% of the Initial Partnership Proceeds will be
used to purchase a Debenture of the Company (the "Company Debenture"), and
approximately 14% of the Initial Partnership Proceeds will be used to purchase
Debentures of two or more eligible controlled affiliates of the Company (the
"Affiliate Debentures"). Each Debenture is expected to have a term of 20 years
and to provide for interest payable on March 31, June 30, September 30 and
December 31 of each year, commencing June 30, 1997, at market rates for such
Debentures. The Debentures will be general unsecured debt obligations of the
relevant issuer, except that the Company Debenture will rank subordinate and
junior to all Senior Indebtedness of the Company.
The payment of interest on each of the Debentures may be deferred at any
time, and from time to time, by the relevant issuer for a period not exceeding
six consecutive quarters. If an issuer were to so defer the payment of interest,
interest would continue to accrue and compound at the stated interest rate on
such Debenture. The Debentures will contain covenants appropriate for unsecured
debt securities issued or guaranteed by similar borrowers pursuant to a public
offering or private placement under Rule 144A of the Securities Act of a
comparable debt security, including a limitation on consolidation, merger, sale
or conveyance of assets. The Debentures will contain redemption provisions that
correspond to the redemption provisions applicable to the Partnership Preferred
Securities, including an option to redeem the Debentures by the relevant issuer,
in whole or in part, from time to time, on or after , 2002, and
following the occurrence of a Partnership Special Event, in each case, in the
same manner described under "--Optional Redemption" and "--Partnership Special
Event Redemption". The Debentures, and any other Affiliate Investment
Instruments that are debt instruments acquired by the Partnership in the future,
will also contain customary events of default (the "Investment Events of
Default"), including events of default for defaults in payments on such
securities when due (provided that no default shall occur upon a valid deferral
of an interest payment by an issuer), defaults in the performance of the
relevant issuer's obligations under its Debenture or Affiliate Investment
Instruments, as the case may be, and certain bankruptcy, insolvency or
reorganization events (subject to customary exceptions and grace periods).
The payment of interest and principal when due and other payment terms of
the Debentures (other than the Company Debenture), will be guaranteed to the
extent described herein (each, an "Investment Guarantee") by the Company for the
benefit of the holders of Partnership Preferred Securities.
See "--Investment Guarantees".
Approximately 1% of the Initial Partnership Proceeds will be invested in
Eligible Debt Securities. "Eligible Debt Securities" means cash or book-entry
securities, negotiable instruments, or other securities
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of entities not affiliated with the Company which evidence any of the following:
(a) any security issued or guaranteed as to principal or interest by the United
States, or by a person controlled or supervised by and acting as an
instrumentality of the Government of the United States pursuant to authority
granted by the Congress of the United States, or any certificate of deposit for
any of the foregoing; (b) commercial paper issued pursuant to Section 3(a)(3) of
the Securities Act and having, at the time of the investment or contractual
commitment to invest therein, a rating from each of Standard & Poor's Ratings
Services, a division of the McGraw-Hill Companies, Inc. ("S&P") and Moody's
Investors Service, Inc. ("Moody's") in the highest investment rating category
granted by such rating agency and having a maturity not in excess of nine
months; (c) demand deposits, time deposits and certificates of deposit which are
fully insured by the Federal Deposit Insurance Corporation ("FDIC"); (d)
repurchase obligations with respect to any security that is a direct obligation
of, or fully guaranteed by, the Government of the United States of America or
any agency or instrumentality thereof, the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company which is an Eligible
Institution (as defined herein) and the deposits of which are insured by the
FDIC; and (e) any other security which is identified as a permitted investment
of a finance subsidiary pursuant to Rule 3a-5 under the 1940 Act at the time it
is acquired by the Partnership.
"Eligible Institution" means (a) a depository institution organized under
the laws of the United States or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank), (1) (i) which has either
(A) a long-term unsecured debt rating of AA or better by S&P and Aa or better by
Moody's or (B) a short-term unsecured debt rating or a certificate of deposit
rating of A-1+ by S&P and P-1 by Moody's and (ii) whose deposits are insured by
the FDIC or (2) (i) the parent of which has a long-term or short-term unsecured
debt rating which signifies investment grade and (ii) whose deposits are insured
by the FDIC.
The Partnership may, from time to time and subject to the restrictions
described below, reinvest payments received with respect to the Affiliate
Investment Instruments (including the Debentures) and the Eligible Debt
Securities in additional Affiliate Investment Instruments and Eligible Debt
Securities. As of the date of this Prospectus Supplement, the Company, as the
General Partner, does not intend to cause the Partnership to reinvest regularly
scheduled, periodic payments of interest or dividends received by the
Partnership, although there can be no assurance that the General Partner's
intention in respect of such reinvestments will not change in the future.
The fairness of specific terms of all Affiliate Investment Instruments
(including the Debentures) will be passed upon by a nationally recognized
accounting firm, bank or investment banking firm that does not (and whose
directors, officers, employees and affiliates do not) have a direct or indirect
material equity interest in the Company or any of its subsidiaries (the
"Independent Financial Advisor").
The Partnership may reinvest in additional Affiliate Investment Instruments
only if certain procedures and criteria are satisfied with respect to such
Affiliate Investment Instrument, including the satisfaction of the following
conditions: (i) the Partnership did not hold debt or equity securities of the
issuer of the proposed Affiliate Investment Instrument within the three-year
period ending on the date of such proposed investment; (ii) there was never a
default on any debt obligation of, or arrearages of dividends on preferred stock
issued by, the issuer of the proposed Affiliate Investment Instrument that was
previously or is currently owned by the Partnership; (iii) the applicable terms
and provisions with respect to the proposed Affiliate Investment Instrument have
been determined by the Independent Financial Advisor to be at least as favorable
as terms which could be obtained by the Partnership in a public offering or
private placement under Rule 144A of the Securities Act of a comparable security
issued by the relevant Investment Affiliate and guarantees, if any, included
therein; and (iv) the requesting Investment Affiliate shall not be deemed to be
an investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Commission. The term "Investment Affiliate"
means the Company or any corporation, partnership, limited liability company or
other entity (other than the Partnership or the Trust) that is controlled by the
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Company. If the Partnership is unable to reinvest payments and proceeds from
Affiliate Investment Instruments in additional Affiliate Investment Instruments
meeting the above criteria, the Partnership may only invest such funds in
Eligible Debt Securities (subject to restrictions of applicable law, including
the 1940 Act).
INVESTMENT GUARANTEES
GENERAL
The Company will agree to execute and deliver an Investment Guarantee, on a
subordinated basis, for the benefit of the holders of Partnership Preferred
Securities with respect to each Debenture issued by an Investment Affiliate
(other than the Company Debenture) to the extent set forth below. The Investment
Guarantees shall be enforceable regardless of any defense, right of set-off or
counterclaim that the Investment Affiliate may have or assert. The Investment
Guarantees will be full and unconditional guarantees, to the extent set forth
therein, with respect to the applicable Debentures from the time of issuance. To
the extent that, as described above, the Partnership invests in additional
Affiliate Investment Instruments, the determination as to whether such Affiliate
Investment Instrument will contain an Investment Guarantee will be made at the
date of its issuance and will be based, among other things, upon its approval by
the Independent Financial Advisor in accordance with the reinvestment criteria
described above.
The Investment Guarantees will constitute guarantees of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the applicable
Investment Guarantee without instituting a legal proceeding against any other
person or entity). If no Special Representative has been appointed to enforce
any Investment Guarantee, the General Partner has the right to enforce such
Investment Guarantee on behalf of the holders of the Partnership Preferred
Securities. The holders of not less than a majority in aggregate liquidation
preference of the Partnership Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of any Investment Guarantee, including the giving of directions to the
General Partner or the Special Representative, as the case may be. If the
General Partner or the Special Representative fails to enforce any Investment
Guarantee as above provided, any holder of Trust Preferred Securities may
institute its own legal proceeding to enforce such Investment Guarantee. No
Investment Guarantee will be discharged except by payment in full of all amounts
guaranteed by such Investment Guarantee (without duplication of amounts
theretofore paid by the relevant Investment Affiliate).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no consent will be
required), the Investment Guarantees may be amended only with the prior approval
of the holders of not less than a majority in liquidation preference of the
outstanding Partnership Preferred Securities, PROVIDED that for so long as the
Property Trustee of the Trust is the holder of the Partnership Preferred
Securities, such amendment will not be effective without the prior written
approval of a majority in liquidation amount of the outstanding Trust Preferred
Securities. All guarantees and agreements contained in the Investment Guarantees
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of Partnership
Preferred Securities. Except in connection with any permitted merger or
consolidation of the Company with or into another entity or any permitted sale,
transfer or lease of the Company's assets to another entity in which the
surviving corporation (if other than the Company) assumes the Company's
obligations under the Investment Guarantees, the Company may not assign its
rights or delegate its obligations under the Investment Guarantees without the
prior approval of the holders of at least a majority of the aggregate stated
liquidation preference of the Partnership Preferred Securities then outstanding.
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STATUS OF THE INVESTMENT GUARANTEES
The Company's obligations under the Investment Guarantees will constitute
unsecured obligations of the Company and will rank subordinate and junior in
right of payment to all other liabilities of the Company and will rank PARI
PASSU with the most senior preferred stock, if any, issued from time to time by
the Company and with any guarantee now or hereafter entered into by the Company
in respect of any preferred stock of any Finance Subsidiary. Accordingly, the
rights of the holders of the Debentures to receive payments under the Investment
Guarantees will be subject to the rights of the holders of any obligations that
are senior in priority to the obligations under the Investment Guarantees.
Furthermore, the holders of obligations of the Company that are senior to the
obligations under the Investment Guarantees (including, but not limited to,
obligations constituting Senior Indebtedness) will be entitled to the same
rights upon payment default or dissolution, liquidation and reorganization in
respect of the Investment Guarantees that inure to the holders of Senior
Indebtedness as against the holders of the Company Debenture. The terms of the
Debentures provide that each holder of Debentures, by acceptance thereof, agrees
to the subordination provisions and other terms of the Investment Guarantees.
GOVERNING LAW
The Investment Guarantees will be governed by and construed in accordance
with the internal laws of the State of New York.
OPTIONAL REDEMPTION
The Partnership Preferred Securities are redeemable, at the option of the
General Partner, in whole or in part, from time to time, on or after June 30,
2002, upon not less than 30 nor more than 60 days notice, at an amount per
Partnership Preferred Security equal to $25 plus accumulated and unpaid
distributions thereon. If the Partnership redeems Partnership Preferred
Securities in accordance with the terms thereof, Trust Securities will be
mandatorily redeemed at the Redemption Price. If a partial redemption would
result in the delisting of the Trust Preferred Securities (or, if the Trust is
liquidated in connection with a Trust Special Event, or if a partial redemption
would result in the delisting of the Partnership Preferred Securities), the
Partnership may only redeem the Partnership Preferred Securities in whole.
PARTNERSHIP SPECIAL EVENT REDEMPTION
If, at any time, a Partnership Tax Event or a Partnership Investment Company
Event (each as hereinafter defined, and each a "Partnership Special Event")
shall occur and be continuing, the General Partner shall, within 90 days
following the occurrence of such Partnership Special Event, elect to either (i)
redeem the Partnership Preferred Securities in whole (but not in part), upon not
less than 30 or more than 60 days notice at the Redemption Price, PROVIDED that,
if at the time there is available to the Partnership the opportunity to
eliminate, within such 90-day period, the Partnership Special Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure that in the sole judgment of the
Company has or will cause no adverse effect on the Partnership, the Trust or the
Company, the General Partner will pursue such measure in lieu of redemption; or
(ii) cause the Partnership Preferred Securities to remain outstanding, PROVIDED
that in the case of this clause (ii), the General Partner shall pay any and all
costs and expenses incurred by or payable by the Partnership attributable to the
Partnership Special Event.
"Partnership Tax Event" means that the General Partner shall have requested
and received an opinion of independent tax counsel experienced in such matters
to the effect that there has been a Tax Action which affects any of the events
described in (i) through (iii) below and that there is more than an
insubstantial risk that (i) the Partnership is, or will be, subject to United
States federal income tax with respect to income accrued or received on the
Affiliate Investment Instruments or the Eligible Debt Securities, (ii) the
Partnership is, or will be, subject to more than a DE MINIMIS amount of other
taxes,
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duties or other governmental charges or (iii) interest payable by an Investment
Affiliate with respect to the Debenture issued by such Investment Affiliate to
the Partnership is not, or will not be, deductible by such Investment Affiliate
for United States federal income tax purposes.
"Partnership Investment Company Event" means that the General Partner shall
have requested and received an opinion of independent legal counsel experienced
in such matters to the effect that as a result of the occurrence on or after the
date hereof of a Change in 1940 Act Law, the Partnership is or will be
considered an "investment company" which is required to be registered under the
1940 Act.
REDEMPTION PROCEDURES
The Partnership may not redeem fewer than all the outstanding Partnership
Preferred Securities unless all accumulated and unpaid distributions have been
paid on all Partnership Preferred Securities for all quarterly distribution
periods terminating on or prior to the date of redemption.
If the Partnership gives a notice of redemption in respect of Partnership
Preferred Securities (which notice will be irrevocable) then, by 12:00 noon, New
York City time, on the redemption date, the Partnership (i) if the Partnership
Preferred Securities are in book entry form with DTC, will deposit irrevocably
with DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price in
respect of the Partnership Preferred Securities held through DTC in global form
or (ii) if the Partnership Preferred Securities are held in certificated form,
will deposit with the paying agent for the Partnership Preferred Securities
funds sufficient to pay such amount in respect of any Partnership Preferred
Securities in certificated form and will give such paying agent irrevocable
instructions and authority to pay such amounts to the holders of Partnership
Preferred Securities upon surrender of their certificates. See "Description of
the Trust Preferred Securities--Book-Entry-Only Issuance--The Depository Trust
Company".
If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of holders of such
Partnership Preferred Securities so called for redemption will cease, except the
right of the holders of such Partnership Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price. In the event
that any date fixed for redemption of Partnership Preferred Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. In the event that payment of the Redemption
Price in respect of Partnership Preferred Securities is improperly withheld or
refused and not paid either by the Partnership or by the Company pursuant to the
Partnership Guarantee described under "Description of the Partnership
Guarantee," distributions on such Partnership Preferred Securities will continue
to accumulate, from the original redemption date to the date of payment.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or any of its subsidiaries
may at any time and from time to time purchase outstanding Partnership Preferred
Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Partnership, the holders of the Partnership Preferred
Securities at the time will be entitled to receive out of the assets of the
Partnership available for distribution to partners after satisfaction of
liabilities of creditors as required by the Partnership Act, before any
distribution of assets is made to the General Partner, an amount equal to, in
the case of holders of Partnership Preferred Securities, the aggregate of the
stated liquidation preference of $25 per Partnership Preferred Security plus
accumulated and unpaid distributions thereon to the date of payment (such amount
being the "Partnership Liquidation Distribution").
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Pursuant to the Limited Partnership Agreement, the Partnership shall be
dissolved and its affairs shall be wound up: (i) upon the bankruptcy of the
General Partner, (ii) upon the assignment by the General Partner of its entire
interest in the Partnership when the assignee is not admitted to the Partnership
as a general partner of the Partnership in accordance with the Limited
Partnership Agreement, or the filing of a certificate of dissolution or its
equivalent with respect to the General Partner, or the revocation of the General
Partner's charter and the expiration of 90 days after the date of notice to the
General Partner of revocation without a reinstatement of its charter, or if any
other event occurs that causes the General Partner to cease to be a general
partner of the Partnership under the Partnership Act, unless the business of the
Partnership is continued in accordance with the Partnership Act, (iii) if the
Partnership has redeemed or otherwise purchased all the Partnership Preferred
Securities, (iv) upon the entry of a decree of judicial dissolution or (v) upon
the written consent of all partners of the Partnership.
VOTING RIGHTS
Except as provided below and under "Description of the Partnership
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Limited Partnership Agreement, the holders of the Partnership Preferred
Securities will have no voting rights.
Not later than 30 days after any Partnership Enforcement Event occurs, the
General Partner will convene a meeting for the purpose of appointing a Special
Representative. If the General Partner fails to convene such meeting within such
30-day period, the holders of 10% in liquidation preference of the outstanding
Partnership Preferred Securities will be entitled to convene such meeting. The
provisions of the Limited Partnership Agreement relating to the convening and
conduct of the meetings of the partners will apply with respect to any such
meeting. In the event that, at any such meeting, holders of less than a majority
in aggregate liquidation preference of Partnership Preferred Securities entitled
to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and the limited partners if (1) the Partnership (or the Company
pursuant to the Partnership Guarantee) shall have paid in full all accumulated
and unpaid distributions on the Partnership Preferred Securities, (2) such
Investment Event of Default, as the case may be, shall have been cured, and (3)
the Company is in compliance with all its obligations under the Partnership
Guarantee and the Company, in its capacity as the General Partner, shall
continue the business of the Partnership without dissolution. Notwithstanding
the appointment of any such Special Representative, the Company shall continue
as General Partner and shall retain all rights under the Limited Partnership
Agreement, including the right to declare, in its sole discretion, the payment
of distributions on the Partnership Preferred Securities for which the failure
of such declaration would not constitute a default under the Limited Partnership
Agreement.
If any proposed amendment to the Limited Partnership Agreement provides for,
or the General Partner otherwise proposes to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Partnership
Preferred Securities, whether by way of amendment to the Limited Partnership
Agreement or otherwise (including, without limitation, the authorization or
issuance of any limited partner interests in the Partnership ranking, as to
participation in the profits or distributions or in the assets of the
Partnership, senior to the Partnership Preferred Securities), or (ii) the
dissolution, winding-up or termination of the Partnership, other than (x) in
connection with the occurrence of a Partnership Special Event or (y) as
described under "Merger, Consolidation or Amalgamation of the Partnership"
below, then the holders of outstanding Partnership Preferred Securities will be
entitled to vote on such amendment or proposal of the General Partner (but not
on any other amendment or proposal) as a class, and such amendment or proposal
shall not be effective except with the approval of the holders of a majority in
liquidation preference of such outstanding Partnership Preferred Securities
having a right to vote on the matter; PROVIDED, HOWEVER, that if the Property
Trustee on behalf of the Trust is the holder of the Partnership Preferred
Securities, any such amendment or proposal not excepted by clauses
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(x) and (y) above shall not be effective without the prior or concurrent
approval of the holders of a majority in liquidation amount of the outstanding
Trust Preferred Securities having a right to vote on such matters.
The General Partner shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available, (ii) waive any Investment
Event of Default that is waivable under the Affiliate Investment Instruments,
(iii) exercise any right to rescind or annul a declaration that the principal of
any Affiliate Investment Instruments which are debt instruments shall be due and
payable, (iv) waive the breach of the covenant by the Company to restrict
certain payments by the Company, or (v) consent to any amendment, modification
or termination of any Affiliate Investment Instrument, where such consent shall
be required from the investor, without, in each case, obtaining the prior
approval of the holders of at least a majority in liquidation preference of the
Partnership Preferred Securities; PROVIDED, HOWEVER, that if the Property
Trustee on behalf of the Trust is the holder of the Partnership Preferred
Securities, such waiver, consent or amendment or other action shall not be
effective without the prior or concurrent approval of at least a majority in
liquidation amount of the outstanding Trust Preferred Securities having a right
to vote on such matters. The General Partner shall not revoke any action
previously authorized or approved by a vote of the holders of the Partnership
Preferred Securities without the approval of such revocation by a majority in
liquidation preference of the outstanding Partnership Preferred Securities. The
General Partner shall notify all holders of the Partnership Preferred Securities
of any notice of an Investment Event of Default received with respect to any
Affiliate Investment Instrument.
Any required approval of holders of Partnership Preferred Securities may be
given at a separate meeting of holders of Partnership Preferred Securities
convened for such purpose, at a meeting of all of the partners in the
Partnership or pursuant to written consent. The Partnership will cause a notice
of any meeting at which holders of Partnership Preferred Securities are entitled
to vote, or of any matter upon which action by written consent of such holders
is to be taken, to be mailed to each holder of record of Partnership Preferred
Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matters upon which written consent
is sought and (iii) instruction for the delivery of proxies or consents.
No vote or consent of the holders of Partnership Preferred Securities will
be required for the Partnership to redeem and cancel Partnership Preferred
Securities in accordance with the Limited Partnership Agreement.
Notwithstanding that holders of Partnership Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Partnership Preferred Securities at such time that are beneficially owned
by the Company or by any entity directly or indirectly controlled by, or under
direct or indirect common control with, the Company, shall not be entitled to
vote or consent and shall, for purposes of such vote or consent, be treated as
if they were not outstanding; PROVIDED, HOWEVER, that persons (other than
affiliates of the Company) to whom the Company or any of its subsidiaries have
pledged Partnership Preferred Securities may vote or consent with respect to
such pledged Partnership Preferred Securities pursuant to the terms of such
pledge.
Holders of the Partnership Preferred Securities will have no rights to
remove or replace the General Partner.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE PARTNERSHIP
The Partnership may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Partnership may, without the consent of the holders of the
Partnership Preferred Securities, consolidate, amalgamate, merge with or into,
or be replaced by a limited partnership, limited liability company or trust
organized as such under the laws of any state of the United States of
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America, provided that (i) such successor entity either (x) expressly assumes
all of the obligations of the Partnership under the Partnership Preferred
Securities or (y) substitutes for the Partnership Preferred Securities other
securities having substantially the same terms as the Partnership Preferred
Securities (the "Partnership Successor Securities") so long as the Partnership
Successor Securities are not junior to any other equity securities of the
successor entity, with respect to participation in the profits and
distributions, and in the assets, of the successor entity, (ii) the Investment
Affiliates expressly acknowledge such successor entity as the holder of the
Affiliate Investment Instruments, (iii) the Partnership Preferred Securities or
any Successor Securities are listed, or any Successor Securities will be listed
upon notification of issuance, on any national securities exchange or other
organization on which the Partnership Preferred Securities, if so listed, are
then listed, (iv) such merger, consolidation, amalgamation or replacement does
not cause the Trust Preferred Securities (or, in the event that the Trust is
liquidated in connection with a Trust Special Event, the Partnership Preferred
Securities (including any Partnership Successor Securities)) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the powers,
preferences and other special rights of the holders of the Trust Preferred
Securities or Partnership Preferred Securities (including any Partnership
Successor Securities) in any material respect (other than, in the case of the
Partnership Preferred Securities, with respect to any dilution of the holders'
interest in the new resulting entity), (vi) such successor entity has a purpose
substantially identical to that of the Partnership, (vii) prior to such merger,
consolidation, amalgamation or replacement, the Company has received an opinion
of independent legal counsel experienced in such matters to the effect that (A)
such successor entity will be treated as a partnership for United States federal
income tax purposes, (B) such merger, consolidation, amalgamation or replacement
would not cause the Trust to be classified as an association taxable as a
corporation for United States federal income tax purposes, (C) following such
merger, consolidation, amalgamation or replacement, the Company and such
successor entity will be in compliance with the 1940 Act without registering
thereunder as an investment company, and (D) such merger, consolidation,
amalgamation or replacement will not adversely affect the limited liability of
the holders of the Partnership Preferred Securities and (viii) the Company
guarantees the obligations of such successor entity under the Partnership
Successor Securities at least to the extent provided by the Partnership
Guarantee.
BOOK-ENTRY AND SETTLEMENT
If the Partnership Preferred Securities are distributed to holders of Trust
Preferred Securities in connection with the involuntary or voluntary
dissolution, winding-up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, the Partnership Preferred Securities will
be issued in the form of one or more global certificates (each a "Global
Partnership Security") registered in the name of DTC as the depository or its
nominee. For a description of DTC and the specific terms of the Depository
arrangements, see "Description of the Trust Preferred Securities--Book-Entry
Only Issuance--The Depository Trust Company". As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Trust Preferred Securities apply in all material respects to any
Partnership Preferred Securities represented by one or more Global Partnership
Securities.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The General Partner will act as registrar, transfer agent and paying agent
for the Partnership Preferred Securities for so long as the Partnership
Preferred Securities are held by the Trust or, if the Trust is liquidated in
connection with a Trust Special Event, for so long as the Partnership Preferred
Securities remain in book-entry only form. In the event the Partnership
Preferred Securities are distributed in connection with a Trust Special Event
and the book-entry system for the Partnership Preferred Securities is
discontinued, it is anticipated that The Bank of New York or one of its
affiliates will act as registrar, transfer agent and paying agent for the
Partnership Preferred Securities.
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Registration of transfers of Partnership Preferred Securities will be
effected without charge by or on behalf of the Partnership, but upon payment
(with the giving of such indemnity as the Partnership or the General Partner may
require) in respect of any tax or other governmental charges that may be imposed
in relation to it.
The Partnership will not be required to register or cause to be registered
the transfer of Partnership Preferred Securities after such Partnership
Preferred Securities have been called for redemption.
MISCELLANEOUS
The General Partner is authorized and directed to conduct its affairs and to
operate the Partnership in such a way that (i) the Partnership will not be
deemed to be an "investment company" required to be registered under the 1940
Act or characterized as an association taxable as a corporation for United
States federal income tax purposes, (ii) the Affiliate Investment Instruments
that are debt instruments will be treated as indebtedness of the issuer of such
debt instruments for United States federal income tax purposes and (iii) the
Partnership will not be treated as an association or as a "publicly traded
partnership" (within the meaning of Section 7704 of the Code) taxable as a
corporation. In this connection, the General Partner is authorized to take any
action, not inconsistent with applicable law, the certificate of limited
partnership of the Partnership or the Limited Partnership Agreement, that the
General Partner determines in its discretion to be necessary or desirable for
such purposes as long as such action does not adversely affect the interests of
the holders of the Partnership Preferred Securities.
DESCRIPTION OF THE PARTNERSHIP GUARANTEE
Set forth below is a summary of information concerning the Partnership
Guarantee that will be executed and delivered by the Company 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 Partnership Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus is a part. The General
Partner will hold the Partnership Guarantee for the benefit of the holders of
the Partnership Preferred Securities.
GENERAL
Pursuant to the Partnership Guarantee, the Company will irrevocably agree,
on a subordinated basis to the extent set forth therein, to pay in full to the
holders of the Partnership Preferred Securities (without duplication of amounts
theretofore paid by the Partnership), as and when due, regardless of any
defense, right of set-off or counterclaim that the Partnership may have or
assert, the following payments (the "Partnership Guarantee Payments"): (i) any
accumulated and unpaid distributions that have theretofore been declared on the
Partnership Preferred Securities out of funds legally available therefor, (ii)
the redemption price with respect to any Partnership Preferred Securities called
for redemption by the Partnership out of funds legally available therefor, and
(iii) upon a liquidation of the Partnership, the lesser of (a) the aggregate of
the liquidation preference and all accumulated and unpaid distributions on the
Partnership Preferred Securities to the date of payment and (b) the amount of
assets of the Partnership, after satisfaction of all liabilities, remaining
available for distribution to holders of Partnership Preferred Securities in
liquidation of the 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
Partnership to pay such amounts to such holders.
The Partnership Guarantee will be a guarantee on a subordinated basis with
respect to the Partnership Preferred Securities from the time of issuance of
such Partnership Preferred Securities but will not apply to any payment of
distributions or Redemption Price, or to payments upon the liquidation of the
Partnership, except to the extent the Partnership shall have funds available
therefor. If Investment Affiliates (including,
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where applicable, the Company, as guarantor) of the Affiliate Investment
Instruments in which the Partnership invests fail to make any payment in respect
of such securities (or, if applicable, guarantees), the Partnership may not
declare or pay dividends on the Partnership Preferred Securities. In such event,
holders of the Partnership Preferred Securities would not be able to rely upon
the Partnership Guarantee for payment of such amounts. Instead, holders of the
Partnership Preferred Securities will have the remedies described herein under
"Description of the Partnership Preferred Securities--Partnership Enforcement
Events," including the right to direct the General Partner or the Special
Representative, as the case may be, to enforce the covenant restricting certain
payments by the Company and Finance Subsidiaries. See "--Covenants of the
Company" below.
The Guarantees, when taken together with the Company Debenture and the
Company's obligations to pay all fees and expenses of the Trust and the
Partnership, constitute a guarantee to the extent set forth herein by the
Company of the distribution, redemption and liquidation payments payable to the
holders of the Partnership Preferred Securities. The Guarantees do not apply,
however, to current distributions by the Partnership unless and until such
distributions are declared by the Partnership out of funds legally available for
payment or to liquidating distributions unless there are assets available for
payment in the Partnership, each as more fully described under "Risk
Factors--Insufficient Income or Assets Available to Partnership".
COVENANTS OF THE COMPANY
The Company will covenant in the Partnership Guarantee that if (a) for any
distribution period, full distributions on a cumulative basis on any Partnership
Preferred Securities have not been paid or declared and set apart for payment,
(b) an Investment Event of Default by any Investment Affiliate in respect of any
Affiliate Investment Instrument has occurred and is continuing or (c) the
Company is in default of its obligations under the Trust Guarantee, the
Partnership Guarantee or any Investment Guarantee, then, during such period (i)
the Company 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 or comparable equity interest (except for
(x) dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, its capital stock, and conversions or
exchanges of common stock of one class into common stock of another class and
(y) redemptions or purchases of any rights pursuant to the Rights Agreement and
the issuance of common stock pursuant to such rights) and (ii) the Company shall
not make, permit any Finance Subsidiary to make, or make any payments that would
enable any Finance Subsidiary to make, any payment of any dividends on, any
distribution with respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any preferred security or
comparable equity interest of any Finance Subsidiary.
EVENTS OF DEFAULT: ENFORCEMENT OF PARTNERSHIP GUARANTEE
An event of default under the 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 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 the Partnership Guarantee. If
the Special Representative fails to enforce its rights under the Partnership
Guarantee, after a holder of Partnership Preferred Securities has made a written
request, such holder of Partnership Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Special Representative's
rights under the Partnership Guarantee without first instituting a legal
proceeding against the Partnership, the Special Representative or any other
person or entity. Notwithstanding the foregoing, if the Company has failed to
make a 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.
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STATUS OF THE PARTNERSHIP GUARANTEE; SUBORDINATION
The Partnership Guarantee will constitute an unsecured obligation of the
Company and will rank subordinate and junior in right of payment to all other
liabilities of the Company and will rank PARI PASSU with the most senior
preferred stock issued from time to time by the Company, and with any guarantee
now or hereafter entered into by the Company in respect of any preferred stock
of any Finance Subsidiary. Accordingly, the rights of the holders of Partnership
Preferred Securities to receive payments under the Partnership Guarantee will be
subject to the rights of the holders of any obligations of the Company that are
senior in priority to the obligations under the Partnership Guarantee.
Furthermore, the holders of obligations of the Company that are senior to the
obligations under the Partnership Guarantee (including, but not limited to,
obligations constituting Senior Indebtedness) will be entitled to the same
rights upon payment default or dissolution, liquidation and reorganization in
respect of the Partnership Guarantee that inure to the holders of Senior
Indebtedness as against the holders of the Company Debenture. The Limited
Partnership Agreement provides that each holder of Partnership Preferred
Securities, by acceptance thereof, agrees to the subordination provisions and
other terms of the Partnership Guarantee.
The Partnership Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the Partnership
Guarantee without instituting a legal proceeding against any other person or
entity).
The Partnership Guarantee will be deposited with the General Partner to be
held for the benefit of the holders of the Partnership Preferred Securities. In
the event of the appointment of a Special Representative to, among other things,
enforce the Partnership Guarantee, the Special Representative may take
possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the holders of the Partnership Preferred Securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no consent will be
required), the Partnership Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation preference of the
outstanding Partnership Preferred Securities. All guarantees and agreements
contained in the 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 then outstanding.
Except in connection with any permitted merger or consolidation of the Company
with or into another entity or any permitted sale, transfer or lease of the
Company's assets to another entity in which the surviving corporation (if other
than the Company) assumes the Company's obligations under the Partnership
Guarantee, the Company may not assign its rights or delegate its obligations
under the Partnership Guarantee without the prior approval of the holders of at
least a majority of the aggregate stated liquidation preference of the
Partnership Preferred Securities then outstanding.
TERMINATION OF THE PARTNERSHIP GUARANTEE
The Partnership Guarantee will terminate and be of no further force and
effect as to the Partnership Preferred Securities upon (i) full payment of the
redemption price of all Partnership Preferred Securities or (ii) full payment of
the amounts payable in accordance with the Limited Partnership Agreement upon
liquidation of the Partnership. The 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 must in accordance with the Partnership Act
restore payment of any sums paid under the Partnership Preferred Securities or
the 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.
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GOVERNING LAW
The Partnership Guarantee will be governed by and construed in accordance
with the internal laws of the State of New York.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special tax
counsel to the Company, the Trust and the Partnership ("Tax Counsel"), the
following is a summary of certain of the material United States federal income
tax consequences that may be relevant to the purchase, ownership and disposition
of Trust Preferred Securities. Unless otherwise stated, this summary deals only
with Trust Preferred Securities held as capital assets by United States Persons
(defined herein) who purchase the Trust Preferred Securities upon original
issuance. As used herein, a "United States Person" means a person that is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust as defined in section
7701(a)(30) of the Internal Revenue Code of 1986, as amended (the "Code"). The
tax treatment of a holder may vary depending on its particular situation. This
summary does not address all the tax consequences that may be relevant to
holders who may be subject to special tax treatment, such as banks, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax- exempt investors, or foreign investors. This
summary does not include any description of any alternative minimum tax
consequences or the tax laws of any state or local government or of any foreign
government that may be applicable to the Trust Preferred Securities. This
summary is based on the Code, the Treasury regulations promulgated thereunder
and administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
The Trust Preferred Securities are not being marketed to persons that are
not United States Persons ("non-United States Persons") and, consequently, the
following discussion does not discuss the tax consequences that might be
relevant to non-United States Persons. Moreover, in order to protect the Trust
and the Partnership from potential adverse consequences, non-United States
Persons will be subject to withholding on distributions on the Trust Preferred
Securities held by such non-United States Persons at a rate of 30%. In
determining a holder's status, the United States entity otherwise required to
withhold taxes may rely on an IRS form W-8, an IRS form W-9, or a holder's
certification of its non-foreign status signed under penalty of perjury.
Non-United States Persons should consult their tax advisors as to the specific
United States federal income tax consequences of the purchase, ownership, and
disposition of Trust Preferred Securities.
Tax Counsel has advised that there is no authority directly on point dealing
with securities such as the Trust Preferred Securities or transactions of the
type described herein and that the opinions of Tax Counsel are not binding on
the Internal Revenue Service ("IRS") or the courts, either of which could take a
contrary position. No rulings have been or will be sought from the IRS.
Accordingly, there can be no assurance that the IRS will not challenge the
opinions expressed herein or that a court would not sustain such a challenge.
Nevertheless, Tax Counsel has advised that it is of the view that, if
challenged, the opinions expressed herein would be sustained by a court with
jurisdiction in a properly presented case.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE
TRUST PREFERRED SECURITIES OR REDEMPTION OF THE PARTNERSHIP PREFERRED SECURITIES
UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF THE TRUST
PREFERRED SECURITIES--TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION" AND
"DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES--PARTNERSHIP SPECIAL EVENT
REDEMPTION" RESPECTIVELY.
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CLASSIFICATION OF THE TRUST
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the Trust will
be classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, for United
States federal income tax purposes, each holder of Trust Preferred Securities
will be considered the owner of an undivided interest in the Partnership
Preferred Securities held by the Trust, and each holder will be required to
include in its gross income its distributive share of income attributable to the
Partnership, which generally will be equal to such holder's allocable share of
amounts accrued on the Partnership Preferred Securities. Unless the Partnership
invests in the stock of certain Investment Affiliates (for example, after
repayment of the Debentures), no amount included in income with respect to the
Trust Preferred Securities will be eligible for the corporate dividends-received
deduction.
CLASSIFICATION OF THE PARTNERSHIP
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the
Partnership will be classified for United States federal income tax purposes as
a partnership and not as an association or publicly traded partnership taxable
as a corporation.
Tax Counsel's opinion is based on certain factual assumptions relating to
the organization and operation of the Partnership and is conditioned upon
certain representations made by the General Partner and the Partnership as to
factual matters, such as the organization and the operation of the Partnership
and the type and frequency of investments made by the Partnership.
The General Partner has represented that it intends to operate the
Partnership in a manner such that it will continue to constitute a partnership
for all future taxable periods in which any Partnership Preferred Securities
remain outstanding. In particular, pursuant to the Limited Partnership
Agreement, the General Partner is prohibited from taking any action that would
cause the Partnership to constitute a "publicly traded partnership" taxable as a
corporation under section 7704(a) of the Code. Accordingly, it is expected that
the Partnership will continue to qualify as a partnership, and therefore will
not constitute a publicly traded partnership taxable as a corporation, for all
taxable years in which the Partnership Preferred Securities remain outstanding.
CLASSIFICATION OF THE DEBENTURES
The Partnership, the Company, the relevant Investment Affiliates and the
holders of the Trust Securities (by acceptance of a beneficial interest in a
Trust Security) will agree to treat the Debentures as indebtedness of the
relevant issuer for all United States tax purposes. In connection with the
issuance of the Debentures, Tax Counsel will issue its opinion that, under
current law, and based on certain representations, facts and assumptions set
forth in such opinion, the Debentures will be classified as indebtedness of the
relevant issuer for United States federal income tax purposes.
INCOME AND DEDUCTIONS
A holder's distributive share of income attributable to the Partnership
generally will be substantially equal to the amount of the cash distributions
that accumulate with respect to the Trust Preferred Securities. Accordingly, if
quarterly distributions on the Trust Preferred Securities are paid currently,
the amount of income recognized by a holder during a taxable year generally will
be substantially equal to the cash distributions received by the holder with
respect to its Trust Preferred Securities.
The nature and timing of the income that is allocated to holders of Trust
Preferred Securities will, however, depend on the United States federal income
tax characterization of the investments held by the Partnership during the
period in question. Because the Partnership will be an accrual basis taxpayer
for
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United States federal income tax purposes, income will accrue on the Trust
Preferred Securities and will be allocated to holders of Trust Preferred
Securities on a daily accrual basis, generally at a rate that is expected to be
equal to (and that will not be greater than) the distribution rate on the Trust
Preferred Securities, regardless of the holders' method of accounting. Actual
cash distributions on the Trust Preferred Securities will not, however, be
separately reported as taxable income to the holders at the time they are
received.
If distributions on the Partnership Preferred Securities are not made
currently, the corresponding distributions on the Trust Preferred Securities
will not be made currently. Because the Partnership is an accrual basis taxpayer
it can be expected that during a period in which interest payments on the
Debentures or distributions on the Partnership Preferred Securities are deferred
(for whatever reason), holders will generally recognize income in advance of
their receipt of any cash distributions with respect to their Trust Preferred
Securities. The amount of income that will be allocated to holders of Trust
Preferred Securities during any such deferral period will equal their pro rata
share of the amount of distributions accruing on the Partnership Preferred
Securities during such deferral period.
The Partnership does not presently intend to make an election under Section
754 of the Code. Accordingly, a subsequent purchaser of Trust Preferred
Securities will not be permitted to adjust the tax basis in his allocable share
of the Partnership's assets so as to reflect any difference between his purchase
price for the Trust Preferred Securities and his share of the Partnership's
underlying tax basis in its assets. As a result, a holder of Trust Preferred
Securities may be required to report a larger or smaller amount of income from
holding the Trust Preferred Securities than would otherwise be appropriate based
upon the holder's purchase price for the Trust Preferred Securities.
RECEIPT OF PARTNERSHIP PREFERRED SECURITIES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Trust Preferred Securities--Trust Special Event Redemption or Distribution",
Partnership Preferred Securities may be distributed to holders of Trust
Preferred Securities in exchange for their Trust Preferred Securities and in
liquidation of the Trust. Unless the liquidation of the Trust occurs as a result
of the Trust being subject to United States federal income tax with respect to
income accrued or received on the Partnership Preferred Securities, such a
distribution to holders would, for United States federal income tax purposes, be
treated as a nontaxable event to each holder, each holder would receive an
aggregate tax basis in the Partnership Preferred Securities equal to such
holder's aggregate tax basis in its Trust Preferred Securities, and a holder's
holding period in the Partnership Preferred Securities so received in
liquidation of the Trust would include the period during which the Trust
Preferred Securities were held by such holder. If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Partnership
Preferred Securities, the distribution of Partnership Preferred Securities to
holders by the Trust would likely be a taxable event to each holder, and a
holder would recognize gain or loss as if the holder had exchanged its Trust
Preferred Securities for the Partnership Preferred Securities it received upon
the liquidation of the Trust. Such gain or loss would be equal to the difference
between the holder's aggregate tax basis in its Trust Preferred Securities
surrendered in the exchange and the aggregate fair market value of the
Partnership Preferred Securities received in the exchange.
REDEMPTION OF TRUST PREFERRED SECURITIES FOR CASH
Under certain circumstances, as described under the caption "Description of
the Trust Preferred Securities--Optional Redemption", "Description of the Trust
Preferred Securities--Trust Special Event Redemption or Distribution" and
"Description of the Partnership Preferred Securities--Partnership Special Event
Redemption", the General Partner may cause the Partnership to redeem the
Partnership Preferred Securities for cash, in which event the Trust would use
the proceeds of such redemption to redeem the Trust Preferred Securities. Under
current law, such a redemption would constitute, for United
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States federal income tax purposes, a taxable disposition, and a holder would
recognize gain or loss as if it sold the holder's proportionate interest in the
redeemed Partnership Preferred Securities for an amount of cash equal to the
proceeds received upon redemption. See "--Disposition of Trust Preferred
Securities".
DISPOSITION OF TRUST PREFERRED SECURITIES
A holder that sells Trust Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the Trust
Preferred Securities and the holder's adjusted tax basis in such Trust Preferred
Securities. Such gain or loss will be a capital gain or loss and will be a long-
term capital gain or loss if the Trust Preferred Securities have been held for
more than one year at the time of the sale. A holder will be required to include
accumulated but unpaid distributions on the Partnership Preferred Securities
through the date of disposition in income as ordinary income, and to add such
amount to the adjusted tax basis of its Trust Preferred Securities.
A holder's tax basis in its Trust Preferred Securities will generally equal
(i) the amount paid by such holder for its Trust Preferred Securities, (ii)
increased by the amount includible in income by such holder with respect to its
Trust Preferred Securities, and (iii) reduced by the amount of cash or other
property distributed to such holder with respect to its Trust Preferred
Securities. A holder who acquires Trust Preferred Securities at different prices
may be required to maintain a single aggregate adjusted tax basis in all of his
Trust Preferred Securities and, upon sale or other disposition of some of such
Trust Preferred Securities, to allocate a PRO RATA portion of such aggregate tax
basis to the Trust Preferred Securities sold (rather than maintaining a separate
tax basis in each Trust Preferred Security for purposes of computing gain or
loss on a sale of that Trust Preferred Security).
OTHER PARTNERSHIP PROVISIONS
SECTION 701. The Department of Treasury has promulgated regulations under
Section 701 of the Code that permit it to recast a transaction or disregard a
partnership if a partnership is "formed or availed of in connection with a
transaction a principal purpose of which is to reduce substantially the present
value of the partners' aggregate federal tax liability in a manner that is
inconsistent with the intent of [the partnership provisions of the Code]" or to
treat a partnership as an aggregate of its partners "as appropriate to carry out
the purpose of any provision of the . . . Code or the [Treasury] regulations."
The Partnership has been formed for, and will engage in, activities typical for
partnerships. Although there is no precedent that applies to the transactions
contemplated herein, Tax Counsel believes that the Partnership is not of the
type intended to fall within the scope of these regulations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Income on the Trust Preferred Securities will be reported to holders on an
IRS Form 1099, which form should be mailed to holders of Trust Preferred
Securities by January 31 following each calendar year.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the fiscal 1998 budget proposal submitted to
Congress, the Clinton Administration proposed certain changes to federal income
tax law which would, among other things, deny an issuer an interest deduction,
for federal income tax purposes, on certain instruments that are "issued on or
after the date of first Congressional Committee action" (the "Clinton
Proposal"). On June 9, 1997, House Ways and Means Committee Chairman Bill Archer
released the Chairman's Mark Relating to Revenue Reconciliation Provisions that
are proposed to be included in 1997 tax legislation (the "Chairman's Mark"). The
Chairman's Mark constitutes "first Congressional Committee action" with respect
to the provisions contained therein. The Chairman's Mark does not include any
provision that would deny an issuer an interest deduction, for federal income
tax purposes, on instruments with terms similar to the Debentures.
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There can be no assurance, however, that the Clinton Proposal or other
legislation that affects the Debentures will not ultimately be enacted into law.
Although it is currently anticipated that any modifications or additions to the
Chairman's Mark would have an effective date after the date hereof, as well as
transitional rules, no assurance can be given that the effective date and
transitional rules relating thereto would be enacted as anticipated, or that
other developments will not occur after the date hereof that would adversely
affect the tax treatment of the Debentures, or whether such tax treatment would
cause a Partnership Tax Event that may result in the redemption of the
Partnership Preferred Securities and, consequently, the Trust Preferred
Securities.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Trust has agreed to sell to each of the Underwriters
named below, and each of the Underwriters, for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Lehman Brothers Inc., Morgan Stanley & Co.
Incorporated, PaineWebber Incorporated, Prudential Securities Incorporated and
Smith Barney Inc. are acting as representatives (the "Representatives"), has
severally agreed to purchase the number of Trust Preferred Securities set forth
opposite its name below. In the Purchase Agreement, the several Underwriters
have agreed, subject to the terms and conditions set forth therein, to purchase
all the Trust Preferred Securities offered hereby if any of the Trust Preferred
Securities are purchased. In the event of default by an Underwriter, the
Purchase Agreement provides that, in certain circumstances, the purchase
commitments of the non-defaulting Underwriters may be increased or the Purchase
Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF TRUST
PREFERRED
UNDERWRITERS SECURITIES
- ---------------------------------------------------------------------------------------------- ------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................................................
Lehman Brothers Inc...........................................................................
Morgan Stanley & Co. Incorporated.............................................................
PaineWebber Incorporated......................................................................
Prudential Securities Incorporated............................................................
Smith Barney Inc..............................................................................
Total............................................................................... 6,000,000
----------
----------
</TABLE>
The Underwriters propose to offer the Trust Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and, in part, to certain securities
dealers at such price less a concession of $ per Trust Preferred Security;
provided that, such concession for sales of 10,000 or more Trust Preferred
Securities to any single purchaser will be $ per Trust Preferred Security.
The Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per Trust Preferred Security to certain brokers and dealers.
After the Trust Preferred Securities are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Representatives.
In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the investment instruments of the
Company and its subsidiaries, the Purchase Agreement provides that the Company
will pay as compensation ("Underwriters' Compensation") to the Underwriters, an
amount in immediately available funds of $ per Trust Preferred Security (or
$ in the aggregate) for the accounts of the several Underwriters; provided
that, such compensation for sales of 10,000 or more Trust Preferred Securities
to any single purchaser will be $ per Trust Preferred Security. Therefore,
to the extent of such sales, the actual amount of Underwriters' Compensation
will be less than the aggregate amount specified in the preceding sentence.
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Application has been made to list the Trust Preferred Securities on the New
York Stock Exchange. Trading of the Trust Preferred Securities on the New York
Stock Exchange is expected to commence within a 30-day period after the initial
delivery of the Trust Preferred Securities. The Representatives have advised the
Trust that they intend to make a market in the Trust Preferred Securities prior
to the commencement of trading on the New York Stock Exchange. The
Representatives will have no obligation to make a market in the Trust Preferred
Securities, however, and may cease market making activities, if commenced, at
any time.
Prior to this offering there has been no public market for the Trust
Preferred Securities. In order to meet one of the requirements for listing the
Trust Preferred Securities on the New York Stock Exchange, the Underwriters will
undertake to sell lots of 100 or more Trust Preferred Securities to a minimum of
400 beneficial holders.
The Trust, the Company, and the Partnership have agreed to indemnify the
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
Until the distribution of the Trust Preferred Securities is completed, rules
of the Securities and Exchange Commission may limit the ability of the
Underwriters and certain selling group members to bid for and purchase the Trust
Preferred Securities. As an exception to these rules, the Representatives are
permitted to engage in certain transactions that stabilize the price of the
Trust Preferred Securities. Such transaction consist of bids or purchases for
the purposes of pegging, fixing or maintaining the price of the Trust Preferred
Securities.
If the Underwriters create a short position in the Trust Preferred
Securities in connection with the offering, I.E., if they sell more Trust
Preferred Securities than are set forth on the cover page of this Prospectus
Supplement, the Representatives may reduce the short position by purchasing
Trust Preferred Securities in the open market.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase Trust
Preferred Securities in the open market to reduce the Underwriters' short
position or to stabilize the price of the Trust Preferred Securities, they may
reclaim the amount of the selling concession from the Underwriters and selling
group members who sold those Trust Preferred Securities as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
None of the Company, the Trust, the Partnership nor any of the Underwriters
makes any representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the Trust
Preferred Securities. In addition, none of the Company, the Trust, the
Partnership nor any of the Underwriters makes any representation that the
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
LEGAL MATTERS
Certain matters of Delaware law relating to the legality of the Trust
Preferred Securities, the validity of the Declaration, the formation of the
Trust and the Partnership and the legality under state law of the Trust
Preferred Securities and the Partnership Preferred Securities are being passed
upon by Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel to
the Trust, the Partnership and the Company. The legality under state law of the
Trust Guarantee, the Partnership Guarantee, the Company Debenture and the
Investment Guarantees with respect to the Affiliate Debentures will be passed
upon on behalf of the Trust, the Partnership and the Company by Partrick J.
Guarino, Esq., Executive Vice
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President, General Counsel and Secretary of the Company. As of June 1, 1997, Mr.
Guarino beneficially owned less than one percent of the issued and outstanding
common stock of UDS. Certain United States federal income taxation matters will
be passed upon on behalf of the Trust, the Partnership and the Company by
Skadden, Arps, Slate, Meagher & Flom LLP. The validity of the Trust Preferred
Securities, the Partnership Preferred Securities and the Trust Guarantee and the
Partnership Guarantee will be passed upon on behalf of the Underwriters by
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, counsel to the
Underwriters.
EXPERTS
The consolidated financial statements and related financial statement
schedules of the Company and its subsidiaries included or incorporated by
reference in the Company's 1996 Annual Report on Form 10-K, and incorporated by
reference in this Prospectus Supplement, have been audited by Ernst & Young LLP,
independent auditors, as stated in their report included therein and
incorporated by reference herein which, as to all periods presented, is based in
part on the report of Price Waterhouse LLP, independent accountants, pertaining
to the Diamond Shamrock operations of UDS, also included therein and
incorporated by reference herein. Such financial statements and schedule 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.
The balance sheets of UDS Funding I, L.P. and UDS Capital I included in this
Prospectus Supplement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
S-62
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERMS PAGE NO.
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C>
Affiliate Debentures.................................................................................. S-44
Affiliate Investment Instruments...................................................................... S-25
Arrangement........................................................................................... S-16
Beneficial Owner...................................................................................... S-35
BPD................................................................................................... S-13
Business Day.......................................................................................... S-28
Chairman's Mark....................................................................................... S-11
Change in 1940 Act Law................................................................................ S-30
Clinton Proposal...................................................................................... S-11
Code.................................................................................................. S-56
Company............................................................................................... S-1
Company Debenture..................................................................................... S-44
CUC................................................................................................... S-23
Debentures............................................................................................ S-44
Declaration........................................................................................... S-24
Delaware Trustee...................................................................................... S-24
Depository............................................................................................ S-35
Diamond Shamrock...................................................................................... S-13
DTC................................................................................................... S-1
Eligible Institution.................................................................................. S-45
Eligible Debt Securities.............................................................................. S-44
FDIC.................................................................................................. S-45
Finance Subsidiary.................................................................................... S-3
General Partner....................................................................................... S-1
Global Certificates................................................................................... S-35
Global Partnership Security........................................................................... S-51
Guarantees............................................................................................ S-2
Independent Financial Advisor......................................................................... S-45
Indirect Participants................................................................................. S-35
Initial Partnership Proceeds.......................................................................... S-44
Investment Affiliate.................................................................................. S-45
Investment Events of Default.......................................................................... S-44
Investment Guarantees................................................................................. S-2
IRS................................................................................................... S-56
Limited Partnership Agreement......................................................................... S-24
Moody's............................................................................................... S-45
NCS................................................................................................... S-23
NCS Acquisition....................................................................................... S-23
New York Stock Exchange............................................................................... S-1
1940 Act.............................................................................................. S-8
Non-United States Persons............................................................................. S-56
Participants.......................................................................................... S-35
Partnership........................................................................................... S-1
Partnership Act....................................................................................... S-25
Partnership Enforcement Event......................................................................... S-43
Partnership Guarantee................................................................................. S-2
Partnership Guarantee Payments........................................................................ S-52
</TABLE>
S-63
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERMS PAGE NO.
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C>
Partnership Investment Company Event.................................................................. S-48
Partnership Liquidation Distribution.................................................................. S-48
Partnership Preferred Securities...................................................................... S-1
Partnership Special Event............................................................................. S-47
Partnership Successor Securities...................................................................... S-51
Partnership Tax Event................................................................................. S-47
Property Account...................................................................................... S-24
Property Trustee...................................................................................... S-24
Proxy Circular........................................................................................ S-16
Purchase Agreement.................................................................................... S-60
Redemption Price...................................................................................... S-4
Regular Trustees...................................................................................... S-24
Representatives....................................................................................... S-60
Rights Agreement...................................................................................... S-3
S&P................................................................................................... S-45
Senior Indebtedness................................................................................... S-2
SFAS.................................................................................................. S-21
Special Event......................................................................................... S-11
Special Representative................................................................................ S-43
Successor Securities.................................................................................. S-34
Tax Action............................................................................................ S-30
Tax Counsel........................................................................................... S-56
Total................................................................................................. S-16
Trust................................................................................................. S-1
Trust Act............................................................................................. S-24
Trust Common Securities............................................................................... S-1
Trust Dissolution Tax Opinion......................................................................... S-30
Trust Enforcement Event............................................................................... S-28
Trust Guarantee....................................................................................... S-2
Trust Guarantee Payments.............................................................................. S-39
Trust Guarantee Trustee............................................................................... S-24
Trust Indenture Act................................................................................... S-24
Trust Investment Company Event........................................................................ S-30
Trust Liquidation..................................................................................... S-32
Trust Liquidation Distribution........................................................................ S-32
Trust Preferred Securities............................................................................ S-1
Trust Redemption Tax Opinion.......................................................................... S-30
Trust Securities...................................................................................... S-1
Trust Special Event................................................................................... S-29
Trust Tax Event....................................................................................... S-30
Trustees.............................................................................................. S-24
UDS................................................................................................... S-1
UDS Merger............................................................................................ S-13
UDS 10-K.............................................................................................. S-15
UDS 10-Q.............................................................................................. S-15
UI.................................................................................................... S-23
Ultramar.............................................................................................. S-13
Underwriters' Compensation............................................................................ S-1
United States Person.................................................................................. S-56
</TABLE>
S-64
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
-------------
<S> <C>
UDS FUNDING I, L.P.
Report of Independent Public Accountants............................................................ F-2
Balance Sheet....................................................................................... F-3
Notes to Balance Sheet.............................................................................. F-4
UDS CAPITAL I
Report of Independent Public Accountants............................................................ F-5
Balance Sheet....................................................................................... F-6
Notes to Balance Sheet.............................................................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the General Partner and Initial Limited Partner of
UDS Funding I, L.P.
We have audited the accompanying balance sheet of UDS Funding I, L.P., a
Delaware Limited Partnership (the "Partnership"), as of June 5, 1997. This
balance sheet is the responsibility of the General Partner's management. Our
responsibility is to express an opinion on this balance sheet based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Partnership as of June 5, 1997,
in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
San Antonio, Texas
June 12, 1997
F-2
<PAGE>
UDS FUNDING I, L.P.
BALANCE SHEET
JUNE 5, 1997
<TABLE>
<S> <C>
Assets............................................................................... $ --
Partnership interests
Initial limited partner interest................................................... $ 85
General partner interest........................................................... 15
---------
$ 100
Less: Receivables from partners for subscribed partnership interests................. (100)
---------
--
---------
---------
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-3
<PAGE>
UDS FUNDING I, L.P.
NOTES TO BALANCE SHEET
UDS Funding I, L.P. (the "Partnership") is a limited partnership that was
formed under the Delaware Revised Uniform Limited Partnership Act on June 5,
1997 for the exclusive purposes of purchasing certain eligible debt securities
of Ultramar Diamond Shamrock Corporation (the "Company") and wholly owned
subsidiaries of the Company and certain other eligible debt instruments of
parties unaffiliated with the Company with the proceeds from the sale of
Partnership Preferred Securities (the "Partnership Preferred Securities") to UDS
Capital I and a capital contribution from the Company in exchange for the
general partnership interest in the Partnership (collectively, the "Partnership
Proceeds").
The Partnership Proceeds will be used to purchase certain eligible debt
instruments of the Company and certain wholly owned subsidiaries of the Company,
with the Partnership retaining 1% in unaffiliated debt securities. The
Partnership shall have a perpetual existence subject to certain termination
events. The Company serves as the sole general partner of the Partnership. The
Company, in its capacity as General Partner of the Partnership, has agreed to
pay all fees and expenses related to the organization and operations of the
Partnership (including any taxes, duties, assessments or government charges of
whatever nature (other than withholding taxes) imposed by the United States or
any other domestic taxing authority upon the Partnership) and the offering of
the Partnership Preferred Securities and be responsible for all debts and other
obligations of the Partnership (other than with respect to the Partnership
Preferred Securities). The General Partner has agreed to indemnify certain
officers and agents of the Partnership.
F-4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees of
UDS Capital I
We have audited the accompanying balance sheet of UDS Capital I, a Delaware
Business Trust (the "Trust"), as of June 5, 1997. This balance sheet is the
responsibility of Ultramar Diamond Shamrock Corporation's management. Our
responsibility is to express an opinion on this balance sheet based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Trust as of June 5, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
San Antonio, Texas
June 12, 1997
F-5
<PAGE>
UDS CAPITAL I
BALANCE SHEET
JUNE 5, 1997
<TABLE>
<S> <C>
Assets................................................................................. $ 0
Trust securities....................................................................... $ 0
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-6
<PAGE>
UDS CAPITAL I
NOTES TO BALANCE SHEET
UDS Capital I (the "Trust") is a statutory business trust formed on June 5,
1997 under the Business Trust Act of the State of Delaware for the exclusive
purposes of (i) issuing the Trust Originated Preferred Securities (the "Trust
Preferred Securities") and the Trust Common Securities (together with the Trust
Preferred Securities, the "Trust Securities") representing undivided beneficial
ownership interests in the assets of the Trust, (ii) purchasing Partnership
Preferred Securities (the "Partnership Preferred Securities") representing the
limited partnership interests of UDS Funding I, L.P. (the "Partnership") with
the proceeds from the sale of the Trust Securities, and (iii) engaging in only
those other activities necessary or incidental thereto. The Trust has a
perpetual existence, subject to certain termination events as provided in the
Declaration of Trust under which it was formed. Subsequent to June 5, 1997, the
Trust intends to issue and sell its Trust Preferred Securities in a public
offering and to issue and sell its Trust Common Securities to Ultramar Diamond
Shamrock Corporation (the "Company"). No Trust Securities have been issued as of
June 5, 1997.
The proceeds from the Trust's sale of the Trust Securities will be used to
purchase the Partnership Preferred Securities from the Partnership.
The Company will be obligated to pay compensation to the underwriters of the
offering of the Trust Preferred Securities. The Company will pay all fees and
expenses related to the organization and operations of the Trust (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 Trust) and the offering of the Trust Preferred
Securities and be responsible for all debts and other obligations of the Trust
(other than the Trust Securities). The Company has also agreed to indemnify the
Trustees and certain other persons.
F-7
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED JUNE 17, 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 A FINAL PROSPECTUS IS DELIVERED.
THIS PROSPECTUS 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.
<PAGE>
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
(CONTINUED ON NEXT PAGE)
------------------------
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
2
<PAGE>
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 , 1997.
3
<PAGE>
(CONTINUED FROM FRONT COVER)
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.
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.
4
<PAGE>
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.
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.
3
<PAGE>
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-Registered Trademark-,
Beacon-Registered Trademark- and Ultramar-Registered Trademark- 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
4
<PAGE>
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
5
<PAGE>
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.
6
<PAGE>
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:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS
ENDED MARCH 31
------------------------
1996 1995 1996 1995 1994 1993
----- ----- ----- ----- ----- -----
Ratio of earnings
to fixed charges............................ 2.2 1.9 1.2 1.8 3.0 2.6
<CAPTION>
<S> <C>
PERIOD FROM
JULY 6, 1992 TO
DECEMBER 31, 1992
---------------------
Ratio of earnings
to fixed charges............................ 2.1
</TABLE>
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.
7
<PAGE>
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
8
<PAGE>
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
9
<PAGE>
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
10
<PAGE>
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
11
<PAGE>
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:
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(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
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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)
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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
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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)
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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.
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"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
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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
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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.
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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").
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.
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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.
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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.
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.
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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.
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.
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.
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. 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.
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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.
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 same effect received from the United States
Internal Revenue Service or a revenue ruling pertaining to a comparable form of
transaction to the same 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.
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.
THE DEBT TRUSTEE
The Company may have normal banking relationships with the Debt Trustee in
the ordinary course of business.
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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.
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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.
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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
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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
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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.
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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
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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
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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.
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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 and
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."
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.
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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
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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,
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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
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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
38
<PAGE>
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
39
<PAGE>
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
40
<PAGE>
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.
41
<PAGE>
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. As of
June 1, 1997, Mr. Guarino beneficially owned less than one percent of the issued
and outstanding common stock of UDS. 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, except as they relate to the assets and
operations of Diamond Shamrock, Inc. prior to its merger with Ultramar
Corporation on 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, pertaining
to such assets and operations of Diamond Shamrock, Inc., 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.
42
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE
OFFERING COVERED BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE TRUST, THE PARTNERSHIP OR THE UNDERWRITERS. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, THE TRUST PREFERRED SECURITIES IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH HEREIN OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
--------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Summary.......................................... S-5
Risk Factors..................................... S-10
Ultramar Diamond Shamrock Corporation............ S-13
Use of Proceeds.................................. S-14
Capitalization................................... S-15
Total Acquisition and Pro Forma Financial Data... S-16
Selected Financial Data.......................... S-23
UDS Capital I.................................... S-24
UDS Funding I, LP................................ S-25
Description of the Trust Preferred Securities.... S-26
Description of the Trust Guarantee............... S-39
Description of the Partnership Preferred
Securities..................................... S-42
Description of the Partnership Guarantee......... S-52
Certain Federal Income Tax Considerations........ S-56
Underwriting..................................... S-60
Legal Matters.................................... S-61
Experts.......................................... S-62
Index of Defined Terms........................... S-63
Index to Financial Statements.................... F-1
PROSPECTUS
Available Information............................ 3
Documents Incorporated by Reference.............. 4
Ultramar Diamond Shamrock Corporation............ 4
The Trusts....................................... 4
The Partnerships................................. 5
Ratio of Earnings to Fixed Charges............... 7
Use of Proceeds.................................. 7
Description of Senior Debt Securities............ 8
Description of Subordinated Debt Securities...... 21
Description of the Trust Preferred Securities.... 26
Description of the Trust Guarantees.............. 27
Description of the Partnership Preferred
Securities..................................... 29
Description of the Partnership Guarantees........ 30
Description of Capital Stock of UDS.............. 34
Plan of Distribution............................. 41
Legal Matters.................................... 42
Experts.......................................... 42
</TABLE>
6,000,000
TRUST PREFERRED SECURITIES
UDS CAPITAL I
% TRUST ORIGINATED
PREFERRED SECURITIES-SM- ("TOPRS-SM-")
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
ULTRAMAR DIAMOND SHAMROCK
CORPORATION
------------------
PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
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
---------
---------
</TABLE>
- ------------------------
* 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.
II-1
<PAGE>
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.
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE
NUMBER DESCRIPTION TO THE FOLLOWING DOCUMENTS
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
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 dated April 27, 1992, Registration Statement on Form S-1 (File No.
as amended on April 28, 1992 33-47586), Exhibit 3.1
3.2 Certificate of Merger of Diamond Shamrock, Inc. Registration Statement on Form S-8 (File No.
with and into the Company, amending the Company's 333-19131), Exhibit 4.2
Articles of Incorporation
3.3 Certificate of Designations of the Company's 5% Registration Statement on Form S-8 (File No.
Cumulative Convertible Preferred Stock 333-19131), 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 to By-laws Annual Report on Form 10-K for the Year Ended
December 31, 1995, Exhibit 3.3
3.6 Amendment dated December 3, 1996 to By-laws Registration Statement on Form S-8 (File No.
333-19131), Exhibit 4.6
4.1 Indenture dated March 15, 1994 between Ultramar Annual Report on Form 10-K for the Year Ended
Diamond Shamrock Corporation, as issuer, and The December 31, 1995, Exhibit 4.7
Bank of New York, as trustee
4.2 Rights Agreement dated June 25, 1992, as amended Registration Statement on Form S-1 (File No.
33-47586), Exhibit 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 Partnership of UDS Funding *
I, L.P.
4.8 Certificate of Limited Partnership of UDS Funding *
II, L.P.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE
NUMBER DESCRIPTION TO THE FOLLOWING DOCUMENTS
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
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 Partnership Preferred Security)
4.11 Form of Trust Preferred Securities Guarantee +
Agreement by UDS and The Bank of New York as
Guarantee Trustee for the benefit of the holders of
Trust Preferred Securities of UDS Capital I
4.12 Form of Trust Preferred Securities Guarantee +
Agreement by UDS and The Bank of New York as
Guarantee 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 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 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
4.16 Form of Subordinated Debenture +
4.17 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 the validity of the Trust Preferred
Securities and the Partnership Preferred Securities
8.1 Opinion of Skadden Arps Slate Meagher & Flom LLP as +
to certain federal income tax matters
12.1 Computations of Ratios of Earnings to Fixed Charges *
23.1 Consent of Ernst & Young LLP +
23.2 Consent of Price Waterhouse LLP +
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE
NUMBER DESCRIPTION TO THE FOLLOWING DOCUMENTS
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
23.3 Consent of Arthur Andersen LLP +
23.4 Consent of Patrick J. Guarino Included in Exhibit 5.1
23.5 Consent of Skadden Arps Slate Meagher & Flom LLP Included in Exhibits 5.2 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 pertaining 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
Guarantee Trustee under the Guarantee pertaining to
the Affiliated Debentures
</TABLE>
- ------------------------
+ Filed herewith.
* Previously filed.
ITEM 17. UNDERTAKINGS.
A. Undertaking Pursuant to Rule 415.
The Registrants hereby undertake:
II-4
<PAGE>
(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.
II-5
<PAGE>
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.
II-6
<PAGE>
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
17, 1997.
<TABLE>
<S> <C> <C> <C>
ULTRAMAR DIAMOND SHAMROCK CORPORATION
BY:
<CAPTION>
/S/ PATRICK J. GUARINO
-----------------------------------------
Name: Patrick J. Guarino
Title: Attorney-in-Fact
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed on June 17, 1997, by
the following persons in the capacities indicated with respect to Ultramar
Diamond Shamrock Corporation:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
* Chief Executive Officer and Chairman of the Board of
------------------------------------------- Directors (Principal Executive Officer)
Roger R. Hemminghaus
* President, Chief Operating Officer and Vice Chairman of
------------------------------------------- the Board of Directors
Jean Gaulin
* Executive Vice President and Chief Financial Officer
------------------------------------------- (Principal Financial and Accounting Officer)
H. Pete Smith
* Director
-------------------------------------------
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
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
* Director
-------------------------------------------
Madeleine Saint-Jacques
* Director
-------------------------------------------
C. Barry Schaefer
* Director
-------------------------------------------
Russel H. Herman
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement or amendment thereto pursuant to the Powers of
Attorney executed by the above-named officers and directors and previously
filed with the Securities and Exchange Commission.
<TABLE>
<C> <S>
/s/ PATRICK J. GUARINO Attorney-in-Fact
- -------------------------------------------
Patrick J. Guarino
Attorney-in-Fact
</TABLE>
II-8
<PAGE>
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 17, 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 AND CHIEF
FINANCIAL OFFICER
II-9
<PAGE>
EXHIBIT 4.5
================================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
UDS CAPITAL I
Dated as of June __, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions........................................ 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................... 12
SECTION 2.2 Lists of Holders of Trust Securities............... 12
SECTION 2.3 Reports by the Property Trustee.................... 13
SECTION 2.4 Periodic Reports to Property Trustee............... 13
SECTION 2.5 Evidence of Compliance with Conditions
Precedent.......................................... 13
SECTION 2.6 Trust Enforcement Events; Waiver................... 13
SECTION 2.7 Trust Enforcement Event; Notice.................... 15
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................... 16
SECTION 3.2 Office............................................. 16
SECTION 3.3 Purpose............................................ 16
SECTION 3.4 Authority.......................................... 16
SECTION 3.5 Title to Property of the Trust..................... 17
SECTION 3.6 Powers and Duties of the Regular
Trustees........................................... 17
SECTION 3.7 Prohibition of Actions by the Trust and
the Trustees....................................... 21
SECTION 3.8 Powers and Duties of the Property
Trustee............................................ 22
SECTION 3.9 Certain Duties and Responsibilities of
the Property Trustee............................... 24
SECTION 3.10 Certain Rights of Property Trustee................. 26
SECTION 3.11 Delaware Trustee................................... 29
SECTION 3.12 Execution of Documents............................. 29
SECTION 3.13 Not Responsible for Recitals or Issuance
of Trust Securities................................ 29
SECTION 3.14 Duration of Trust.................................. 29
SECTION 3.15 Mergers............................................ 29
i
<PAGE>
Page
----
ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.................... 32
SECTION 4.2 Indemnification and Expenses of the
Trustee............................................ 33
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common
Securities......................................... 33
SECTION 5.2 Covenants of the Trust Common Securities
Holder............................................. 33
ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees................................. 34
SECTION 6.2 Delaware Trustee................................... 34
SECTION 6.3 Property Trustee; Eligibility...................... 35
SECTION 6.4 Qualifications of Regular Trustees and
Delaware Trustee Generally......................... 36
SECTION 6.5 Regular Trustees................................... 36
SECTION 6.6 Delaware Trustee................................... 36
SECTION 6.7 Appointment, Removal and Resignation of
Trustees........................................... 36
SECTION 6.8 Vacancies among Trustees........................... 38
SECTION 6.9 Effect of Vacancies................................ 38
SECTION 6.10 Meetings........................................... 39
SECTION 6.11 Delegation of Power................................ 39
Section 6.12 Merger, Conversion, Consolidation or
Succession to Business............................. 40
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions...................................... 40
ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Re-
garding Trust Securities........................... 42
SECTION 8.2 Redemption of Trust Securities..................... 44
SECTION 8.3 Redemption Procedures.............................. 45
ii
<PAGE>
Page
----
SECTION 8.4 Voting Rights of Trust Preferred
Securities......................................... 48
SECTION 8.5 Voting Rights of Trust Common
Securities......................................... 51
SECTION 8.6 Paying Agent....................................... 53
SECTION 8.7 Listing............................................ 53
SECTION 8.8 Acceptance of Guarantee and Agreements,
Limited Partnership Agreement...................... 53
ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust............................... 54
SECTION 9.2 Liquidation Distribution Upon Termina-
tion and Dissolution of the Trust.................. 55
ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities....................... 57
SECTION 10.2 Transfer of Certificates........................... 57
SECTION 10.3 Deemed Security Holders............................ 57
SECTION 10.4 Book Entry Interests............................... 58
SECTION 10.5 Notices to Clearing Agency......................... 59
SECTION 10.6 Appointment of Successor Clearing
Agency............................................. 59
SECTION 10.7 Definitive Trust Preferred Security
Certificates....................................... 59
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen
Certificates....................................... 60
ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability.......................................... 61
SECTION 11.2 Exculpation........................................ 61
SECTION 11.3 Fiduciary Duty..................................... 62
SECTION 11.4 Indemnification.................................... 63
SECTION 11.5 Outside Businesses................................. 66
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year........................................ 67
SECTION 12.2 Certain Accounting Matters......................... 67
iii
<PAGE>
Page
----
SECTION 12.3 Banking............................................ 68
SECTION 12.4 Withholding........................................ 68
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments......................................... 69
SECTION 13.2 Meetings of the Holders of Trust
Securities; Action by Written Consent.............. 72
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of
Property Trustee................................... 74
SECTION 14.2 Representations and Warranties of
Delaware Trustee................................... 75
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices............................................ 76
SECTION 15.2 Governing Law...................................... 77
SECTION 15.3 Intention of the Parties........................... 77
SECTION 15.4 Headings........................................... 77
SECTION 15.5 Successors and Assigns............................. 77
SECTION 15.6 Partial Enforceability............................. 78
SECTION 15.7 Counterparts....................................... 78
iv
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)............................................. 6.3(a)
310(c)............................................. Inapplicable
311(c)............................................. Inapplicable
312(a)............................................. 2.2(a)
312(b)............................................. 2.2(b)
313................................................ 2.3
314(a)............................................. 2.4
314(b)............................................. Inapplicable
314(c)............................................. 2.5
314(d)............................................. Inapplicable
314(f)............................................. Inapplicable
315(a)............................................. 3.9(b)
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Annex I
316(c)............................................. 3.6(e)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
UDS CAPITAL I
June __, 1997
AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration") dated
and effective as of June __, 1997, by the Trustees (as defined herein), by the
Sponsor (as defined herein) and by the Holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, certain of the Trustees and the Sponsor established UDS
CAPITAL I (the "Business Trust"), a trust under the Delaware Business Trust Act
(the "Trust Act"), pursuant to a Declaration of Trust dated as of June 5, 1997
(the "Original Declaration") and a Certificate of Trust filed with the Secretary
of State of the State of Delaware on June 5, 1997, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in the
Partnership Preferred Securities;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the Holders, from time to time, of the securities
representing undivided beneficial ownership interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has
the same meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires;
(f) a reference to the singular includes the plural
and vice versa; and
(g) a term used in this Agreement and not otherwise defined herein
shall have the meaning ascribed to such term in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of the Limited Partnership Agreement.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as set forth in Section 10.4 of this
Declaration.
2
<PAGE>
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Certificate" means a Trust Common Security Certificate or a Trust
Preferred Security Certificate.
"Change in 1940 Act Law" means, as a result of the occurrence on or
after the date of the issuance of the Trust Preferred Securities of a change in
law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, the Trust is or will be considered an "investment company" which is
required to be registered under the 1940 Act.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Trust Preferred Securities and in whose name or in the name of a nominee
of that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of beneficial interests in
the Trust Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of interest in securities
deposited with the Clearing Agency.
"Closing Date" means June __, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission.
"Common Security Holder of the Trust" means the Company in its
capacity as Holder of the Trust Common Security.
"Company" means Ultramar Diamond Shamrock Corporation.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees,
3
<PAGE>
representatives or agents of any Regular Trustee; or (d) any officer, director,
shareholder, member, partner, employee, representative or agent of the Trust or
its Affiliates.
"Compounded Distributions" has the meaning set forth in Section
7.1(a) of this Declaration.
"Corporate Trust Office" means the principal corporate trust office
of the Property Trustee in the Borough of Manhattan, the City of New York, which
office at the date hereof is located at 101 Barclay Street, Floor 21 West, New
York, New York 10286.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Trust Securities.
"Definitive Trust Preferred Security Certificates" has the meaning
set forth in Section 10.4 of this Declaration.
"Delaware Trustee" has the meaning set forth in Section 6.2 of this
Declaration.
"Distribution" has the meaning set forth in Section 7.1(a) of this
Declaration.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
11.4(b) of this Declaration.
"Fiscal Period" has the meaning set forth in Section 1.1 of the
Limited Partnership Agreement.
"Fiscal Year" has the meaning set forth in Section 12.1 of this
Declaration.
"General Partner" means Ultramar Diamond Shamrock Corporation, in
its capacity as the general partner of the Partnership, its permitted
successors, or any successor general partner in the Partnership admitted as such
pursuant to the Limited Partnership Agreement.
"Global Certificate" has the meaning set forth in Section 10.4 of
this Declaration.
4
<PAGE>
"Holder" means a Person in whose name a Certificate representing a
Trust Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Initial Debentures" has the meaning set forth in Section 7.1(b) of
the Limited Partnership Agreement.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that (i) is controlled by the Company and (ii) is not
an investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
"Investment Company" means an investment company as defined in the
1940 Act.
"Investment Guarantee" means any guarantee on a subordinated basis
by the Company with respect to (1) payment of interest, principal and other
payment terms of Affiliate Investment Instruments that are debt securities of an
Investment Affiliate and (2) the payment of dividends, distributions and other
payment terms of Affiliate Investment Instruments that are preferred or
preference stock of an Investment Affiliate when, as and if declared by such
Investment Affiliate.
"Legal Action" has the meaning set forth in Section 3.6(h) of this
Declaration.
"Limited Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of UDS Funding I, L.P. dated as of June __,
1997.
"List of Holders" has the meaning set forth in Section 2.2(a) of
this Declaration.
"Majority in liquidation amount of the Trust Securities" means,
except as provided in the terms of the Trust Preferred Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount of all outstanding Trust Securities of the relevant
class.
5
<PAGE>
"Ministerial Action" means, a ministerial action (such as filing a
form or making an election or pursuing some other similar reasonable measure)
which in the sole judgment of the Company has or will cause no adverse effect on
the Trust, the Partnership, the Company or the holders of the Trust Securities
and will involve no material cost.
"Nasdaq" means the National Association of Securities Dealers
Automated Quotation System.
"1940 Act" means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
"Officers' Certificate" means, with respect to any Person (who is
not an individual), a certificate signed by the Chairman of the Board, the
President, a Vice President or the Treasurer, and by an Assistant Treasurer, the
Secretary or an Assistant Secretary of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Partnership" means UDS Funding I, L.P., a Delaware limited
partnership.
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.
"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of June __, 1997, by the Company in favor of the Partnership Preferred
Security Holders with respect to the
6
<PAGE>
Partnership Preferred Securities, as amended or supplemented from time to time.
"Partnership Preferred Securities" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
"Partnership Special Event" has the meaning set forth in Section 1.1
of the Limited Partnership Agreement.
"Payment Amount" has the meaning set forth in Section 7.1(a) of this
Declaration.
"Paying Agent" has the meaning set forth in Section 3.8(g) of this
Declaration.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, or each case in accordance
with the rules of such Clearing Agency).
"Property Account" has the meaning set forth in Section 3.8(c) of
this Declaration.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3 of this Declaration.
"Pro Rata" means, in reference to any distributions on or
redemptions of Trust Securities or the distribution of Partnership Preferred
Securities or any other payment with respect to Trust Securities in connection
with a Trust Special Event or liquidation of the Trust, pro rata to each Holder
of Trust Securities according to the aggregate liquidation amount of the Trust
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Trust Securities outstanding.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
7
<PAGE>
"Redemption Price" has the meaning set forth in Section 8.2(a) of
this Declaration.
"Regular Trustee" has the meaning set forth in Section 6.1 of this
Declaration.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, the chairman or vice-chairman of the board of directors, the
chairman or vice-chairman of the executive committee of the board of directors,
the president, any vice president (whether or not designated by a number or a
word or words added before or after the title "vice president"), the secretary,
any assistant secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust officer, or any
other officer of the Trust Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the 1940 Act.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Special Representative" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.
"Sponsor" means the Company or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.
"Successor Entity" has the meaning set forth in Section 3.15 of this
Declaration.
"Successor Property Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.
"Successor Trust Securities" has the meaning set forth in Section
3.15 of this Declaration.
8
<PAGE>
"Super Majority" has the meaning set forth in Section 2.6(a)(ii) of
this Declaration.
"Tax Action" means (a) an amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United States
or any political subdivision or taxing authority thereof or therein, (b) a
judicial decision interpreting, applying or clarifying such laws or regulations,
(c) an administrative pronouncement or action that represents an official
position (including a clarification of an official position) of the governmental
authority or regulatory body making such administrative pronouncement or taking
such action, or (d) a threatened challenge asserted in connection with an audit
of the Company or any of its subsidiaries, the Partnership, or the Trust, or a
threatened challenge asserted in writing against any other taxpayer that has
raised capital through the issuance of securities that are substantially similar
to the Debentures, the Partnership Preferred Securities, or the Trust Preferred
Securities, which amendment or change is adopted or which decision,
pronouncement or proposed change is announced or which action, clarification or
challenge occurs on or after the date of the prospectus related to the issuance
of the Trust Preferred Securities.
"10% in liquidation amount of the Trust Securities" means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of 10% or more of the aggregate
liquidation amount of all outstanding Trust Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Common Security" has the meaning set forth in Section 8.1 of
this Declaration.
"Trust Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
"Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of June __,
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1997, entered into by the Company, as Guarantor, for the benefit of the holders
of the Trust Common Securities.
"Trust Dissolution Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that there has been a Trust Tax Event.
"Trust Enforcement Event" means the occurrence, at any time, of (i)
arrearages on distributions on the Trust Preferred Securities that shall exist
for six consecutive quarterly distribution periods, (ii) a default by the
Company in respect of any of its obligations under the Trust Guarantee or (iii)
a Partnership Enforcement Event (as defined in the Limited Partnership
Agreement).
"Trust Guarantees" means the Trust Common Securities Guarantee and
The Trust Preferred Securities Guarantee, collectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trust Investment Company Event" means that the Company shall have
requested and received and shall have delivered to the Regular Trustees an
opinion of nationally recognized independent legal counsel experienced in such
matters to the effect that as a result of a Change in 1940 Act Law, the Trust is
or will be considered an "investment company" which is required to be registered
under the 1940 Act.
"Trust Liquidation" has the meaning set forth in Section 9.2(a) of
this Declaration.
"Trust Preferred Securities Guarantee" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
"Trust Liquidation Distribution" has the meaning set forth in
Section 9.2(a) of this Declaration.
"Trust Preferred Security" has the meaning set forth in Section
8.1(a) of this Declaration.
"Trust Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
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"Trust Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.
"Trust Redemption Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters that there has
been a Trust Tax Event, and following such Trust Tax Event there is more than an
insubstantial risk that interest payable by one or more of the Investment
Affiliates with respect to the Debentures is not, or will not be, deductible by
such Investment Affiliate for United States federal income tax purposes even if
the Partnership Preferred Securities were distributed to the Holders of the
Trust Securities in liquidation of such Holders' interests in the Trust.
"Trust Securities" means the Trust Common Securities and the Trust
Preferred Securities.
"Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event.
"Trust Tax Event" means that there has been a Tax Action which
relates to any of the items described in (i) through (iii) below, and that there
is more than an insubstantial risk that (i) the Trust is, or will be subject to
United States federal income tax with respect to income accrued or received on
the Partnership Preferred Securities, (ii) the Trust is, or will be, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges or (iii) interest payable by one or more of the Investment Affiliates
with respect to the Debentures is not, or will not be, deductible by such
Investment Affiliate for United States federal income tax purposes.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Trust Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the Trust
Securities ("List of Holders") as of such record date, provided, that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity), provided, that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Property Trustee.
Within 60 days after December 15 of each year commencing December
15, 1997, the Property Trustee shall provide to the Holders of the Trust
Preferred Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
are required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.
SECTION 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in liquidation amount of Trust
Preferred Securities may, by vote, on behalf of the Holders of all of the Trust
Preferred Securities, waive any past Trust Enforcement Event in respect of the
Trust Preferred Securities and its consequences, provided, that if the
underlying event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Preferred Securities Guarantee
or the Limited Partnership Agreement, the Trust Enforcement Event under
this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of greater than a
Majority in liquidation amount of the Trust Preferred Securities to be
waived under the Trust Preferred
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Securities Guarantee or the Partnership Preferred Securities to be waived
under the Limited Partnership Agreement (a "Super Majority"),
the Trust Enforcement Event under this Declaration may only be waived by the
vote of the Holders of at least the relevant Super Majority in liquidation
amount of the Trust Preferred Securities.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Trust Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Trust Enforcement Event with respect
to the Trust Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Trust Enforcement Event with respect to the
Trust Preferred Securities or impair any right consequent thereon. Any waiver by
the Holders of the Trust Preferred Securities of Trust Enforcement Events with
respect to the Trust Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Trust Common Securities of any such Trust
Enforcement Event with respect to the Trust Common Securities for all purposes
of this Declaration without any further act, vote, or consent of the Holders of
the Trust Common Securities.
(b) The Holders of a Majority in liquidation amount of the Trust
Common Securities may, by vote, on behalf of the Holders of all of the Trust
Common Securities, waive any past Trust Enforcement Event with respect to the
Trust Common Securities and its consequences, provided, that if the underlying
event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Common Securities Guarantee or
the Limited Partnership Agreement, except where the Holders of the Trust
Common Securities are deemed to have waived such Trust Enforcement Event
under this Declaration as provided below in this Section 2.6(b), the Trust
Enforcement Event under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of a Super Majority
to be waived, except where the Holders of the Trust Common Securities are
deemed to have waived such Trust Enforcement Event under the Declaration
as provided below in this Section 2.6(b), the Trust Enforcement Event
under this Declaration may only be waived by the vote of the
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Holders of at least the relevant Super Majority in liquidation amount of
the Trust Common Securities;
provided, further, each Holder of Trust Common Securities will be deemed to have
waived any such Trust Enforcement Event and all Trust Enforcement Events with
respect to the Trust Common Securities and its consequences if all Trust
Enforcement Events with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated, and until such Trust Enforcement Events
have been so cured, waived or otherwise eliminated, the Property Trustee will be
deemed to be acting solely on behalf of the Holders of the Trust Preferred
Securities and only the Holders of the Trust Preferred Securities will have the
right to direct the Property Trustee in accordance with the terms of the Trust
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Trust Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Trust
Enforcement Event with respect to the Trust Common Securities arising therefrom
shall be deemed to have been cured for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or Trust Enforcement
Event with respect to the Trust Common Securities or impair any right consequent
thereon.
(c) A waiver of Partnership Enforcement Events under the Limited
Partnership Agreement by the Property Trustee at the direction of the Holders of
the Trust Preferred Securities constitutes a waiver of the corresponding Trust
Enforcement Event under this Declaration. The foregoing provisions of this
Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture
Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Trust Securities, as permitted by the
Trust Indenture Act.
SECTION 2.7 Trust Enforcement Event; Notice.
The Property Trustee shall, within 90 days after the occurrence of a
Trust Enforcement Event, transmit by mail, first class postage prepaid, to the
Holders of the Trust Securities, notices of all defaults with respect to the
Trust Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7 being hereby defined
to be defaults as defined in the Trust Guarantees or the Limited Partnership
Agreement, not including
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any periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided, that except for a default in the payment of
principal of (or premium, if any) or interest on any of the Affiliate Investment
Instruments or in the payment of any sinking fund installment established for
the Affiliate Investment Instruments, the Property Trustee shall be fully
protected in withholding such notice if and so long as a Responsible Officer of
the Property Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Trust Securities.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "UDS Capital I," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of Trust Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Ultramar
Diamond Shamrock Corporation, 9830 Colonnade Boulevard, San Antonio, Texas
78230. On ten Business Days written notice to the Holders of Trust Securities,
the Regular Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
the Trust Securities, (b) investing the proceeds from such sale of the Trust
Securities to acquire the Partnership Preferred Securities, and (c) except as
otherwise limited herein, to engage in only those other activities necessary or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, mortgage or pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out
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the purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust and an
action taken by the Property Trustee on behalf of the Trust in accordance with
its powers shall constitute the act of and serve to bind the Trust. In dealing
with the Trustees acting on behalf of the Trust, no person shall be required to
inquire into the authority of the Trustees to bind the Trust. Persons dealing
with the Trust are entitled to rely conclusively on the power and authority of
the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Partnership
Preferred Securities and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial ownership interest in the assets
of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Trust Preferred Securities and the Trust
Common Securities in accordance with this Declaration; provided, however,
that the Trust may issue no more than one series of Trust Preferred
Securities and no more than one series of Trust Common Securities, and,
provided, further, that there shall be no interests in the Trust other
than the Trust Securities, and the issuance of Trust Securities shall be
limited to a one-time, simultaneous issuance of both Trust Preferred
Securities and Trust Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Trust Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor, including any
amendments thereto, pertaining to the Trust Preferred Securities;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the
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Sponsor to be necessary in order to qualify or register all or part
of the Trust Preferred Securities in any State in which the Sponsor
has determined to qualify or register such Trust Preferred
Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc. or any other national
stock exchange or the Nasdaq National Market System for listing upon
notice of issuance of any Trust Preferred Securities;
(iv) execute and file with the Commission a registration
statement, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Trust Preferred
Securities, the Partnership Preferred Securities, the Trust
Preferred Securities Guarantee and the Partnership Guarantee under
Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting agreement
providing for the sale of the Trust Preferred Securities and perform
the duties and obligations of the Trust thereunder;
(c) to acquire the Partnership Preferred Securities with the
proceeds of the sale of the Trust Preferred Securities and the Trust
Common Securities; provided, however, that the Regular Trustees shall
cause legal title to the Partnership Preferred Securities to be held of
record in the name of the Property Trustee for the benefit of the Holders
of the Trust Preferred Securities and the Holders of Trust Common
Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Trust Special Event; provided, that the
Regular Trustees shall consult with the Sponsor and the Property Trustee
before taking or refraining from taking any Ministerial Action in relation
to a Trust Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of Section 316(c) of the Trust Indenture
Act, Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Trust Preferred Securities and Holders
of Trust Common Securities as to such actions and applicable record dates;
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(f) to give prompt written notice to the Holders of the Trust
Securities of any notice received from the Partnership of the General
Partner's election not to make a current, quarterly distribution on the
Partnership Preferred Securities under the Limited Partnership Agreement;
(g) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Trust Securities;
(h) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(f), the Property
Trustee has the exclusive power to bring such Legal Action;
(i) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(j) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(k) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;
(l) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(m) to act as, or appoint another Person to act as, registrar and
transfer agent for the Trust Securities;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Trust Preferred Securities or to enable the Trust to effect the
purposes for which the Trust was created;
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(p) to take any action, or to take no action, not inconsistent with
this Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying out
the activities of the Trust as set out in this Section 3.6, including, but
not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the 1940 Act; and
(ii) taking no action which would be reasonably likely to
cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States
federal income tax purposes;
provided, that such action does not adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Partnership pursuant to Section 9.1 of
the Limited Partnership Agreement.
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SECTION 3.7 Prohibition of Actions by the Trust and the
Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Partnership Preferred Securities, but shall distribute all such proceeds
to Holders of Trust Securities pursuant to the terms of this Declaration
and of the Trust Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness or acquire any
securities other than the Partnership Preferred Securities;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Trust Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Trust Securities;
(vii) other than as set forth herein, (A) cause the Special
Representative to direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative or
exercising any trust or power conferred upon the Special Representative
with respect to the Partnership Preferred Securities, the Affiliate
Investment Instruments, and the Investment Guarantees, (B) cause the
Special Representative to waive any past default that is waivable under
the Limited Partnership Agreement, the Affiliate Investment Instruments or
the Investment Guarantees, (C) cause the Special Representative to
exercise any right to rescind or annul any declaration that the principal
of, or other amounts in respect of, any Affiliate Investment Instrument is
due and payable or (D) consent to any amendment, modification or
termination of the Limited Partnership
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Agreement or the Partnership Preferred Securities where such consent
shall be required; and
(viii) other than in connection with the liquidation of the Trust
pursuant to a Trust Special Event or upon redemption of all the Trust
Securities, file a certificate of cancellation of the Trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Partnership Preferred Securities shall be
owned by and held of record in the name of the Property Trustee in trust for the
benefit of the Holders of the Trust Securities. The right, title and interest of
the Property Trustee to the Partnership Preferred Securities shall vest
automatically in each Person who may hereafter be appointed as Property Trustee
in accordance with Section 6.7. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Partnership
Preferred Securities have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Partnership Preferred Securities to the Regular Trustees or to
the Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the Trust
Securities and, upon the receipt of payments of funds made in respect of
the Partnership Preferred Securities held by the Property Trustee, deposit
such funds into the Property Account and make payments to the Holders of
the Trust Preferred Securities and Holders of the Trust Common Securities
from the Property Account in accordance with Section 7.1. Funds in the
Property Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Account shall be an account that is
maintained with a banking institution (including the Property Trustee if
it qualifies hereunder) authorized to exercise corporate trust powers and
having a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by Federal or state authority;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the
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Trust Preferred Securities and the Trust Common Securities to the extent
the Partnership Preferred Securities are redeemed; and
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Trust Securities, engage in
such ministerial activities as shall be necessary or appropriate to effect
the distribution of the Partnership Preferred Securities to Holders of
Trust Securities upon the occurrence of a Trust Special Event.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Trust Securities.
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act.
(f) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a Holder of Partnership Preferred
Securities and, if a Trust Enforcement Event occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Trust Securities,
enforce its rights as Holder of the Partnership Preferred Securities subject to
the rights of the Holders pursuant to the terms of such Trust Securities.
(g) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Trust Securities and any
such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Trust Securities pursuant to the
terms of the Trust Securities; or
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(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 6.7.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.
(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing or waiver of all Trust Enforcement Events
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Property Trustee. In case a Trust
Enforcement Event has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and after
the curing or waiving of all such Trust Enforcement Events that may have
occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and the Property Trustee shall not be liable except for
the performance of such duties and obligations as are specifically
set forth in this Declaration, and no implied covenants or
obligations shall be read into this Declaration against the Property
Trustee; and
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(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but
in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) subject to the requirement of the Property Trustee receiving a
tax opinion as set forth in Section 8.4(d) or 8.5(c), as the case may be,
the Property Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount
of the Trust Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property
Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or protection from
such liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property Trustee
against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Partnership Preferred
Securities and the Property Account shall be to deal with such property in
a similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limita-
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tions on liability afforded to the Property Trustee under this Declaration
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Partnership Preferred Securities or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Property Account
maintained by the Property Trustee pursuant to Section 3.8(c)(i) and
except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee
be liable for any default or misconduct of the Regular Trustees or the
Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
acting on behalf of the Trust contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Sponsor or the Regular Trustees;
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(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts
and the advice or opinion of such counsel and experts with respect to
legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion; such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of
its employees. The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Declaration from
any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless (a) such Holder shall have
provided to the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Property Trustee and (b)
the Property Trustee has obtained the legal opinions, if any, required by
Section 8.4(d) or 8.5(c), as the case may be, of this Agreement; provided,
that, nothing contained in this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the occurrence of a Trust Enforcement
Event, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder
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either directly or by or through agents, custodians, nominees or attorneys
and the Property Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Trust Securities,
and the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property Trustee
to so act or as to its compliance with any of the terms and provisions of
this Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the
Trust Securities which instructions may only be given by the Holders of
the same proportion in liquidation amount of the Trust Securities as would
be entitled to direct the Property Trustee under the terms of the Trust
Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in
conclusively relying on or acting in or accordance with such instructions;
provided, however, that the Property Trustee shall not be required to take
any action unless it shall have obtained such legal opinions, if any,
required by Sections 8.4(d) or 8.5(c), as the case may be, of this
Agreement; and
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority
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available to the Property Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any provision of this Declaration other than Section
6.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees or the Property Trustee described in this Declaration. Except
as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute on behalf of the Trust any documents that the Regular Trustees have
the power and authority to cause the Trust to execute pursuant to Section 3.6;
provided, that the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by or on behalf of a majority
of the Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of
Trust Securities.
The recitals contained in this Declaration and the Trust Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Trust Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have perpetual existence.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
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(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Trust Securities, the Delaware Trustee or the
Property Trustee, consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of any
State of the United States; provided, that:
(i) if the Trust is not the survivor, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Trust Securities; or
(B) substitutes for the Trust Preferred Securities other
securities having substantially the same terms as the Trust
Preferred Securities (the "Successor Trust Securities") so long as
the Successor Trust Securities rank the same as the Trust Preferred
Securities rank with respect to Distributions, assets and payments
upon liquidation, redemption and otherwise;
(ii) the Company expressly acknowledges a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee
as the Holder of the Partnership Preferred Securities;
(iii) the Successor Trust Securities are listed, or any Successor
Trust Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the
Trust Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Trust Preferred
Securities (including any Successor Trust Securities) to be downgraded by
any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred
Securities (including any Successor Trust Securities) in any material
respect;
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(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) the Company guarantees the obligations of such Successor
Entity under the Successor Trust Securities at least to the extent
provided by the Trust Guarantees; and
(viii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease will not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred
Securities (including any Successor Trust Securities) in any
material respect (other than with respect to any dilution of the
Holders' interest in the new entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an Investment
Company under the 1940 Act;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will not be
classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax
purposes; and
(D) following such merger, consolidation, amalgamation or
replacement, the Partnership will not be classified as an
association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Trust Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity or the Partnership to be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
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ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.
In connection with the issue and sale of the Trust Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Trust Preferred
Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Trust Preferred Securities
and to do any and all such acts, other than actions which must be taken by
the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq
National Market System for listing upon notice of issuance of any Trust
Preferred Securities, Partnership Preferred Securities, the Trust
Preferred Securities Guarantee and the Partnership Guarantee;
(d) to prepare for filing by the Trust with the Commission a
registration statement relating to the registration of the Trust Preferred
Securities, the Partnership Preferred Securities, the Trust Preferred
Securities Guarantee, and the Partnership Guarantee under Section 12(b) of
the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and any
pricing agreement providing for the sale of the Trust Preferred
Securities.
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SECTION 4.2 Indemnification and Expenses of the Trustee
The Partnership agrees, and to the extent the Partnership fails to
do so, the Sponsor agrees to indemnify the Property Trustee and the Delaware
Trustee for, and to hold each of them harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Property
Trustee or the Delaware Trustee, as the case may be, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending either of them against
any claim or liability in connection with the exercise or performance of any of
their respective powers or duties hereunder; the provisions of this Section 4.2
shall survive the resignation or removal of the Delaware Trustee or the Property
Trustee or the termination of this Declaration.
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common Securities.
On the Closing Date the Company will purchase all of the Trust
Common Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Trust Preferred Securities are
sold.
SECTION 5.2 Covenants of the Trust Common Securities Holder.
For so long as the Trust Preferred Securities remain outstanding,
the Company will covenant (i) to maintain directly 100 percent ownership of the
Trust Common Securities, (ii) to cause the Trust to remain a statutory business
trust and not to voluntarily dissolve, wind up, liquidate, or be terminated,
except as permitted by this Declaration, (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be an investment company
for purposes of the 1940 Act, and (iv) to take no action which would be
reasonably likely to cause the Trust to be classified as an association or a
publicly traded partnership taxable as a corporation for United States federal
income tax purposes.
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ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Trust Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Trust Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
Majority in liquidation amount of the Trust Common Securities voting as a
class at a meeting of the Holders of the Trust Common Securities;
provided, however, that the number of Trustees shall in no event be less
than three (3); provided, further, that (1) if required by the Business
Trust Act, one Trustee is the Delaware Trustee; (2) there shall be at
least one Trustee who is an employee or officer of, or is affiliated with
the Company (each, a "Regular Trustee"); and (3) one Trustee shall be the
Property Trustee for so long as this Declaration is required to qualify as
an indenture under the Trust Indenture Act, and such Property Trustee may
also serve as Delaware Trustee if it meets the applicable requirements.
SECTION 6.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided, that if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee (in which case
Section 3.11 shall have no application).
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SECTION 6.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 6.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 6.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 6.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Trust Common Securities (as if it were
the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Trust Guarantee shall be deemed to be specifically described
in this Declaration for purposes of clause (i) of the first provision contained
in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
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SECTION 6.4 Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 6.5 Regular Trustees.
The initial Regular Trustees shall be:
H. Pete Smith
Steve Blank
(a) Except as expressly set forth in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that the registration statement referred to
in Section 3.6(b)(i), including any amendments thereto, shall be signed by or on
behalf of a majority of the Regular Trustees.
SECTION 6.6 Delaware Trustee.
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
SECTION 6.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 6.7(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Trust Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Trust Securities, by vote of the
Holders of a Majority in liquidation amount of
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the Trust Common Securities voting as a class at a meeting of the Holders
of the Trust Common Securities.
(b)(i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 6.7(a) until a successor Trustee possessing
the qualifications to act as Property Trustee under Section 6.3 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 6.7(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 6.2 and 6.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the Sponsor
and the resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of
the Trust Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
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(d) The Holders of the Trust Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 6.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
6.7 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation, the resigning Property Trustee or Delaware Trustee, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or successor Delaware
Trustee, as the case may be.
SECTION 6.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is
increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.7.
SECTION 6.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.7, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
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SECTION 6.10 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter; provided, that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees. Notwithstanding the
foregoing, any and all actions of the Regular Trustees may be taken by the
unanimous written consent of all Regular Trustees.
SECTION 6.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
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Section 6.12 Merger, Conversion, Consolidation or Succession
to Business.
Any corporation into which the Property Trustee or the Delaware Trustee,
as the case may be, may be merged or converted or with which either may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder; provided, that such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions.
(a) Holders of Trust Securities shall be entitled to receive
cumulative cash distributions at the rate per annum of __% of the stated
liquidation amount of $25 per Trust Security, calculated on the basis of a
360-day year consisting of twelve 30-day months. For any period shorter than a
full 90-day quarter, distributions will be computed on the basis of the actual
number of days elapsed in such 90-day quarter. Distributions shall be made on
the Trust Preferred Securities and the Trust Common Securities on a Pro Rata
basis. Distributions on the Trust Securities shall, from the date of original
issue, accumulate and be cumulative and shall be payable quarterly only to the
extent that the Trust has funds available for the payment of such Distributions
in the Property Account. Distributions not paid on the scheduled payment date
will accumulate and compound quarterly at the rate of __% per annum ("Compounded
Distributions"). "Distributions" shall mean ordinary cumulative distributions in
respect of each Fiscal Period together with any Compounded Distributions. If and
to the extent that the Partnership makes a distribution on the Partnership
Preferred Securities held by the Property Trustee or the Company makes a payment
under the Partnership Guarantee (the amount of any such partnership
distribution, including any compounded partnership distributions, or guarantee
payment being a "Payment Amount"), the Trust shall and the Property Trustee is
directed, to the extent funds are available for that purpose, to make a Pro Rata
Distribution of the Payment Amount to Holders.
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(b) Distributions on the Trust Securities will be cumulative, will
accumulate from the date of initial issuance and will be payable quarterly in
arrears on each March 31, June 30, September 30 and December 31, commencing
________, 1997, when, as and if available for payment, by the Property Trustee,
except as otherwise described below. If Distributions are not paid when
scheduled, the accumulated Distributions shall be paid to the Holders of record
of Trust Securities as they appear on the books and records of the Trust on the
record date as determined under Section 7.1(d) below.
(c) Amounts available to the Trust for distribution to the Holders
of the Trust Securities will be limited to payments received by the Trust from
the Partnership on the Partnership Preferred Securities or from the Company on
the Partnership Guarantees paid by the Company to the Trust. If the Property
Trustee, as the holder of the Partnership Preferred Securities for the benefit
of the Holders of the Trust Securities, receives notice of any determination by
the Partnership not to pay distributions on such Partnership Preferred
Securities, the Property Trustee shall give notice of such determination to the
Holders.
(d) Distributions on the Trust Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which relevant record dates, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Partnership
Preferred Securities in the Property Account for the benefit of the Holders of
the Trust Securities. In the event that the Trust Preferred Securities do not
remain in book-entry only form, the relevant record dates shall be the 15th day
of the month of the relevant payment dates. In the event that any date on which
distributions are payable on the Trust Securities is not a Business Day, payment
of the distribution payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
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ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Regarding
Trust Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial ownership
interests in the assets of the Trust and one class of common securities
representing undivided beneficial ownership interests in the assets of the Trust
as follows:
(i) Trust Preferred Securities. 6,000,000 Trust Preferred Securities
of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of one hundred fifty million dollars ($150,000,000)
and a liquidation amount with respect to the assets of the Trust of $25
per preferred security, are hereby designated for the purpose of
identification only as __% Trust Originated Preferred SecuritiesSM 1 (the
"Trust Preferred Securities"). The Trust Preferred Security Certificates
evidencing the Trust Preferred Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage,
custom or practice or to conform to the rules of any stock exchange on
which the Trust Preferred Securities are listed.
(ii) Trust Common Securities. _______ Trust Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of
the Trust of ______________ dollars ($_________) and a liquidation amount
with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as __% Trust
Common Securities (the "Trust Common Securities" and, together with the
Trust Preferred Securities, the "Trust Securities"). The Trust Common
Security Certificates evidencing the Trust Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
- --------
1 "Trust Originated Preferred Securities" and "TOPrS" are service
marks of Merrill Lynch & Co., Inc.
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(b) Except as provided in Section 9.2(b) of this Declaration, the
Trust Preferred Securities rank pari passu and payment thereon shall be made Pro
Rata with the Trust Common Securities. The Trust shall issue no securities or
other interests in the assets of the Trust other than the Trust Preferred
Securities and the Trust Common Securities.
(c) Any Regular Trustee shall sign the Trust Securities for the
Trust by manual or facsimile signature. In case any Regular Trustee of the Trust
who shall have signed any of the Trust Securities shall cease to be a Regular
Trustee before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Trust Security, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Trust Securities may be listed, or to conform to
usage.
A Trust Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Property Trustee. Such
signature shall be conclusive evidence that the Trust Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Trust Securities for original issue. The
aggregate number of Trust Securities outstanding at any time shall not exceed
the number set forth in the Terms of the Trust Securities.
The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Trust Securities. An authenticating agent may
authenticate Trust Preferred Securities whenever the Property Trustee may do so.
Each reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee to deal with the Sponsor or an Affiliate of the
Sponsor.
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(d) The consideration received by the Trust for the issuance of the
Trust Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(e) Upon issuance of the Trust Securities as provided in this
Declaration, the Trust Securities so issued shall be deemed to be validly
issued, fully paid and non-assessable, subject to Section 11.1 with respect to
the Trust Common Securities.
(f) Every Person, by virtue of having become a Holder or a Trust
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 8.2 Redemption of Trust Securities.
(a) Upon a purchase of the Partnership Preferred Securities by the
Partnership upon redemption or otherwise, the proceeds from such purchase shall
be simultaneously applied Pro Rata to redeem Trust Securities having an
aggregate liquidation amount equal to the Partnership Preferred Securities so
purchased or redeemed at an amount equal to $25 per Partnership Preferred
Security plus an amount equal to accumulated and unpaid Distributions, including
any Compounded Distributions thereon through the date of the redemption or such
lesser amount as shall be received by the Trust in respect of the Partnership
Preferred Securities so purchased or redeemed (the "Redemption Price"). Holders
will be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Trust Securities are to be so
redeemed, the Trust Common Securities and the Trust Preferred Securities will be
redeemed Pro Rata and the Trust Preferred Securities to be redeemed will be
redeemed as described in Section 8.3 below; provided, that fewer than all of the
outstanding Trust Preferred Securities may not be redeemed unless all
accumulated and unpaid Distributions have been paid on all Trust Preferred
Securities for all quarterly distribution periods terminating on or prior to the
date of redemption.
(c) If, at any time, a Trust Special Event shall occur and be
continuing, the Regular Trustees shall, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described below, within 90
days following the occurrence of such Trust Special Event elect to either (i)
dissolve the Trust upon not less than 30 nor more than 60 days
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notice with the result that, after satisfaction of creditors, if any, of the
Trust, Partnership Preferred Securities would be distributed on a Pro Rata basis
to the Holders of the Trust Preferred Securities and the Trust Common Securities
in liquidation of such Holders' interests in the Trust; provided, however, that
if at the time there is available to the Trust the opportunity to eliminate,
within such 90-day period, the Trust Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure which in the sole judgment of the Sponsor has or will
cause no adverse effect on the Trust, the Partnership, the Sponsor or the
Holders of the Trust Securities and will involve no material cost, the Trust
will pursue such measure in lieu of dissolution or (ii) cause the Trust
Preferred Securities to remain outstanding; provided, that in the case of this
clause (ii), the Sponsor shall pay any and all expenses incurred by or payable
by the Trust attributable to the Trust Special Event. Furthermore, if in the
case of the occurrence of a Trust Tax Event, the Regular Trustees have received
a Trust Redemption Tax Opinion, then the General Partner shall have the right,
within 90 days following the occurrence of such Trust Tax Event, to elect to
cause the Partnership to redeem the Partnership Preferred Securities in whole
(but not in part) for cash upon not less than 30 nor more than 60 days notice
and promptly following such redemption, the Trust Securities will be redeemed by
the Trust at the Redemption Price.
(d) If the Partnership Preferred Securities are distributed to the
Holders of the Trust Preferred Securities, the Sponsor will use its best efforts
to cause the Partnership Preferred Securities to be listed on the New York Stock
Exchange or on such other national securities exchange or similar organization
as the Trust Preferred Securities are then listed or quoted.
(e) On the date fixed for any distribution of Partnership Preferred
Securities, upon dissolution of the Trust, (i) the Trust Preferred Securities
and the Trust Common Securities will no longer be deemed to be outstanding and
(ii) certificates representing Trust Securities will be deemed to represent the
Partnership Preferred Securities having a liquidation preference equal to the
stated liquidation amount of such Trust Securities until such certificates are
presented to the Sponsor or its agent for transfer or reissuance.
SECTION 8.3 Redemption Procedures.
(a) Notice of any redemption of, or notice of distribution of
Partnership Preferred Securities in exchange for,
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the Trust Securities (a "Redemption/Distribution Notice") will be given by the
Trust by mail to each Holder of Trust Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed for
redemption of the Partnership Preferred Securities. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this Section 8.3, a Redemption/ Distribution Notice shall
be deemed to be given on the day such notice is first mailed by first-class
mail, postage prepaid, to Holders of Trust Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of Trust
Securities at the address of each such Holder appearing in the books and records
of the Trust. No defect in the Redemption/ Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.
(b) In the event that fewer than all the outstanding Trust
Securities are to be redeemed, the Trust Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Trust Securities, provided, that in
respect of Preferred Securities registered in the name of and held of record by
DTC or its nominee (or any successor Clearing Agency or its nominee) or any
nominee, the distribution of the proceeds of such redemption will be made to
each Clearing Agency Participant (or Person on whose behalf such nominee holds
such securities) in accordance with the procedures applied by such agency or
nominee. In the event that the Trust Securities do not remain in book-entry only
form and fewer than all of the outstanding Trust Securities are to be redeemed,
the Trust Securities shall be redeemed Pro Rata or pursuant to the rules of any
securities exchange on which the Trust Securities are listed.
(c) If Trust Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Partnership Preferred Securities are redeemed as set out in this Section 8.3
(which notice will be irrevocable), then (A) while the Trust Preferred
Securities are in book-entry only form, by 12:00 noon, New York City time, on
the redemption date, the Property Trustee will deposit irrevocably with the DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to
pay the applicable Redemption Price with respect to the Trust Preferred
Securities and will give the DTC irrevocable instructions and authority to pay
the Redemption Price to the Holders of the Trust Preferred Securities, and (B)
with respect to Trust Preferred Securities issued in definitive form and Trust
Common Securities, the Property Trustee will pay the relevant Redemption Price
to the Holders of
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such Trust Securities by check mailed to the address of the relevant Holder
appearing on the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable, distributions
will cease to accumulate on the Trust Securities so called for redemption and
all rights of Holders of such Trust Securities will cease, except the right of
the Holders of such Trust Securities to receive the Redemption Price, but
without interest on such Redemption Price. If any date fixed for redemption of
Trust Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of the amount payable
subject to such delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any Trust
Securities is improperly withheld or refused and not paid either by the Property
Trustee or by the Sponsor as guarantor pursuant to the relevant Trust Guarantee,
Distributions on such Trust Securities will continue to accumulate at the then
applicable rate from the original redemption date to the actual date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price. For these purposes,
the applicable Redemption Price shall not include Distributions which are being
paid to Holders who were Holders on a relevant record date. Upon satisfaction of
the foregoing conditions, then immediately prior to the close of business on the
date of such deposit or payment, all rights of Holders of such Trust Preferred
Securities so called for redemption will cease, except the right of the Holders
to have received the Redemption Price, but without interest on such Redemption
Price, and from and after the date fixed for redemption, such Trust Preferred
Securities will not accumulate distributions or bear interest.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Trust Securities that
have been called for redemption.
(d) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Company or its
subsidiaries may at any time and from time to time purchase outstanding Trust
Preferred Securities by tender, in the open market or by private agreement.
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SECTION 8.4 Voting Rights of Trust Preferred Securities.
(a) Except as provided under Sections 6.1(b) and this Article VIII
and as otherwise required by the Business Trust Act, the Trust Indenture Act and
other applicable law, the Holders of the Trust Preferred Securities will have no
voting rights.
(b) Subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in Section 8.4(d) below, the
Holders of a Majority in liquidation amount of the Trust Preferred Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as Holder of the Partnership
Preferred Securities, to (i) exercise the remedies available to it under the
Limited Partnership Agreement as a Holder of the Partnership Preferred
Securities, including the right to direct the Special Representative of the
Partnership as elected by the Holders of the Partnership Preferred Securities in
accordance with the Limited Partnership Agreement (A) to enforce the
Partnership's creditors rights and other rights with respect to the Affiliate
Investment Instruments and any Investment Guarantees, (B) to enforce the rights
of the Holders of the Partnership Preferred Securities under the Partnership
Guarantee, and (C) to enforce the rights of the Holders of the Partnership
Preferred Securities to receive distributions (if and to the extent such
distributions have been declared out of funds legally available therefor by the
General Partner in its sole discretion) on the Partnership Preferred Securities
or (ii) consent to any amendment, modification, or termination of the Limited
Partnership Agreement or the Partnership Preferred Securities where such consent
shall be required; provided, however, that where a consent or action under the
Limited Partnership Agreement would require the consent or act of the Holders of
more than a majority of the aggregate liquidation preference of Partnership
Preferred Securities affected thereby, only the Holders of the percentage of the
aggregate stated liquidation amount of the Trust Preferred Securities which is
at least equal to the percentage of aggregate liquidation preference required
under the Limited Partnership Agreement may direct the Property Trustee to give
such consent or take such action.
(c) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Preferred
Securities has made a written request, such Holder of record of Trust Preferred
Securities may institute a legal proceeding directly against the General Partner
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or the Special Representative, to enforce the Property Trustee's rights under
the Limited Partnership Agreement without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Notwithstanding the
foregoing, if a Trust Enforcement Event has occurred and is continuing and such
event is attributable to the failure of an Investment Affiliate to make any
required payment when due on any Affiliate Investment Instrument, then a Holder
of Trust Preferred Securities may directly institute a proceeding against such
Investment Affiliate for enforcement of payment with respect to such Affiliate
Investment Instrument.
(d) The Property Trustee shall notify all Holders of the Trust
Preferred Securities of any notice of any Partnership Enforcement Event received
from the General Partner with respect to the Partnership Preferred Securities
and the Affiliate Investment Instruments. Such notice shall state that such
Partnership Enforcement Event also constitutes a Trust Enforcement Event. Except
with respect to directing the time, method, and place of conducting a proceeding
for a remedy, the Property Trustee shall be under no obligation to take any of
the actions described in clause 8.4(b)(i) and (ii) above unless the Property
Trustee has obtained an opinion of independent tax counsel to the effect that as
a result of such action, the Trust will not fail to be classified as a grantor
trust for United States federal income tax purposes and that after such action
each Holder will continue to be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
(e) In the event the consent of the Property Trustee, as the Holder
of the Partnership Preferred Securities, is required under the Limited
Partnership Agreement with respect to any amendment, modification or termination
of the Limited Partnership Agreement, the Property Trustee shall request the
direction of the Holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however, that
where a consent under the Limited Partnership Agreement would require the
consent of the Holders of more than a majority of the aggregate liquidation
preference of the Partnership Preferred Securities, the Property Trustee may
only give such consent at the direction of the Holders of at least the same
proportion in aggregate stated liquidation amount of the Trust Securities. The
Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Trust Securities unless the Property Trustee
has obtained an opinion of tax counsel to the effect that, as a result of such
action, the Trust will not
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be classified as other than a grantor trust for United States federal income tax
purposes.
(f) A waiver of a Partnership Enforcement Event with respect to the
Partnership Preferred Securities will constitute a waiver of the corresponding
Trust Enforcement Event.
(g) Any required approval or direction of Holders of Trust Preferred
Securities may be given at a separate meeting of Holders of Trust Preferred
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents.
(h) No vote or consent of the Holders of Trust Preferred Securities
will be required for the Trust to redeem and cancel Trust Preferred Securities
or distribute Partnership Preferred Securities in accordance with the
Declaration.
(i) Notwithstanding that Holders of Trust Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Trust Securities that are beneficially owned at such time by the Company
or any entity directly or indirectly controlled by, or under direct or indirect
common control with, the Company, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Trust
Securities were not outstanding, except for Trust Preferred Securities purchased
or acquired by the Company or its affiliates in connection with transactions
effected by or for the account of customers of the Company or any of its
subsidiaries or in connection with the distribution or trading of such Trust
Securities; provided, however, that persons (other than affiliates of the
Company) to whom the Company or any of its subsidiaries have pledged Trust
Preferred Securities may vote or consent with respect to such pledged Trust
Preferred Securities pursuant to the terms of such pledge.
(j) Holders of the Trust Preferred Securities will
have no rights to appoint or remove the Regular Trustees, who may
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be appointed, removed or replaced solely by the Company, as the
Holder of all of the Trust Common Securities.
SECTION 8.5 Voting Rights of Trust Common Securities.
(a) Except as provided under this Section 8.5 or as otherwise
required by the Business Trust Act, the Trust Indenture Act or other applicable
law or provided by the Declaration, the Holders of the Trust Common Securities
will have no voting rights.
(b) The Holders of the Trust Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all
Trust Enforcement Events with respect to the Trust Preferred Securities have
been cured, waived, or otherwise eliminated and subject to the requirement of
the Property Trustee obtaining a tax opinion in certain circumstances set forth
in this paragraph (c), the Holders of a Majority in liquidation amount of the
Trust Common Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Partnership Preferred Securities, to (i) exercise the remedies
available to it under the Limited Partnership Agreement as a Holder of the
Partnership Preferred Securities, including the right to direct the Special
Representative of the Partnership as elected by the Holders of the Partnership
Preferred Securities in accordance with the Limited Partnership Agreement (A) to
enforce the Partnership's creditors rights and other rights with respect to the
Affiliate Investment Instruments and any Investment Guarantees, (B) to enforce
the rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee, and (C) to enforce the rights of the Holders of the
Partnership Preferred Securities to receive distributions (if and to the extent
such distributions have been declared out of funds legally available therefor by
the General Partner in its sole discretion) on the Partnership Preferred
Securities or (ii) consent to any amendment, modification, or termination of the
Limited Partnership Agreement or the Partnership Preferred Securities where such
consent shall be required; provided, however, that where a consent or action
under the Limited Partnership Agreement would require the consent or act of the
Holders of more than a majority of the aggregate liquidation preference of
Partnership Preferred Securities affected thereby, only the Holders
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of the percentage of the aggregate stated liquidation amount of the Trust Common
Securities which is at least equal to the percentage required under the Limited
Partnership Agreement may direct the Property Trustee to give such consent or
take such action. Except with respect to directing the time, method, and place
of conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 8.5(c)(i) and (ii)
above unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that, as a result of such action, for United States
federal income tax purposes the Trust will not fail to be classified as a
grantor trust and each Holder will be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
(d) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Common
Securities has made a written request, such Holder of record of Trust Common
Securities may directly institute a legal proceeding directly against the
Company, as General Partner of the Partnership or the Special Representative, to
enforce the Property Trustee's rights under the Partnership Preferred Securities
without first instituting any legal proceeding against the Property Trustee or
any other person or entity. Notwithstanding the foregoing, if a Trust
Enforcement Event has occurred and is continuing and such event is attributable
to the failure of an Investment Affiliate to make any required payment when due
on any Affiliate Investment Instrument, then a Holder of Trust Common Securities
may directly institute a proceeding against such Investment Affiliate for
enforcement of payment with respect to such Affiliate Investment Instrument.
(e) A waiver of a Partnership Enforcement Event with respect to the
Partnership Preferred Securities will constitute a waiver of the corresponding
Trust Enforcement Event.
(f) Any required approval or direction of Holders of Trust Common
Securities may be given at a separate meeting of Holders of Trust Common
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Trust Common Securities are entitled
to vote, or of any matter upon which action by written consent of such Holders
is to be taken, to be mailed to each Holder of record of Trust Common
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to
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vote or of such matter upon which written consent is sought; and (iii)
instructions for the delivery of proxies or consents.
(g) No vote or consent of the Holders of the Trust Common Securities
shall be required for the Trust to redeem and cancel Trust Common Securities or
to distribute Partnership Preferred Securities in accordance with the
Declaration and the terms of the Trust Securities.
SECTION 8.6 Paying Agent.
In the event that the Trust Preferred Securities are not in
book-entry only form, the Trust shall maintain in the Borough of Manhattan, City
of New York, State of New York, an office or agency where the Trust Preferred
Securities may be presented for payment ("Paying Agent"). The Trust may appoint
the Paying Agent and may appoint one or more additional paying agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent. The Trust may change any Paying Agent without prior
notice to any Holder. The Trust shall notify the Property Trustee of the name
and address of any Paying Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Paying Agent, the Property
Trustee shall act as such. The Trust or any of its Affiliates may act as Paying
Agent. The Bank of New York shall initially act as Paying Agent for the Trust
Preferred Securities and the Trust Common Securities.
SECTION 8.7 Listing
The Sponsor shall use its best efforts to cause the Trust Preferred
Securities to be listed for quotation on the New York Stock Exchange.
SECTION 8.8 Acceptance of Guarantee and Agreements, Limited
Partnership Agreement.
Each Holder of Trust Preferred Securities and Trust Common
Securities, by the acceptance thereof, agrees to the provisions of the
applicable Trust Guarantee, the Partnership Guarantee, and the Investment
Guarantee, respectively, including the subordination provisions therein.
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ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of Trust Common
Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, the filing of a certificate of
cancellation with respect to the Trust after having obtained the consent
of at least a Majority in Liquidation Amount of the Trust Securities,
voting together as a single class, to file such certificate of
cancellation, or the revocation of the Sponsor's charter and the
expiration of 90 days after the date of revocation without a reinstatement
thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust;
(iv) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Trust
Securities;
(v) upon the election of the Regular Trustees, following the
occurrence and continuation of a Trust Special Event, pursuant to which
the Trust shall have been dissolved in accordance with the terms of the
Trust Securities and all of the Partnership Preferred Securities shall
have been distributed to the Holders of Trust Securities in exchange for
all of the Trust Securities; or
(vi) before the issuance of any Trust Securities, with the consent
of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 9.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article XI shall survive the
termination of the Trust.
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SECTION 9.2 Liquidation Distribution Upon Termination and
Dissolution of the Trust.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (each a "Trust
Liquidation"), the Holders of the Trust Preferred Securities on the date of the
Trust Liquidation will be entitled to receive, out of the assets of the Trust
available for distribution to Holders of Trust Securities after satisfaction of
the Trusts' liabilities and creditors, distributions in cash or other
immediately available funds in an amount equal to the aggregate of the stated
liquidation amount of $25 per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities shall be distributed on a Pro Rata basis to the
Holders of the Trust Securities in exchange for such Trust Securities.
(b) If, upon any such Trust Liquidation, the Trust Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Trust Liquidation Distribution, then the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
Pro Rata basis. The Holders of the Trust Common Securities will be entitled to
receive distributions upon any such Trust Liquidation Pro Rata with the Holders
of the Trust Preferred Securities except that if the Company is in default on
any of its obligations under the Trust Preferred Securities Guarantee, the
Partnership Guarantee, or any Investment Guarantee, or any Investment Event of
Default has occurred and is continuing with respect to an Affiliate Investment
Instrument, the Trust Preferred Securities shall have a preference over the
Trust Common Securities with regard to such distributions as provided below.
Such preference is effectuated by the Holder of the Trust Common Securities
hereby agreeing to provide limited recourse guarantees as follows: (i) to the
Holders of the Trust Preferred Securities, of the Company's obligations under
the Trust Preferred Securities Guarantee; (ii) to the Trust and the Holders of
the Trust Preferred Securities, of the Company's obligations under the
Partnership Guarantee; and (iii) to the Partnership and the Holders of the Trust
Preferred Securities, of the Company's obligations under any Investment
Guarantee and/or the obligations of any Investment Affiliate under an Affiliate
Investment Instrument. In the case of the limited recourse guarantee given by
the Holder of the Trust Common Securities to the Partnership and the Holder of
the Trust Preferred Securities in respect of the Company's obligations under any
Investment Guarantee and/or any Investment Affiliate's obligations under an
Affiliate Investment
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Instrument, (i) the Trust Common Securities Holder will be deemed to have
pledged the amount due in respect of its Trust Common Securities upon a
liquidation of the Trust to the Partnership and the Holders of Trust Preferred
Securities; (ii) the Trust Common Securities Holder will be deemed to have paid
such amount to the Partnership in respect of such defaulted Investment Guarantee
and/or Affiliate Investment Instrument, as the case may be; (iii) the
Partnership will be deemed to have paid such amount to the Trust; and (iv) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of Trust Preferred Securities (on a pro rata basis among such Trust Preferred
Securities Holders) in respect of the Trust Common Securities Holder's pledge of
such amounts to such Trust Preferred Securities Holders. In the case of a
limited recourse guarantee given by the Holder of the Trust Common Securities to
the Trust and the Holders of the Trust Preferred Securities in respect of the
Company's obligations under the Partnership Guarantee, (i) the Holder of the
Trust Common Securities will be deemed to have pledged the amount due in respect
of its Trust Common Securities upon a liquidation of the Trust to the Trust and
the Holders of the Trust Preferred Securities; (ii) the Holder of the Trust
Common Securities will be deemed to have paid such amount to the Trust in
respect of its obligations under the Partnership Guarantee; and (iii) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of the Trust Preferred Securities (on a pro rata basis among such Trust
Preferred Securities Holders) in respect of the Trust Common Securities Holder's
pledge of such amount to such Trust Preferred Securities Holders.
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ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities.
(a) Trust Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and in
the terms of the Trust Securities. Any transfer or purported transfer of any
Trust Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article X, Trust Preferred Securities shall be
freely transferable.
SECTION 10.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 10.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole Holder of
such Certificate and of the Trust Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Trust Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
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SECTION 10.4 Book Entry Interests.
Unless otherwise specified in the terms of the Trust Preferred
Securities, the Trust Preferred Securities Certificates, on original issuance,
will be issued in the form of one or more fully registered, global Trust
Preferred Security Certificates (each a "Global Certificate"), to be delivered
to DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificates shall initially be registered on the books and records of the Trust
in the name of Cede & Co., the nominee of DTC, and no Trust Preferred Security
Beneficial Owner will receive a definitive Trust Preferred Security Certificate
representing such Trust Preferred Security Beneficial Owner's interests in such
Global Certificates, except as provided in Section 10.7. Unless and until
definitive, fully registered Trust Preferred Security Certificates (the
"Definitive Trust Preferred Security Certificates") have been issued to the
Trust Preferred Security Beneficial Owners pursuant to Section 10.7:
(a) the provisions of this Section 10.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Trust
Preferred Securities and the sole Holder of the Global Certificates and
shall have no obligation to the Trust Preferred Security Beneficial
Owners;
(c) to the extent that the provisions of this Section 10.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 10.4 shall control; and
(d) the rights of the Trust Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be limited
to those established by law and agreements between such Trust Preferred
Security Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants and the Clearing Agency shall receive and transmit
payments of Distributions on the Global Certificates to such Clearing
Agency Participants. The Clearing Agency will make book entry transfers
among the Clearing Agency Participants; provided, that solely for the
purposes of determining whether the Holders of the requisite amount of
Trust Preferred Securities have voted on any matter provided for in this
Declaration, so long as Definitive Trust Preferred Security Certificates
have not been issued,
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the Trustees may conclusively rely on, and shall be fully protected in
relying on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Trust Preferred Security
Beneficial Owners' votes or assigning the right to vote on any matter to
any other Persons either in whole or in part.
SECTION 10.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Trust Preferred
Security Holders is required under this Declaration, unless and until Definitive
Trust Preferred Security Certificates shall have been issued to the Trust
Preferred Security Beneficial Owners pursuant to Section 10.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Trust Preferred Security Holders to the Clearing Agency, and shall
have no notice obligations to the Trust Preferred Security Beneficial Owners.
SECTION 10.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities, the
Regular Trustees may, in their sole discretion, appoint a successor Clearing
Agency with respect to such Trust Preferred Securities.
SECTION 10.7 Definitive Trust Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 10.6 or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with
respect to the Trust Preferred Securities,
(c) there is a Trust Enforcement Event,
then:
(d) Definitive Trust Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to
such Trust Preferred Securities; and
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(e) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Trust Preferred Security Certificates to be
delivered to Trust Preferred Security Beneficial Owners in accordance with
the instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions and
each of them may conclusively rely on and shall be fully protected in
relying on, said instructions of the Clearing Agency. The Definitive Trust
Preferred Security Certificates shall be printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have
such letters, numbers or other marks of identification or designation and
such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Trust Preferred Securities may be listed, or to
conform to usage.
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 10.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Trust Securities, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
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ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability.
(a) Except as expressly set forth in this Declaration, the Trust
Guarantees and the terms of the Trust Securities, the Sponsor and the Trustees
shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Trust
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Trust
Securities any deficit upon dissolution of the Trust or otherwise.
(b) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Trust Securities shall be entitled to the same limitation of
personal liability extended to shareholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 11.2 Exculpation.
(a) No Company Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Company Indemnified Person in good faith on behalf of the Trust
and in a manner such Company Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Company Indemnified Person by this
Declaration or by law, except that a Company Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Company
Indemnified Person's gross negligence (or, in the case of the Property Trustee,
negligence) or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets,
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liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Trust Securities might
properly be paid.
SECTION 11.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Trust Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including
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its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust or any
other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 11.4 Indemnification.
(a) (i) To the fullest extent permitted by applicable law, the
Sponsor shall indemnify and hold harmless any Company Indemnified Person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of
the Trust, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the fullest extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit
by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as
to which such Company Indemnified
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Person shall have been adjudged to be liable to the Trust unless and only
to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity
for such expenses which such Court of Chancery or such other court shall
deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 11.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the fullest
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 11.4(a) (unless ordered by a court) shall be made by the Sponsor
only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall be made (1) by
the Regular Trustees by a majority vote of a quorum consisting of such
Regular Trustees who were not parties to such action, suit or proceeding,
(2) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Regular Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Holder of the Trust Common
Securities.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 11.4(a) shall be paid by the Sponsor in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such Company Indemnified Person to repay
such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Sponsor as authorized in this Section 11.4(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor if
a determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular Trustees,
(ii) if such a quorum is
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not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Holder of the Trust Common Securities, that, based
upon the facts known to the Regular Trustees, counsel or the Holder of the
Trust Common Securities at the time such determination is made, such
Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of
the Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his conduct
was unlawful. In no event shall any advance be made in instances where the
Regular Trustees, independent legal counsel or Holder of the Trust Common
Securities reasonably determine that such person deliberately breached his
duty to the Trust or Holders of Trust Common Securities.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 11.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of shareholders or disinterested directors of the Sponsor
or Holders of the Trust Preferred Securities or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section
11.4(a) shall be deemed to be provided by a contract between the Sponsor
and each Company Indemnified Person who serves in such capacity at any
time while this Section 11.4(a) is in effect. Any repeal or modification
of this Section 11.4(a) shall not affect any rights or obligations then
existing.
(vii) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any person who is or was a Company Indemnified Person against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Sponsor
would have the power to indemnify him against such liability under the
provisions of this Section 11.4(a).
(viii) For purposes of this Section 11.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any person who is or was a
director, trustee, officer or employee of such constituent entity, or is
or was serving at the request of such constituent entity as a director,
trustee, officer, employee or
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agent of another entity, shall stand in the same position under the
provisions of this Section 11.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent entity
if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 11.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be
a Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii)
the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, damage, claim,
liability or expense including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or bad faith on the part of the Trustee
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 11.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 11.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of Trust
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, nor the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the
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Delaware Trustee and the Property Trustee shall have the right to take for its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Covered Person,
the Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
or may act as depositary for, trustee or agent for, or act on any committee or
body of Holders of, securities or other obligations of the Sponsor or its
Affiliates.
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year.
SECTION 12.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the Trust by
a firm of independent certified public accountants selected by the Regular
Trustees.
(b) Within 60 days after December 15 of each year commencing
December 15, 1997, the Property Trustee shall provide to the Holders of the
Trust Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Trust Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Trust Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such
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statements within 30 days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 12.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Partnership Preferred Securities held by the Property Trustee
shall be made directly to the Property Account and no other funds of the Trust
shall be deposited in the Property Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Account.
SECTION 12.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding. Notwithstanding anything herein to the contrary,
the Trust and the Regular Trustees shall, absent receipt of an opinion of
nationally recognized tax counsel to the contrary, withhold thirty percent (30%)
(or such other rate as may be
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imposed as a result of an amendment to the Code or such lower rate as may be
imposed under an applicable income tax treaty) on the gross amount of any
Distributions on Trust Preferred Securities held by a Holder that is not a
"United States person" within the meaning of Section 7701(a)(30) of the Code.
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Trust Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Trust Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee,
the Property Trustee shall have first received an opinion of counsel (who
may be counsel to the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this Declaration (including
the terms of the Trust Securities); and
(iii) to the extent the result of such amendment would be to:
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<PAGE>
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
(B) cause the Partnership to be classified for purposes of
United States federal income tax as an association or publicly
traded partnership taxable as a corporation;
(C) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(D) cause the Trust to be deemed to be an Investment Company
required to be registered under the 1940 Act.
(c) In the event the consent of the Property Trustee, as the Holder
of the Partnership Preferred Securities is required under the Limited
Partnership Agreement with respect to any amendment, modification or termination
of the Limited Partnership Agreement or the Partnership Preferred Securities the
Property Trustee shall request the direction of the Holders of the Trust
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a Majority in liquidation amount of the Trust Securities voting together as a
single class; provided, however, that where a consent under the Limited
Partnership Agreement would require the consent of a Super Majority of the
Holders of Partnership Preferred Securities the Property Trustee may only give
such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super Majority
represents of the aggregate liquidation preference of the Partnership Preferred
Securities outstanding; provided, further, that the Property Trustee shall not
be obligated to take any action in accordance with the directions of the Holders
of the Trust Securities under this Section 13.1(c) unless the Property Trustee
has obtained an opinion of independent tax counsel to the effect that for United
States federal income tax purposes the Trust will continue to be classified as a
grantor trust after consummation of such action and each Holder will be treated
as owning an undivided beneficial ownership interest in the Partnership
Preferred Securities.
(d) At such time after the Trust has issued any Trust Securities
that remain outstanding, any amendment that would (I) adversely affect the
powers, preferences or special rights of the Trust Securities or (II) provide
for the dissolution, winding-up or termination of the Trust other than pursuant
to the terms of
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<PAGE>
this Declaration, may be effected only with the approval of the Holders of at
least a Majority in liquidation amount of the Trust Securities affected thereby;
provided, that if any amendment or proposal referred to in clause (I) hereof
would adversely affect only the Trust Preferred Securities or the Trust Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Trust Securities;
(e) Section 11.1(c) and this Section 13.1 shall not be amended
without the consent of all of the Holders of the Trust Securities;
(f) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Trust Common Securities and;
(g) The rights of the Holders of the Trust Common Securities under
Article V to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Trust Common Securities; and
(h) Notwithstanding Section 13.1(c), this Declaration may be amended
without the consent of the Holders of the Trust Securities:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) to add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in the 1940 Act or written change in
interpretation or application of the rules and regulations promulgated
thereunder by any legislative body, court, government agency or regulatory
authority;
(v) to conform to any change in the Trust Indenture Act or written
change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government agency
or regulatory authority; and
71
<PAGE>
(vi) to modify, eliminate and add to any provision of this
Declaration to such extent as may be necessary;
provided, that such amendments do not have a material adverse effect on the
rights, preferences or privileges of the Holders.
SECTION 13.2 Meetings of the Holders of Trust Securities;
Action by Written Consent.
(a) Meetings of the Holders of any class of Trust Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Trust Securities) to consider and act on any matter on which Holders of such
class of Trust Securities are entitled to act under the terms of this
Declaration, the terms of the Trust Securities, the Limited Partnership
Agreement, the rules of any stock exchange on which the Trust Preferred
Securities are listed or admitted for trading, the Business Trust Act or other
applicable law. The Regular Trustees shall call a meeting of the Holders of such
class if directed to do so by the Holders of at least 10% in liquidation amount
of such class of Trust Securities. Such direction shall be given by delivering
to the Regular Trustees one or more notices in a writing stating that the
signing Holders of Trust Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Trust Securities calling a meeting shall specify in writing the Certificates
held by the Holders of Trust Securities exercising the right to call a meeting
and only those Trust Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Trust Securities, the following provisions shall apply to meetings of Holders of
Trust Securities:
(i) notice of any such meeting shall be given to all the Holders of
Trust Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Any action that may be
taken at a meeting of the Holders of Trust Securities may be taken without
a meeting if a consent in writing setting forth the action so taken is
signed by the Holders of Trust Securities owning not less than the minimum
amount of Trust Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Trust Securities having a right to vote thereon were present and voting.
Prompt notice of the taking of action without a meeting shall be given to
the Holders of Trust Securities
72
<PAGE>
entitled to vote who have not consented in writing. The Regular Trustees
may specify that any written ballot submitted to the Holder for the
purpose of taking any action without a meeting shall be returned to the
Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Trust Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Trust Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Holder of
Trust Securities executing it. Except as otherwise provided herein, all
matters relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware relating
to proxies, and judicial interpretations thereunder, as if the Trust were
a Delaware corporation and the Holders of the Trust Securities were
shareholders of a Delaware corporation;
(iii) each meeting of the Holders of the Trust Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Trust Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Trust Preferred Securities are then listed for
trading, otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Trust Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any
Holders of Trust Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
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ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of Property
Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of New York, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of,
the Declaration;
(b) The execution, delivery and performance by the Property Trustee
of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee and constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Property Trustee;
(d) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this
Declaration; and
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<PAGE>
(e) The Property Trustee, pursuant to this Declaration, shall hold
legal title to, and a valid ownership interest on behalf of the Holders of
the Trust Securities, in the Partnership Preferred Securities and agrees
that, except as expressly provided or contemplated by this Agreement, it
will not create, incur or assume, or suffer to exist any mortgage, pledge,
hypothecation, encumbrance, lien or other charge or security interest upon
the Partnership Preferred Securities.
SECTION 14.2 Representations and Warranties of Delaware
Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware corporation with, duly
organized, validly existing and in good standing under the laws of the
State of Delaware, with power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration, under Delaware law, constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration; and
(d) The Delaware Trustee is an entity which has its principal place
of business in the State of Delaware.
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ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Trust Securities):
UDS CAPITAL I
c/o Ultramar Diamond Shamrock
Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer.
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice
of to the other Trustees):
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Attention: Walter N. Gitlin
Senior Trust Officer.
(c) if given to the Property Trustee, at its Corporate Trust Office
to the attention of Walter N. Gitlin, Vice President (or such other
address as the Property Trustee may give notice of to the Holders of the
Trust Securities and the other Trustee).
(d) if given to the Holder of the Trust Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as
the Holder of the Trust Common Securities may give notice of to the
Trust):
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<PAGE>
UDS CAPITAL I
c/o Ultramar Diamond Shamrock
Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer.
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
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<PAGE>
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees and a duly authorized officer of the Sponsor
to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and effect
as though all of the signers had signed a single signature page.
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused these
presents to be executed as of the day and year first above written.
_______________________________________
H. Pete Smith, as Regular Trustee
_______________________________________
Steve Blank, as Regular Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: ___________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By: ___________________________________
Name:
Title:
ULTRAMAR DIAMOND SHAMROCK
CORPORATION,
as Sponsor
By: ___________________________________
Name:
Title:
79
<PAGE>
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
This Trust Preferred Security is a Global Certificate within the meaning
of the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary. This
Trust Preferred Security is exchangeable for Trust Preferred Securities
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Declaration and no transfer of
this Trust Preferred Security (other than a transfer of this Trust Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Trust Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York), a New York corporation, to the Trust or its agent for registration of
transfer, exchange or payment, and any Trust Preferred Security issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depositary and any payment hereon is made to
Cede & Co. or such other entity as is requested by an authorized representative
of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________ agent to transfer this Trust
Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: ______________________________
Signature: _________________________
(Sign exactly as your name appears on the other side of this Trust Preferred
Security Certificate)
A1-1
<PAGE>
TP-1 [ ]
CUSIP NO. _________
Certificate Evidencing Trust Preferred Securities
of
UDS CAPITAL I
__% Trust Preferred Securities
(liquidation amount $25 per Trust Preferred Security)
UDS CAPITAL I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of 6,000,000 preferred securities of the Trust
representing undivided beneficial ownership interests in the assets of the Trust
designated the __% Trust Preferred Securities (liquidation amount $25 per Trust
Preferred Security) (the "Trust Preferred Securities"). The Trust Preferred
Securities are freely transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designation, rights, powers,
privileges, restrictions, preferences and other terms and provisions of the
Trust Preferred Securities represented hereby are set forth in, issued under and
shall in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust dated as of June __, 1997, as the same may be amended from
time to time (the "Declaration"). Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled to
the benefits of the Trust Preferred Securities Guarantee to the extent provided
therein. Each Holder of a Trust Preferred Security, by acceptance of this
Certificate and each Certificate owner, by acquisition of a beneficial interest
in a Certificate, agrees to treat the Debentures, and any other Affiliate
Investment Instruments that are treated as debt instruments by the relevant
Investment Affiliate and by the Partnership, as indebtedness for United States
federal income tax purposes. The Sponsor will provide a copy of the Declaration,
the Trust Preferred Securities Guarantee and the Limited Partnership Agreement
to a Holder without charge upon written request to the Trust at its principal
place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A1-2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this
____ day of June, 1997.
UDS CAPITAL I
____________________________________________
Name: ,
as Regular Trustee
(See reverse for additional terms)
A1-3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Trust Preferred Security described in the
within-mentioned Declaration.
THE BANK OF NEW YORK,
as Trustee
By:__________________________________
Authorized Signatory
A1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Holders of Trust Preferred Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of __% of the stated
liquidation amount of $25 per Trust Preferred Security. Distributions on the
Trust Preferred Securities shall, from the date of original issue, accumulate
and be cumulative and shall be payable quarterly only to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account. Distributions not paid on the scheduled payment date will accumulate
and compound quarterly (to the extent permitted by applicable law) at the rate
of __% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any such
Compounded Distributions. Amounts available to the Trust for distribution to the
holders of the Trust Preferred Securities will be limited to payments received
by the Trust from the Partnership on the Partnership Preferred Securities or
from the Company on the Partnership Guarantee. Distributions on the Partnership
Preferred Securities will be paid only if, as and when declared in the sole
discretion of the Company, as the General Partner of the Partnership. If and to
the extent that the Partnership makes a distribution on the Partnership
Preferred Securities held by the Property Trustee or the Company makes a payment
under the Partnership Guarantee (the amount of any such partnership
distribution, including any compounded partnership distributions or guarantee
payment being a "Payment Amount"), the Trust shall and the Property Trustee is
directed, to the extent funds are available for that purpose, to make a Pro Rata
Distribution of the Payment Amount to Holders.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, distributions on the Trust
Preferred Securities will be cumulative, will accumulate from the date of
initial issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on _________ __, 1997, if,
as and when available for payment by the Property Trustee. If the Trust
Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) are in book-entry-only form, Distributions will be payable to the
Holders of record of Trust Preferred Securities as they appear on the books and
records of the Trust on the relevant record dates, which will be one Business
Day prior to the relevant payment dates. If the Trust Preferred
A1-5
<PAGE>
Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) do not remain in book-entry-only form, the relevant record dates
shall be the 15th day of the month of the relevant payment dates. In the event
that any date on which distributions are payable is not a Business Day, payment
of such Distribution shall be made on the next succeeding day which is a
Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, with
the same force and effect as if made on such date. Payments of accumulated
Distributions will be payable to Holders of record of Trust Preferred Securities
as they appear on the books and records of the Trust on the record date with
respect to the payment date for the Trust Preferred Securities which corresponds
to the payment date fixed by the Partnership with respect to the payment of
cumulative distributions on the Partnership Preferred Securities.
The Trust Preferred Securities shall be redeemable as provided
in the Declaration.
A1-6
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
CS-1 [ ]
Certificate Evidencing Trust Common Securities
of
UDS CAPITAL I
__% Trust Common Securities
(liquidation amount $25 per Trust Common Security)
UDS CAPITAL I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Ultramar Diamond
Shamrock Corporation, a Delaware corporation (the "Holder") is the registered
owner of _______ common securities of the Trust representing undivided
beneficial ownership interests in the assets of the Trust designated the __%
Trust Common Securities (liquidation amount $25 per Trust Common Security) (the
"Trust Common Securities"). The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Trust Common
Securities represented hereby are set forth in, issued under and shall in all
respects be subject to the provisions of the Amended and Restated Declaration of
Trust dated as of June __, 1997, as the same may be amended from time to time
(the "Declaration"). Capitalized terms used herein but not defined shall have
the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Trust Common Securities Guarantee to the extent provided
therein. Each Holder of a Trust Common Security, by acceptance of this
Certificate, agrees to treat the Debentures, and any other Affiliate Investment
Instruments that are treated as debt instruments by the relevant Investment
Affiliate and by the Partnership, as indebtedness for United States federal
income tax purposes. The Sponsor will provide a copy of the Declaration, the
Trust Common Securities Guarantee and the Limited Partnership Agreement to a
Holder without charge upon written request to the Sponsor at its principal place
of business. THE TRUST COMMON SECURITIES ARE TRANSFERABLE ON THE BOOKS AND
RECORDS OF THE TRUST ONLY IN ACCORDANCE WITH THE TERMS OF THE DECLARATION.
<PAGE>
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trust has executed this certificate this
____ day of June, 1997.
UDS CAPITAL I
_______________________________________
,
as Regular Trustee
(See reverse for additional terms)
A2-2
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Trust Common Security described in the within-mentioned
Declaration.
THE BANK OF NEW YORK,
as Trustee
By:____________________________
Authorized Signatory
A2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Holders of Trust Common Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of __% of the stated
liquidation amount of $25 per Trust Common Security. Distributions on the Trust
Common Securities shall, from the date of original issue, accumulate and be
cumulative and shall be payable quarterly only to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
Distributions not paid on the scheduled payment date will accumulate and
compound quarterly (to the extent permitted by applicable law) at the rate of
__% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any such
Compounded Distributions. Amounts available to the Trust for distribution to the
holders of the Trust Common Securities will be limited to payments received by
the Trust from the Partnership on the Partnership Preferred Securities or from
the Company on the Partnership Guarantee. Distributions on the Partnership
Preferred Securities will be paid only if, as and when declared in the sole
discretion of the Company, as the General Partner of the Partnership. If and to
the extent that the Partnership makes a distribution on the Partnership
Preferred Securities held by the Property Trustee or the Company makes a payment
under the Partnership Guarantee (the amount of any such partnership
distribution, including any compounded partnership distributions or guarantee
payment being a "Payment Amount"), the Trust shall and the Property Trustee is
directed, to the extent funds are available for that purpose, to make a Pro Rata
Distribution of the Payment Amount to Holders.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, distributions on the Trust
Common Securities will be cumulative, will accumulate from the date of initial
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on ______ __, 1997 if, as
and when available for payment by the Property Trustee. Distributions will be
payable to the Holders of record of Trust Common Securities as they appear
A2-4
<PAGE>
on the books and records of the Trust on the relevant record dates, which will
be one Business Day prior to the relevant payment dates. In the event that any
date on which distributions are payable is not a Business Day, payment of the
Distribution shall be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. Payments of accumulated
Distributions will be payable to Holders of record of Trust Common Securities as
they appear on the books and records of the Trust on the record date with
respect to the payment date for the Trust Common Securities which corresponds to
the payment date fixed by the Partnership with respect to the payment of
cumulative distributions on the Partnership Preferred Securities.
The Trust Common Securities shall be redeemable as provided in
the Declaration.
A2-5
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Common
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
______________________________________________ agent to transfer this Trust
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: ____________________________
Signature: _______________________
(Sign exactly as your name appears on the other side of this Trust Common
Security Certificate)
A2-6
<PAGE>
EXHIBIT 4.6
======================================
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
UDS CAPITAL II
Dated as of __________ __, 1997
======================================
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TABLE OF CONTENTS
Page
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions........................................ 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................... 12
SECTION 2.2 Lists of Holders of Trust Securities............... 12
SECTION 2.3 Reports by the Property Trustee.................... 13
SECTION 2.4 Periodic Reports to Property Trustee............... 13
SECTION 2.5 Evidence of Compliance with Conditions
Precedent.......................................... 13
SECTION 2.6 Trust Enforcement Events; Waiver................... 13
SECTION 2.7 Trust Enforcement Event; Notice.................... 15
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................... 16
SECTION 3.2 Office............................................. 16
SECTION 3.3 Purpose............................................ 16
SECTION 3.4 Authority.......................................... 16
SECTION 3.5 Title to Property of the Trust..................... 17
SECTION 3.6 Powers and Duties of the Regular
Trustees........................................... 17
SECTION 3.7 Prohibition of Actions by the Trust and
the Trustees....................................... 21
SECTION 3.8 Powers and Duties of the Property
Trustee............................................ 22
SECTION 3.9 Certain Duties and Responsibilities of
the Property Trustee............................... 24
SECTION 3.10 Certain Rights of Property Trustee................. 26
SECTION 3.11 Delaware Trustee................................... 29
SECTION 3.12 Execution of Documents............................. 29
SECTION 3.13 Not Responsible for Recitals or Issuance
of Trust Securities................................ 29
SECTION 3.14 Duration of Trust.................................. 29
SECTION 3.15 Mergers............................................ 29
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ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.................... 32
SECTION 4.2 Indemnification and Expenses of the
Trustee............................................ 33
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common
Securities......................................... 33
SECTION 5.2 Covenants of the Trust Common Securities
Holder............................................. 33
ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees................................. 34
SECTION 6.2 Delaware Trustee................................... 34
SECTION 6.3 Property Trustee; Eligibility...................... 35
SECTION 6.4 Qualifications of Regular Trustees and
Delaware Trustee Generally......................... 36
SECTION 6.5 Regular Trustees................................... 36
SECTION 6.6 Delaware Trustee................................... 36
SECTION 6.7 Appointment, Removal and Resignation of
Trustees........................................... 36
SECTION 6.8 Vacancies among Trustees........................... 38
SECTION 6.9 Effect of Vacancies................................ 38
SECTION 6.10 Meetings........................................... 39
SECTION 6.11 Delegation of Power................................ 39
Section 6.12 Merger, Conversion, Consolidation or
Succession to Business............................. 40
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions...................................... 40
ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Re-
garding Trust Securities........................... 42
SECTION 8.2 Redemption of Trust Securities..................... 44
SECTION 8.3 Redemption Procedures.............................. 45
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SECTION 8.4 Voting Rights of Trust Preferred
Securities......................................... 48
SECTION 8.5 Voting Rights of Trust Common
Securities......................................... 51
SECTION 8.6 Paying Agent....................................... 53
SECTION 8.7 Listing............................................ 53
SECTION 8.8 Acceptance of Guarantee and Agreements,
Limited Partnership Agreement...................... 53
ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust............................... 54
SECTION 9.2 Liquidation Distribution Upon Termina-
tion and Dissolution of the Trust.................. 55
ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities....................... 57
SECTION 10.2 Transfer of Certificates........................... 57
SECTION 10.3 Deemed Security Holders............................ 57
SECTION 10.4 Book Entry Interests............................... 58
SECTION 10.5 Notices to Clearing Agency......................... 59
SECTION 10.6 Appointment of Successor Clearing
Agency............................................. 59
SECTION 10.7 Definitive Trust Preferred Security
Certificates....................................... 59
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen
Certificates....................................... 60
ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability.......................................... 61
SECTION 11.2 Exculpation........................................ 61
SECTION 11.3 Fiduciary Duty..................................... 62
SECTION 11.4 Indemnification.................................... 63
SECTION 11.5 Outside Businesses................................. 66
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year........................................ 67
SECTION 12.2 Certain Accounting Matters......................... 67
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SECTION 12.3 Banking............................................ 68
SECTION 12.4 Withholding........................................ 68
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments......................................... 69
SECTION 13.2 Meetings of the Holders of Trust
Securities; Action by Written Consent.............. 72
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of
Property Trustee................................... 74
SECTION 14.2 Representations and Warranties of
Delaware Trustee................................... 75
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices............................................ 76
SECTION 15.2 Governing Law...................................... 77
SECTION 15.3 Intention of the Parties........................... 77
SECTION 15.4 Headings........................................... 77
SECTION 15.5 Successors and Assigns............................. 77
SECTION 15.6 Partial Enforceability............................. 78
SECTION 15.7 Counterparts....................................... 78
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CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)............................................. 6.3(a)
310(c)............................................. Inapplicable
311(c)............................................. Inapplicable
312(a)............................................. 2.2(a)
312(b)............................................. 2.2(b)
313................................................ 2.3
314(a)............................................. 2.4
314(b)............................................. Inapplicable
314(c)............................................. 2.5
314(d)............................................. Inapplicable
314(f)............................................. Inapplicable
315(a)............................................. 3.9(b)
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Annex I
316(c)............................................. 3.6(e)
- ----------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
UDS CAPITAL II
_________ __, 1997
AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration") dated
and effective as of __________ __, 1997, by the Trustees (as defined herein), by
the Sponsor (as defined herein) and by the Holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, certain of the Trustees and the Sponsor established UDS
CAPITAL II (the "Business Trust"), a trust under the Delaware Business Trust Act
(the "Trust Act"), pursuant to a Declaration of Trust dated as of June 5, 1997
(the "Original Declaration") and a Certificate of Trust filed with the Secretary
of State of the State of Delaware on June 5, 1997, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in the
Partnership Preferred Securities;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the Holders, from time to time, of the securities
representing undivided beneficial ownership interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) a term used in this Agreement and not otherwise defined herein
shall have the meaning ascribed to such term in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of the Limited Partnership Agreement.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as set forth in Section 10.4 of this
Declaration.
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"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. Section 3801 et seq., as it may be
amended from time to time, or any successor legislation.
"Certificate" means a Trust Common Security Certificate or a Trust
Preferred Security Certificate.
"Change in 1940 Act Law" means, as a result of the occurrence on or
after the date of the issuance of the Trust Preferred Securities of a change in
law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, the Trust is or will be considered an "investment company" which is
required to be registered under the 1940 Act.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Trust Preferred Securities and in whose name or in the name of a nominee
of that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of beneficial interests in
the Trust Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of interest in securities
deposited with the Clearing Agency.
"Closing Date" means ____________ __, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission.
"Common Security Holder of the Trust" means the Company in its
capacity as Holder of the Trust Common Security.
"Company" means Ultramar Diamond Shamrock Corporation.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees,
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representatives or agents of any Regular Trustee; or (d) any officer, director,
shareholder, member, partner, employee, representative or agent of the Trust or
its Affiliates.
"Compounded Distributions" has the meaning set forth in Section
7.1(a) of this Declaration.
"Corporate Trust Office" means the principal corporate trust office
of the Property Trustee in the Borough of Manhattan, the City of New York, which
office at the date hereof is located at 101 Barclay Street, Floor 21 West, New
York, New York 10286.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Trust Securities.
"Definitive Trust Preferred Security Certificates" has the meaning
set forth in Section 10.4 of this Declaration.
"Delaware Trustee" has the meaning set forth in Section 6.2 of this
Declaration.
"Distribution" has the meaning set forth in Section 7.1(a) of this
Declaration.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
11.4(b) of this Declaration.
"Fiscal Period" has the meaning set forth in Section 1.1 of the
Limited Partnership Agreement.
"Fiscal Year" has the meaning set forth in Section 12.1 of this
Declaration.
"General Partner" means Ultramar Diamond Shamrock Corporation, in
its capacity as the general partner of the Partnership, its permitted
successors, or any successor general partner in the Partnership admitted as such
pursuant to the Limited Partnership Agreement.
"Global Certificate" has the meaning set forth in Section 10.4 of
this Declaration.
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"Holder" means a Person in whose name a Certificate representing a
Trust Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Initial Debentures" has the meaning set forth in Section 7.1(b) of
the Limited Partnership Agreement.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that (i) is controlled by the Company and (ii) is not
an investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
"Investment Company" means an investment company as defined in the
1940 Act.
"Investment Guarantee" means any guarantee on a subordinated basis
by the Company with respect to (1) payment of interest, principal and other
payment terms of Affiliate Investment Instruments that are debt securities of an
Investment Affiliate and (2) the payment of dividends, distributions and other
payment terms of Affiliate Investment Instruments that are preferred or
preference stock of an Investment Affiliate when, as and if declared by such
Investment Affiliate.
"Legal Action" has the meaning set forth in Section 3.6(h) of this
Declaration.
"Limited Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of UDS Funding II, L.P. dated as of
____________ __, 1997.
"List of Holders" has the meaning set forth in Section 2.2(a) of
this Declaration.
"Majority in liquidation amount of the Trust Securities" means,
except as provided in the terms of the Trust Preferred Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount of all outstanding Trust Securities of the relevant
class.
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"Ministerial Action" means, a ministerial action (such as filing a
form or making an election or pursuing some other similar reasonable measure)
which in the sole judgment of the Company has or will cause no adverse effect on
the Trust, the Partnership, the Company or the holders of the Trust Securities
and will involve no material cost.
"Nasdaq" means the National Association of Securities Dealers
Automated Quotation System.
"1940 Act" means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
"Officers' Certificate" means, with respect to any Person (who is
not an individual), a certificate signed by the Chairman of the Board, the
President, a Vice President or the Treasurer, and by an Assistant Treasurer, the
Secretary or an Assistant Secretary of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Partnership" means UDS Funding II, L.P., a Delaware limited
partnership.
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.
"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of _________ __, 1997, by the Company in favor of the Partnership
Preferred Security Holders with respect to the
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Partnership Preferred Securities, as amended or supplemented from time to time.
"Partnership Preferred Securities" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
"Partnership Special Event" has the meaning set forth in Section 1.1
of the Limited Partnership Agreement.
"Payment Amount" has the meaning set forth in Section 7.1(a) of this
Declaration.
"Paying Agent" has the meaning set forth in Section 3.8(g) of this
Declaration.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, or each case in accordance
with the rules of such Clearing Agency).
"Property Account" has the meaning set forth in Section 3.8(c) of
this Declaration.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3 of this Declaration.
"Pro Rata" means, in reference to any distributions on or
redemptions of Trust Securities or the distribution of Partnership Preferred
Securities or any other payment with respect to Trust Securities in connection
with a Trust Special Event or liquidation of the Trust, pro rata to each Holder
of Trust Securities according to the aggregate liquidation amount of the Trust
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Trust Securities outstanding.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
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"Redemption Price" has the meaning set forth in Section 8.2(a) of
this Declaration.
"Regular Trustee" has the meaning set forth in Section 6.1 of this
Declaration.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, the chairman or vice-chairman of the board of directors, the
chairman or vice-chairman of the executive committee of the board of directors,
the president, any vice president (whether or not designated by a number or a
word or words added before or after the title "vice president"), the secretary,
any assistant secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust officer, or any
other officer of the Trust Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the 1940 Act.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Special Representative" has the meaning set forth in
Section 6.2(h)(i) of the Limited Partnership Agreement.
"Sponsor" means the Company or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.
"Successor Entity" has the meaning set forth in Section 3.15 of this
Declaration.
"Successor Property Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.
"Successor Trust Securities" has the meaning set forth in Section
3.15 of this Declaration.
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"Super Majority" has the meaning set forth in Section 2.6(a)(ii)
of this Declaration.
"Tax Action" means (a) an amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (b)
a judicial decision interpreting, applying or clarifying such laws or
regulations, (c) an administrative pronouncement or action that represents an
official position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or (d) a threatened challenge asserted in
connection with an audit of the Company or any of its subsidiaries, the
Partnership, or the Trust, or a threatened challenge asserted in writing against
any other taxpayer that has raised capital through the issuance of securities
that are substantially similar to the Debentures, the Partnership Preferred
Securities, or the Trust Preferred Securities, which amendment or change is
adopted or which decision, pronouncement or proposed change is announced or
which action, clarification or challenge occurs on or after the date of the
prospectus related to the issuance of the Trust Preferred Securities.
"10% in liquidation amount of the Trust Securities" means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of 10% or more of the aggregate
liquidation amount of all outstanding Trust Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Common Security" has the meaning set forth in Section 8.1 of
this Declaration.
"Trust Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
"Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of __________ __,
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1997, entered into by the Company, as Guarantor, for the benefit of the holders
of the Trust Common Securities.
"Trust Dissolution Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that there has been a Trust Tax Event.
"Trust Enforcement Event" means the occurrence, at any time, of (i)
arrearages on distributions on the Trust Preferred Securities that shall exist
for six consecutive quarterly distribution periods, (ii) a default by the
Company in respect of any of its obligations under the Trust Guarantee or (iii)
a Partnership Enforcement Event (as defined in the Limited Partnership
Agreement).
"Trust Guarantees" means the Trust Common Securities Guarantee and
The Trust Preferred Securities Guarantee, collectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trust Investment Company Event" means that the Company shall have
requested and received and shall have delivered to the Regular Trustees an
opinion of nationally recognized independent legal counsel experienced in such
matters to the effect that as a result of a Change in 1940 Act Law, the Trust is
or will be considered an "investment company" which is required to be registered
under the 1940 Act.
"Trust Liquidation" has the meaning set forth in Section 9.2(a) of
this Declaration.
"Trust Preferred Securities Guarantee" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
"Trust Liquidation Distribution" has the meaning set forth in
Section 9.2(a) of this Declaration.
"Trust Preferred Security" has the meaning set forth in Section
8.1(a) of this Declaration.
"Trust Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
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"Trust Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.
"Trust Redemption Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters that there has
been a Trust Tax Event, and following such Trust Tax Event there is more than an
insubstantial risk that interest payable by one or more of the Investment
Affiliates with respect to the Debentures is not, or will not be, deductible by
such Investment Affiliate for United States federal income tax purposes even if
the Partnership Preferred Securities were distributed to the Holders of the
Trust Securities in liquidation of such Holders' interests in the Trust.
"Trust Securities" means the Trust Common Securities and the Trust
Preferred Securities.
"Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event.
"Trust Tax Event" means that there has been a Tax Action which
relates to any of the items described in (i) through (iii) below, and that there
is more than an insubstantial risk that (i) the Trust is, or will be subject to
United States federal income tax with respect to income accrued or received on
the Partnership Preferred Securities, (ii) the Trust is, or will be, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges or (iii) interest payable by one or more of the Investment Affiliates
with respect to the Debentures is not, or will not be, deductible by such
Investment Affiliate for United States federal income tax purposes.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Trust Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the Trust
Securities ("List of Holders") as of such record date, provided, that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity), provided, that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Property Trustee.
Within 60 days after December 15 of each year commencing December
15, 1997, the Property Trustee shall provide to the Holders of the Trust
Preferred Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
are required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.
SECTION 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in liquidation amount of Trust
Preferred Securities may, by vote, on behalf of the Holders of all of the Trust
Preferred Securities, waive any past Trust Enforcement Event in respect of the
Trust Preferred Securities and its consequences, provided, that if the
underlying event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Preferred Securities Guarantee
or the Limited Partnership Agreement, the Trust Enforcement Event under
this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of greater than a
Majority in liquidation amount of the Trust Preferred Securities to be
waived under the Trust Preferred
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Securities Guarantee or the Partnership Preferred Securities to be waived
under the Limited Partnership Agreement (a "Super Majority"),
the Trust Enforcement Event under this Declaration may only be waived by the
vote of the Holders of at least the relevant Super Majority in liquidation
amount of the Trust Preferred Securities.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Trust Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Trust Enforcement Event with respect
to the Trust Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Trust Enforcement Event with respect to the
Trust Preferred Securities or impair any right consequent thereon. Any waiver by
the Holders of the Trust Preferred Securities of Trust Enforcement Events with
respect to the Trust Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Trust Common Securities of any such Trust
Enforcement Event with respect to the Trust Common Securities for all purposes
of this Declaration without any further act, vote, or consent of the Holders of
the Trust Common Securities.
(b) The Holders of a Majority in liquidation amount of the Trust
Common Securities may, by vote, on behalf of the Holders of all of the Trust
Common Securities, waive any past Trust Enforcement Event with respect to the
Trust Common Securities and its consequences, provided, that if the underlying
event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Common Securities Guarantee or
the Limited Partnership Agreement, except where the Holders of the Trust
Common Securities are deemed to have waived such Trust Enforcement Event
under this Declaration as provided below in this Section 2.6(b), the Trust
Enforcement Event under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of a Super Majority
to be waived, except where the Holders of the Trust Common Securities are
deemed to have waived such Trust Enforcement Event under the Declaration
as provided below in this Section 2.6(b), the Trust Enforcement Event
under this Declaration may only be waived by the vote of the
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Holders of at least the relevant Super Majority in liquidation amount of
the Trust Common Securities;
provided, further, each Holder of Trust Common Securities will be deemed to have
waived any such Trust Enforcement Event and all Trust Enforcement Events with
respect to the Trust Common Securities and its consequences if all Trust
Enforcement Events with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated, and until such Trust Enforcement Events
have been so cured, waived or otherwise eliminated, the Property Trustee will be
deemed to be acting solely on behalf of the Holders of the Trust Preferred
Securities and only the Holders of the Trust Preferred Securities will have the
right to direct the Property Trustee in accordance with the terms of the Trust
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Trust Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Trust
Enforcement Event with respect to the Trust Common Securities arising therefrom
shall be deemed to have been cured for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or Trust Enforcement
Event with respect to the Trust Common Securities or impair any right consequent
thereon.
(c) A waiver of Partnership Enforcement Events under the Limited
Partnership Agreement by the Property Trustee at the direction of the Holders of
the Trust Preferred Securities constitutes a waiver of the corresponding Trust
Enforcement Event under this Declaration. The foregoing provisions of this
Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture
Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Trust Securities, as permitted by the
Trust Indenture Act.
SECTION 2.7 Trust Enforcement Event; Notice.
The Property Trustee shall, within 90 days after the occurrence of a
Trust Enforcement Event, transmit by mail, first class postage prepaid, to the
Holders of the Trust Securities, notices of all defaults with respect to the
Trust Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7 being hereby defined
to be defaults as defined in the Trust Guarantees or the Limited Partnership
Agreement, not including
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any periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided, that except for a default in the payment of
principal of (or premium, if any) or interest on any of the Affiliate Investment
Instruments or in the payment of any sinking fund installment established for
the Affiliate Investment Instruments, the Property Trustee shall be fully
protected in withholding such notice if and so long as a Responsible Officer of
the Property Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Trust Securities.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "UDS Capital II," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of Trust Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Ultramar
Diamond Shamrock Corporation, 9830 Colonnade Boulevard, San Antonio, Texas
78230. On ten Business Days written notice to the Holders of Trust Securities,
the Regular Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
the Trust Securities, (b) investing the proceeds from such sale of the Trust
Securities to acquire the Partnership Preferred Securities, and (c) except as
otherwise limited herein, to engage in only those other activities necessary or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, mortgage or pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out
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the purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust and an
action taken by the Property Trustee on behalf of the Trust in accordance with
its powers shall constitute the act of and serve to bind the Trust. In dealing
with the Trustees acting on behalf of the Trust, no person shall be required to
inquire into the authority of the Trustees to bind the Trust. Persons dealing
with the Trust are entitled to rely conclusively on the power and authority of
the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Partnership
Preferred Securities and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial ownership interest in the assets
of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Trust Preferred Securities and the Trust
Common Securities in accordance with this Declaration; provided, however,
that the Trust may issue no more than one series of Trust Preferred
Securities and no more than one series of Trust Common Securities, and,
provided, further, that there shall be no interests in the Trust other
than the Trust Securities, and the issuance of Trust Securities shall be
limited to a one-time, simultaneous issuance of both Trust Preferred
Securities and Trust Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Trust Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor, including any
amendments thereto, pertaining to the Trust Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the
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Sponsor to be necessary in order to qualify or register all or part
of the Trust Preferred Securities in any State in which the Sponsor
has determined to qualify or register such Trust Preferred
Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc. or any other national
stock exchange or the Nasdaq National Market System for listing upon
notice of issuance of any Trust Preferred Securities;
(iv) execute and file with the Commission a registration
statement, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Trust Preferred
Securities, the Partnership Preferred Securities, the Trust
Preferred Securities Guarantee and the Partnership Guarantee under
Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting agreement providing
for the sale of the Trust Preferred Securities and perform the
duties and obligations of the Trust thereunder;
(c) to acquire the Partnership Preferred Securities with the
proceeds of the sale of the Trust Preferred Securities and the Trust
Common Securities; provided, however, that the Regular Trustees shall
cause legal title to the Partnership Preferred Securities to be held of
record in the name of the Property Trustee for the benefit of the Holders
of the Trust Preferred Securities and the Holders of Trust Common
Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Trust Special Event; provided, that the
Regular Trustees shall consult with the Sponsor and the Property Trustee
before taking or refraining from taking any Ministerial Action in relation
to a Trust Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of Section 316(c) of the Trust Indenture
Act, Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Trust Preferred Securities and Holders
of Trust Common Securities as to such actions and applicable record dates;
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(f) to give prompt written notice to the Holders of the Trust
Securities of any notice received from the Partnership of the General
Partner's election not to make a current, quarterly distribution on the
Partnership Preferred Securities under the Limited Partnership Agreement;
(g) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Trust Securities;
(h) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(f), the Property
Trustee has the exclusive power to bring such Legal Action;
(i) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(j) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(k) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;
(l) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(m) to act as, or appoint another Person to act as, registrar and
transfer agent for the Trust Securities;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Trust Preferred Securities or to enable the Trust to effect the
purposes for which the Trust was created;
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(p) to take any action, or to take no action, not inconsistent with
this Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying out
the activities of the Trust as set out in this Section 3.6, including, but
not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the 1940 Act; and
(ii) taking no action which would be reasonably likely to
cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States
federal income tax purposes;
provided, that such action does not adversely affect the
interests of Holders; and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Partnership pursuant to Section 9.1 of
the Limited Partnership Agreement.
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SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Partnership Preferred Securities, but shall distribute all such proceeds
to Holders of Trust Securities pursuant to the terms of this Declaration
and of the Trust Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness or acquire any
securities other than the Partnership Preferred Securities;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Trust Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Trust Securities;
(vii) other than as set forth herein, (A) cause the Special
Representative to direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative or
exercising any trust or power conferred upon the Special Representative
with respect to the Partnership Preferred Securities, the Affiliate
Investment Instruments, and the Investment Guarantees, (B) cause the
Special Representative to waive any past default that is waivable under
the Limited Partnership Agreement, the Affiliate Investment Instruments or
the Investment Guarantees, (C) cause the Special Representative to
exercise any right to rescind or annul any declaration that the principal
of, or other amounts in respect of, any Affiliate Investment Instrument is
due and payable or (D) consent to any amendment, modification or
termination of the Limited Partnership
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Agreement or the Partnership Preferred Securities where such consent shall
be required; and
(viii) other than in connection with the liquidation of the Trust
pursuant to a Trust Special Event or upon redemption of all the Trust
Securities, file a certificate of cancellation of the Trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Partnership Preferred Securities shall be
owned by and held of record in the name of the Property Trustee in trust for the
benefit of the Holders of the Trust Securities. The right, title and interest of
the Property Trustee to the Partnership Preferred Securities shall vest
automatically in each Person who may hereafter be appointed as Property Trustee
in accordance with Section 6.7. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Partnership
Preferred Securities have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Partnership Preferred Securities to the Regular Trustees or to
the Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the Trust
Securities and, upon the receipt of payments of funds made in respect of
the Partnership Preferred Securities held by the Property Trustee, deposit
such funds into the Property Account and make payments to the Holders of
the Trust Preferred Securities and Holders of the Trust Common Securities
from the Property Account in accordance with Section 7.1. Funds in the
Property Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Account shall be an account that is
maintained with a banking institution (including the Property Trustee if
it qualifies hereunder) authorized to exercise corporate trust powers and
having a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by Federal or state authority;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the
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Trust Preferred Securities and the Trust Common Securities to the extent
the Partnership Preferred Securities are redeemed; and
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Trust Securities, engage in
such ministerial activities as shall be necessary or appropriate to effect
the distribution of the Partnership Preferred Securities to Holders of
Trust Securities upon the occurrence of a Trust Special Event.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Trust Securities.
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act.
(f) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a Holder of Partnership Preferred
Securities and, if a Trust Enforcement Event occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Trust Securities,
enforce its rights as Holder of the Partnership Preferred Securities subject to
the rights of the Holders pursuant to the terms of such Trust Securities.
(g) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Trust Securities and any
such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Trust Securities pursuant to the
terms of the Trust Securities; or
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(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 6.7.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing or waiver of all Trust Enforcement Events
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Property Trustee. In case a Trust
Enforcement Event has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and after
the curing or waiving of all such Trust Enforcement Events that may have
occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this Declaration
and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Property Trustee;
and
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(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but
in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) subject to the requirement of the Property Trustee receiving a
tax opinion as set forth in Section 8.4(d) or 8.5(c), as the case may be,
the Property Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount
of the Trust Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property
Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or protection from
such liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property Trustee
against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Partnership Preferred
Securities and the Property Account shall be to deal with such property in
a similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limita-
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tions on liability afforded to the Property Trustee under this Declaration
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Partnership Preferred Securities or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Property Account
maintained by the Property Trustee pursuant to Section 3.8(c)(i) and
except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee
be liable for any default or misconduct of the Regular Trustees or the
Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
acting on behalf of the Trust contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Sponsor or the Regular Trustees;
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(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts
and the advice or opinion of such counsel and experts with respect to
legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion; such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of
its employees. The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Declaration from
any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless (a) such Holder shall have
provided to the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Property Trustee and (b)
the Property Trustee has obtained the legal opinions, if any, required by
Section 8.4(d) or 8.5(c), as the case may be, of this Agreement; provided,
that, nothing contained in this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the occurrence of a Trust Enforcement
Event, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder
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either directly or by or through agents, custodians, nominees or attorneys
and the Property Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Trust Securities,
and the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property Trustee
to so act or as to its compliance with any of the terms and provisions of
this Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the
Trust Securities which instructions may only be given by the Holders of
the same proportion in liquidation amount of the Trust Securities as would
be entitled to direct the Property Trustee under the terms of the Trust
Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in
conclusively relying on or acting in or accordance with such instructions;
provided, however, that the Property Trustee shall not be required to take
any action unless it shall have obtained such legal opinions, if any,
required by Sections 8.4(d) or 8.5(c), as the case may be, of this
Agreement; and
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority
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available to the Property Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any provision of this Declaration other than Section
6.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees or the Property Trustee described in this Declaration. Except
as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute on behalf of the Trust any documents that the Regular Trustees have
the power and authority to cause the Trust to execute pursuant to Section 3.6;
provided, that the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by or on behalf of a majority
of the Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Trust Securities.
The recitals contained in this Declaration and the Trust Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Trust Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have perpetual existence.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
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(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Trust Securities, the Delaware Trustee or the
Property Trustee, consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of any
State of the United States; provided, that:
(i) if the Trust is not the survivor, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Trust Securities; or
(B) substitutes for the Trust Preferred Securities other
securities having substantially the same terms as the Trust
Preferred Securities (the "Successor Trust Securities") so long as
the Successor Trust Securities rank the same as the Trust Preferred
Securities rank with respect to Distributions, assets and payments
upon liquidation, redemption and otherwise;
(ii) the Company expressly acknowledges a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee
as the Holder of the Partnership Preferred Securities;
(iii) the Successor Trust Securities are listed, or any Successor
Trust Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the
Trust Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Trust Preferred
Securities (including any Successor Trust Securities) to be downgraded by
any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred
Securities (including any Successor Trust Securities) in any material
respect;
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(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) the Company guarantees the obligations of such Successor
Entity under the Successor Trust Securities at least to the extent
provided by the Trust Guarantees; and
(viii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease will not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred
Securities (including any Successor Trust Securities) in any
material respect (other than with respect to any dilution of the
Holders' interest in the new entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an Investment
Company under the 1940 Act;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will not be
classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax
purposes; and
(D) following such merger, consolidation, amalgamation or
replacement, the Partnership will not be classified as an
association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Trust Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity or the Partnership to be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
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ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.
In connection with the issue and sale of the Trust Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Trust Preferred
Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Trust Preferred Securities
and to do any and all such acts, other than actions which must be taken by
the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq
National Market System for listing upon notice of issuance of any Trust
Preferred Securities, Partnership Preferred Securities, the Trust
Preferred Securities Guarantee and the Partnership Guarantee;
(d) to prepare for filing by the Trust with the Commission a
registration statement relating to the registration of the Trust Preferred
Securities, the Partnership Preferred Securities, the Trust Preferred
Securities Guarantee, and the Partnership Guarantee under Section 12(b) of
the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and any
pricing agreement providing for the sale of the Trust Preferred
Securities.
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SECTION 4.2 Indemnification and Expenses of the Trustee
The Partnership agrees, and to the extent the Partnership fails to
do so, the Sponsor agrees to indemnify the Property Trustee and the Delaware
Trustee for, and to hold each of them harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Property
Trustee or the Delaware Trustee, as the case may be, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending either of them against
any claim or liability in connection with the exercise or performance of any of
their respective powers or duties hereunder; the provisions of this Section 4.2
shall survive the resignation or removal of the Delaware Trustee or the Property
Trustee or the termination of this Declaration.
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common Securities.
On the Closing Date the Company will purchase all of the Trust
Common Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Trust Preferred Securities are
sold.
SECTION 5.2 Covenants of the Trust Common Securities Holder.
For so long as the Trust Preferred Securities remain outstanding,
the Company will covenant (i) to maintain directly 100 percent ownership of the
Trust Common Securities, (ii) to cause the Trust to remain a statutory business
trust and not to voluntarily dissolve, wind up, liquidate, or be terminated,
except as permitted by this Declaration, (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be an investment company
for purposes of the 1940 Act, and (iv) to take no action which would be
reasonably likely to cause the Trust to be classified as an association or a
publicly traded partnership taxable as a corporation for United States federal
income tax purposes.
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ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Trust Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Trust Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
Majority in liquidation amount of the Trust Common Securities voting as a
class at a meeting of the Holders of the Trust Common Securities;
provided, however, that the number of Trustees shall in no event be less
than three (3); provided, further, that (1) if required by the Business
Trust Act, one Trustee is the Delaware Trustee; (2) there shall be at
least one Trustee who is an employee or officer of, or is affiliated with
the Company (each, a "Regular Trustee"); and (3) one Trustee shall be the
Property Trustee for so long as this Declaration is required to qualify as
an indenture under the Trust Indenture Act, and such Property Trustee may
also serve as Delaware Trustee if it meets the applicable requirements.
SECTION 6.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided, that if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee (in which case
Section 3.11 shall have no application).
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SECTION 6.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 6.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 6.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 6.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Trust Common Securities (as if it were
the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Trust Guarantee shall be deemed to be specifically described
in this Declaration for purposes of clause (i) of the first provision contained
in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
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SECTION 6.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 6.5 Regular Trustees.
The initial Regular Trustees shall be:
H. Pete Smith
Steve Blank
(a) Except as expressly set forth in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that the registration statement referred to
in Section 3.6(b)(i), including any amendments thereto, shall be signed by or on
behalf of a majority of the Regular Trustees.
SECTION 6.6 Delaware Trustee.
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
SECTION 6.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 6.7(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Trust Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Trust Securities, by vote of the
Holders of a Majority in liquidation amount of
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the Trust Common Securities voting as a class at a meeting of the Holders
of the Trust Common Securities.
(b)(i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 6.7(a) until a successor Trustee possessing
the qualifications to act as Property Trustee under Section 6.3 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 6.7(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 6.2 and 6.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the Sponsor
and the resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of
the Trust Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
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(d) The Holders of the Trust Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 6.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
6.7 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation, the resigning Property Trustee or Delaware Trustee, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or successor Delaware
Trustee, as the case may be.
SECTION 6.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is
increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.7.
SECTION 6.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.7, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
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SECTION 6.10 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter; provided, that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees. Notwithstanding the
foregoing, any and all actions of the Regular Trustees may be taken by the
unanimous written consent of all Regular Trustees.
SECTION 6.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
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Section 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware Trustee,
as the case may be, may be merged or converted or with which either may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder; provided, that such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions.
(a) Holders of Trust Securities shall be entitled to receive
cumulative cash distributions at the rate per annum of __% of the stated
liquidation amount of $25 per Trust Security, calculated on the basis of a
360-day year consisting of twelve 30-day months. For any period shorter than a
full 90-day quarter, distributions will be computed on the basis of the actual
number of days elapsed in such 90-day quarter. Distributions shall be made on
the Trust Preferred Securities and the Trust Common Securities on a Pro Rata
basis. Distributions on the Trust Securities shall, from the date of original
issue, accumulate and be cumulative and shall be payable quarterly only to the
extent that the Trust has funds available for the payment of such Distributions
in the Property Account. Distributions not paid on the scheduled payment date
will accumulate and compound quarterly at the rate of __% per annum ("Compounded
Distributions"). "Distributions" shall mean ordinary cumulative distributions in
respect of each Fiscal Period together with any Compounded Distributions. If and
to the extent that the Partnership makes a distribution on the Partnership
Preferred Securities held by the Property Trustee or the Company makes a payment
under the Partnership Guarantee (the amount of any such partnership
distribution, including any compounded partnership distributions, or guarantee
payment being a "Payment Amount"), the Trust shall and the Property Trustee is
directed, to the extent funds are available for that purpose, to make a Pro Rata
Distribution of the Payment Amount to Holders.
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(b) Distributions on the Trust Securities will be cumulative, will
accumulate from the date of initial issuance and will be payable quarterly in
arrears on each March 31, June 30, September 30 and December 31, commencing
________, 1997, when, as and if available for payment, by the Property Trustee,
except as otherwise described below. If Distributions are not paid when
scheduled, the accumulated Distributions shall be paid to the Holders of record
of Trust Securities as they appear on the books and records of the Trust on the
record date as determined under Section 7.1(d) below.
(c) Amounts available to the Trust for distribution to the Holders
of the Trust Securities will be limited to payments received by the Trust from
the Partnership on the Partnership Preferred Securities or from the Company on
the Partnership Guarantees paid by the Company to the Trust. If the Property
Trustee, as the holder of the Partnership Preferred Securities for the benefit
of the Holders of the Trust Securities, receives notice of any determination by
the Partnership not to pay distributions on such Partnership Preferred
Securities, the Property Trustee shall give notice of such determination to the
Holders.
(d) Distributions on the Trust Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which relevant record dates, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Partnership
Preferred Securities in the Property Account for the benefit of the Holders of
the Trust Securities. In the event that the Trust Preferred Securities do not
remain in book-entry only form, the relevant record dates shall be the 15th day
of the month of the relevant payment dates. In the event that any date on which
distributions are payable on the Trust Securities is not a Business Day, payment
of the distribution payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
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ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Regarding Trust Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial ownership
interests in the assets of the Trust and one class of common securities
representing undivided beneficial ownership interests in the assets of the Trust
as follows:
(i) Trust Preferred Securities. ________ Trust Preferred Securities
of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of _______________ dollars ($_________) and a
liquidation amount with respect to the assets of the Trust of $25 per
preferred security, are hereby designated for the purpose of
identification only as __% Trust Originated Preferred SecuritiesSM 1 (the
"Trust Preferred Securities"). The Trust Preferred Security Certificates
evidencing the Trust Preferred Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage,
custom or practice or to conform to the rules of any stock exchange on
which the Trust Preferred Securities are listed.
(ii) Trust Common Securities. _______ Trust Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of
the Trust of ______________ dollars ($_________) and a liquidation amount
with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as __% Trust
Common Securities (the "Trust Common Securities" and, together with the
Trust Preferred Securities, the "Trust Securities"). The Trust Common
Security Certificates evidencing the Trust Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
- ----------
1 "Trust Originated Preferred Securities" and "TOPrS" are service
marks of Merrill Lynch & Co., Inc.
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(b) Except as provided in Section 9.2(b) of this Declaration, the
Trust Preferred Securities rank pari passu and payment thereon shall be made Pro
Rata with the Trust Common Securities. The Trust shall issue no securities or
other interests in the assets of the Trust other than the Trust Preferred
Securities and the Trust Common Securities.
(c) Any Regular Trustee shall sign the Trust Securities for the
Trust by manual or facsimile signature. In case any Regular Trustee of the Trust
who shall have signed any of the Trust Securities shall cease to be a Regular
Trustee before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Trust Security, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Trust Securities may be listed, or to conform to
usage.
A Trust Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Property Trustee. Such
signature shall be conclusive evidence that the Trust Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Trust Securities for original issue. The
aggregate number of Trust Securities outstanding at any time shall not exceed
the number set forth in the Terms of the Trust Securities.
The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Trust Securities. An authenticating agent may
authenticate Trust Preferred Securities whenever the Property Trustee may do so.
Each reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee to deal with the Sponsor or an Affiliate of the
Sponsor.
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(d) The consideration received by the Trust for the issuance of the
Trust Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(e) Upon issuance of the Trust Securities as provided in this
Declaration, the Trust Securities so issued shall be deemed to be validly
issued, fully paid and non-assessable, subject to Section 11.1 with respect to
the Trust Common Securities.
(f) Every Person, by virtue of having become a Holder or a Trust
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 8.2 Redemption of Trust Securities.
(a) Upon a purchase of the Partnership Preferred Securities by the
Partnership upon redemption or otherwise, the proceeds from such purchase shall
be simultaneously applied Pro Rata to redeem Trust Securities having an
aggregate liquidation amount equal to the Partnership Preferred Securities so
purchased or redeemed at an amount equal to $25 per Partnership Preferred
Security plus an amount equal to accumulated and unpaid Distributions, including
any Compounded Distributions thereon through the date of the redemption or such
lesser amount as shall be received by the Trust in respect of the Partnership
Preferred Securities so purchased or redeemed (the "Redemption Price"). Holders
will be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Trust Securities are to be so
redeemed, the Trust Common Securities and the Trust Preferred Securities will be
redeemed Pro Rata and the Trust Preferred Securities to be redeemed will be
redeemed as described in Section 8.3 below; provided, that fewer than all of the
outstanding Trust Preferred Securities may not be redeemed unless all
accumulated and unpaid Distributions have been paid on all Trust Preferred
Securities for all quarterly distribution periods terminating on or prior to the
date of redemption.
(c) If, at any time, a Trust Special Event shall occur and be
continuing, the Regular Trustees shall, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described below, within 90
days following the occurrence of such Trust Special Event elect to either (i)
dissolve the Trust upon not less than 30 nor more than 60 days
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notice with the result that, after satisfaction of creditors, if any, of the
Trust, Partnership Preferred Securities would be distributed on a Pro Rata basis
to the Holders of the Trust Preferred Securities and the Trust Common Securities
in liquidation of such Holders' interests in the Trust; provided, however, that
if at the time there is available to the Trust the opportunity to eliminate,
within such 90-day period, the Trust Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure which in the sole judgment of the Sponsor has or will
cause no adverse effect on the Trust, the Partnership, the Sponsor or the
Holders of the Trust Securities and will involve no material cost, the Trust
will pursue such measure in lieu of dissolution or (ii) cause the Trust
Preferred Securities to remain outstanding; provided, that in the case of this
clause (ii), the Sponsor shall pay any and all expenses incurred by or payable
by the Trust attributable to the Trust Special Event. Furthermore, if in the
case of the occurrence of a Trust Tax Event, the Regular Trustees have received
a Trust Redemption Tax Opinion, then the General Partner shall have the right,
within 90 days following the occurrence of such Trust Tax Event, to elect to
cause the Partnership to redeem the Partnership Preferred Securities in whole
(but not in part) for cash upon not less than 30 nor more than 60 days notice
and promptly following such redemption, the Trust Securities will be redeemed by
the Trust at the Redemption Price.
(d) If the Partnership Preferred Securities are distributed to the
Holders of the Trust Preferred Securities, the Sponsor will use its best efforts
to cause the Partnership Preferred Securities to be listed on the New York Stock
Exchange or on such other national securities exchange or similar organization
as the Trust Preferred Securities are then listed or quoted.
(e) On the date fixed for any distribution of Partnership Preferred
Securities, upon dissolution of the Trust, (i) the Trust Preferred Securities
and the Trust Common Securities will no longer be deemed to be outstanding and
(ii) certificates representing Trust Securities will be deemed to represent the
Partnership Preferred Securities having a liquidation preference equal to the
stated liquidation amount of such Trust Securities until such certificates are
presented to the Sponsor or its agent for transfer or reissuance.
SECTION 8.3 Redemption Procedures.
(a) Notice of any redemption of, or notice of distribution of
Partnership Preferred Securities in exchange for,
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the Trust Securities (a "Redemption/Distribution Notice") will be given by the
Trust by mail to each Holder of Trust Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed for
redemption of the Partnership Preferred Securities. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this Section 8.3, a Redemption/ Distribution Notice shall
be deemed to be given on the day such notice is first mailed by first-class
mail, postage prepaid, to Holders of Trust Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of Trust
Securities at the address of each such Holder appearing in the books and records
of the Trust. No defect in the Redemption/ Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.
(b) In the event that fewer than all the outstanding Trust
Securities are to be redeemed, the Trust Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Trust Securities, provided, that in
respect of Preferred Securities registered in the name of and held of record by
DTC or its nominee (or any successor Clearing Agency or its nominee) or any
nominee, the distribution of the proceeds of such redemption will be made to
each Clearing Agency Participant (or Person on whose behalf such nominee holds
such securities) in accordance with the procedures applied by such agency or
nominee. In the event that the Trust Securities do not remain in book-entry only
form and fewer than all of the outstanding Trust Securities are to be redeemed,
the Trust Securities shall be redeemed Pro Rata or pursuant to the rules of any
securities exchange on which the Trust Securities are listed.
(c) If Trust Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Partnership Preferred Securities are redeemed as set out in this Section 8.3
(which notice will be irrevocable), then (A) while the Trust Preferred
Securities are in book-entry only form, by 12:00 noon, New York City time, on
the redemption date, the Property Trustee will deposit irrevocably with the DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to
pay the applicable Redemption Price with respect to the Trust Preferred
Securities and will give the DTC irrevocable instructions and authority to pay
the Redemption Price to the Holders of the Trust Preferred Securities, and (B)
with respect to Trust Preferred Securities issued in definitive form and Trust
Common Securities, the Property Trustee will pay the relevant Redemption Price
to the Holders of
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such Trust Securities by check mailed to the address of the relevant Holder
appearing on the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable, distributions
will cease to accumulate on the Trust Securities so called for redemption and
all rights of Holders of such Trust Securities will cease, except the right of
the Holders of such Trust Securities to receive the Redemption Price, but
without interest on such Redemption Price. If any date fixed for redemption of
Trust Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of the amount payable
subject to such delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any Trust
Securities is improperly withheld or refused and not paid either by the Property
Trustee or by the Sponsor as guarantor pursuant to the relevant Trust Guarantee,
Distributions on such Trust Securities will continue to accumulate at the then
applicable rate from the original redemption date to the actual date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price. For these purposes,
the applicable Redemption Price shall not include Distributions which are being
paid to Holders who were Holders on a relevant record date. Upon satisfaction of
the foregoing conditions, then immediately prior to the close of business on the
date of such deposit or payment, all rights of Holders of such Trust Preferred
Securities so called for redemption will cease, except the right of the Holders
to have received the Redemption Price, but without interest on such Redemption
Price, and from and after the date fixed for redemption, such Trust Preferred
Securities will not accumulate distributions or bear interest.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Trust Securities that
have been called for redemption.
(d) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Company or its
subsidiaries may at any time and from time to time purchase outstanding Trust
Preferred Securities by tender, in the open market or by private agreement.
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SECTION 8.4 Voting Rights of Trust Preferred Securities.
(a) Except as provided under Sections 6.1(b) and this Article VIII
and as otherwise required by the Business Trust Act, the Trust Indenture Act and
other applicable law, the Holders of the Trust Preferred Securities will have no
voting rights.
(b) Subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in Section 8.4(d) below, the
Holders of a Majority in liquidation amount of the Trust Preferred Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as Holder of the Partnership
Preferred Securities, to (i) exercise the remedies available to it under the
Limited Partnership Agreement as a Holder of the Partnership Preferred
Securities, including the right to direct the Special Representative of the
Partnership as elected by the Holders of the Partnership Preferred Securities in
accordance with the Limited Partnership Agreement (A) to enforce the
Partnership's creditors rights and other rights with respect to the Affiliate
Investment Instruments and any Investment Guarantees, (B) to enforce the rights
of the Holders of the Partnership Preferred Securities under the Partnership
Guarantee, and (C) to enforce the rights of the Holders of the Partnership
Preferred Securities to receive distributions (if and to the extent such
distributions have been declared out of funds legally available therefor by the
General Partner in its sole discretion) on the Partnership Preferred Securities
or (ii) consent to any amendment, modification, or termination of the Limited
Partnership Agreement or the Partnership Preferred Securities where such consent
shall be required; provided, however, that where a consent or action under the
Limited Partnership Agreement would require the consent or act of the Holders of
more than a majority of the aggregate liquidation preference of Partnership
Preferred Securities affected thereby, only the Holders of the percentage of the
aggregate stated liquidation amount of the Trust Preferred Securities which is
at least equal to the percentage of aggregate liquidation preference required
under the Limited Partnership Agreement may direct the Property Trustee to give
such consent or take such action.
(c) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Preferred
Securities has made a written request, such Holder of record of Trust Preferred
Securities may institute a legal proceeding directly against the General Partner
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or the Special Representative, to enforce the Property Trustee's rights under
the Limited Partnership Agreement without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Notwithstanding the
foregoing, if a Trust Enforcement Event has occurred and is continuing and such
event is attributable to the failure of an Investment Affiliate to make any
required payment when due on any Affiliate Investment Instrument, then a Holder
of Trust Preferred Securities may directly institute a proceeding against such
Investment Affiliate for enforcement of payment with respect to such Affiliate
Investment Instrument.
(d) The Property Trustee shall notify all Holders of the Trust
Preferred Securities of any notice of any Partnership Enforcement Event received
from the General Partner with respect to the Partnership Preferred Securities
and the Affiliate Investment Instruments. Such notice shall state that such
Partnership Enforcement Event also constitutes a Trust Enforcement Event. Except
with respect to directing the time, method, and place of conducting a proceeding
for a remedy, the Property Trustee shall be under no obligation to take any of
the actions described in clause 8.4(b)(i) and (ii) above unless the Property
Trustee has obtained an opinion of independent tax counsel to the effect that as
a result of such action, the Trust will not fail to be classified as a grantor
trust for United States federal income tax purposes and that after such action
each Holder will continue to be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
(e) In the event the consent of the Property Trustee, as the Holder
of the Partnership Preferred Securities, is required under the Limited
Partnership Agreement with respect to any amendment, modification or termination
of the Limited Partnership Agreement, the Property Trustee shall request the
direction of the Holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however, that
where a consent under the Limited Partnership Agreement would require the
consent of the Holders of more than a majority of the aggregate liquidation
preference of the Partnership Preferred Securities, the Property Trustee may
only give such consent at the direction of the Holders of at least the same
proportion in aggregate stated liquidation amount of the Trust Securities. The
Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Trust Securities unless the Property Trustee
has obtained an opinion of tax counsel to the effect that, as a result of such
action, the Trust will not
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be classified as other than a grantor trust for United States federal income tax
purposes.
(f) A waiver of a Partnership Enforcement Event with respect to the
Partnership Preferred Securities will constitute a waiver of the corresponding
Trust Enforcement Event.
(g) Any required approval or direction of Holders of Trust Preferred
Securities may be given at a separate meeting of Holders of Trust Preferred
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents.
(h) No vote or consent of the Holders of Trust Preferred Securities
will be required for the Trust to redeem and cancel Trust Preferred Securities
or distribute Partnership Preferred Securities in accordance with the
Declaration.
(i) Notwithstanding that Holders of Trust Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Trust Securities that are beneficially owned at such time by the Company
or any entity directly or indirectly controlled by, or under direct or indirect
common control with, the Company, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Trust
Securities were not outstanding, except for Trust Preferred Securities purchased
or acquired by the Company or its affiliates in connection with transactions
effected by or for the account of customers of the Company or any of its
subsidiaries or in connection with the distribution or trading of such Trust
Securities; provided, however, that persons (other than affiliates of the
Company) to whom the Company or any of its subsidiaries have pledged Trust
Preferred Securities may vote or consent with respect to such pledged Trust
Preferred Securities pursuant to the terms of such pledge.
(j) Holders of the Trust Preferred Securities will have no rights to
appoint or remove the Regular Trustees, who may
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be appointed, removed or replaced solely by the Company, as the Holder of all of
the Trust Common Securities.
SECTION 8.5 Voting Rights of Trust Common Securities.
(a) Except as provided under this Section 8.5 or as otherwise
required by the Business Trust Act, the Trust Indenture Act or other applicable
law or provided by the Declaration, the Holders of the Trust Common Securities
will have no voting rights.
(b) The Holders of the Trust Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all
Trust Enforcement Events with respect to the Trust Preferred Securities have
been cured, waived, or otherwise eliminated and subject to the requirement of
the Property Trustee obtaining a tax opinion in certain circumstances set forth
in this paragraph (c), the Holders of a Majority in liquidation amount of the
Trust Common Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Partnership Preferred Securities, to (i) exercise the remedies
available to it under the Limited Partnership Agreement as a Holder of the
Partnership Preferred Securities, including the right to direct the Special
Representative of the Partnership as elected by the Holders of the Partnership
Preferred Securities in accordance with the Limited Partnership Agreement (A) to
enforce the Partnership's creditors rights and other rights with respect to the
Affiliate Investment Instruments and any Investment Guarantees, (B) to enforce
the rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee, and (C) to enforce the rights of the Holders of the
Partnership Preferred Securities to receive distributions (if and to the extent
such distributions have been declared out of funds legally available therefor by
the General Partner in its sole discretion) on the Partnership Preferred
Securities or (ii) consent to any amendment, modification, or termination of the
Limited Partnership Agreement or the Partnership Preferred Securities where such
consent shall be required; provided, however, that where a consent or action
under the Limited Partnership Agreement would require the consent or act of the
Holders of more than a majority of the aggregate liquidation preference of
Partnership Preferred Securities affected thereby, only the Holders
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of the percentage of the aggregate stated liquidation amount of the Trust Common
Securities which is at least equal to the percentage required under the Limited
Partnership Agreement may direct the Property Trustee to give such consent or
take such action. Except with respect to directing the time, method, and place
of conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 8.5(c)(i) and (ii)
above unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that, as a result of such action, for United States
federal income tax purposes the Trust will not fail to be classified as a
grantor trust and each Holder will be treated as owning an undivided beneficial
ownership interest in the Partnership Preferred Securities.
(d) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Common
Securities has made a written request, such Holder of record of Trust Common
Securities may directly institute a legal proceeding directly against the
Company, as General Partner of the Partnership or the Special Representative, to
enforce the Property Trustee's rights under the Partnership Preferred Securities
without first instituting any legal proceeding against the Property Trustee or
any other person or entity. Notwithstanding the foregoing, if a Trust
Enforcement Event has occurred and is continuing and such event is attributable
to the failure of an Investment Affiliate to make any required payment when due
on any Affiliate Investment Instrument, then a Holder of Trust Common Securities
may directly institute a proceeding against such Investment Affiliate for
enforcement of payment with respect to such Affiliate Investment Instrument.
(e) A waiver of a Partnership Enforcement Event with respect to the
Partnership Preferred Securities will constitute a waiver of the corresponding
Trust Enforcement Event.
(f) Any required approval or direction of Holders of Trust Common
Securities may be given at a separate meeting of Holders of Trust Common
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Trust Common Securities are entitled
to vote, or of any matter upon which action by written consent of such Holders
is to be taken, to be mailed to each Holder of record of Trust Common
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to
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vote or of such matter upon which written consent is sought; and (iii)
instructions for the delivery of proxies or consents.
(g) No vote or consent of the Holders of the Trust Common Securities
shall be required for the Trust to redeem and cancel Trust Common Securities or
to distribute Partnership Preferred Securities in accordance with the
Declaration and the terms of the Trust Securities.
SECTION 8.6 Paying Agent.
In the event that the Trust Preferred Securities are not in
book-entry only form, the Trust shall maintain in the Borough of Manhattan, City
of New York, State of New York, an office or agency where the Trust Preferred
Securities may be presented for payment ("Paying Agent"). The Trust may appoint
the Paying Agent and may appoint one or more additional paying agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent. The Trust may change any Paying Agent without prior
notice to any Holder. The Trust shall notify the Property Trustee of the name
and address of any Paying Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Paying Agent, the Property
Trustee shall act as such. The Trust or any of its Affiliates may act as Paying
Agent. The Bank of New York shall initially act as Paying Agent for the Trust
Preferred Securities and the Trust Common Securities.
SECTION 8.7 Listing
The Sponsor shall use its best efforts to cause the Trust Preferred
Securities to be listed for quotation on the New York Stock Exchange.
SECTION 8.8 Acceptance of Guarantee and Agreements, Limited Partnership
Agreement.
Each Holder of Trust Preferred Securities and Trust Common
Securities, by the acceptance thereof, agrees to the provisions of the
applicable Trust Guarantee, the Partnership Guarantee, and the Investment
Guarantee, respectively, including the subordination provisions therein.
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ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of Trust Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, the filing of a certificate of
cancellation with respect to the Trust after having obtained the consent
of at least a Majority in Liquidation Amount of the Trust Securities,
voting together as a single class, to file such certificate of
cancellation, or the revocation of the Sponsor's charter and the
expiration of 90 days after the date of revocation without a reinstatement
thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust;
(iv) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Trust
Securities;
(v) upon the election of the Regular Trustees, following the
occurrence and continuation of a Trust Special Event, pursuant to which
the Trust shall have been dissolved in accordance with the terms of the
Trust Securities and all of the Partnership Preferred Securities shall
have been distributed to the Holders of Trust Securities in exchange for
all of the Trust Securities; or
(vi) before the issuance of any Trust Securities, with the consent
of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 9.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article XI shall survive the
termination of the Trust.
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SECTION 9.2 Liquidation Distribution Upon Termination and Dissolution of the
Trust.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (each a "Trust
Liquidation"), the Holders of the Trust Preferred Securities on the date of the
Trust Liquidation will be entitled to receive, out of the assets of the Trust
available for distribution to Holders of Trust Securities after satisfaction of
the Trusts' liabilities and creditors, distributions in cash or other
immediately available funds in an amount equal to the aggregate of the stated
liquidation amount of $25 per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities shall be distributed on a Pro Rata basis to the
Holders of the Trust Securities in exchange for such Trust Securities.
(b) If, upon any such Trust Liquidation, the Trust Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Trust Liquidation Distribution, then the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
Pro Rata basis. The Holders of the Trust Common Securities will be entitled to
receive distributions upon any such Trust Liquidation Pro Rata with the Holders
of the Trust Preferred Securities except that if the Company is in default on
any of its obligations under the Trust Preferred Securities Guarantee, the
Partnership Guarantee, or any Investment Guarantee, or any Investment Event of
Default has occurred and is continuing with respect to an Affiliate Investment
Instrument, the Trust Preferred Securities shall have a preference over the
Trust Common Securities with regard to such distributions as provided below.
Such preference is effectuated by the Holder of the Trust Common Securities
hereby agreeing to provide limited recourse guarantees as follows: (i) to the
Holders of the Trust Preferred Securities, of the Company's obligations under
the Trust Preferred Securities Guarantee; (ii) to the Trust and the Holders of
the Trust Preferred Securities, of the Company's obligations under the
Partnership Guarantee; and (iii) to the Partnership and the Holders of the Trust
Preferred Securities, of the Company's obligations under any Investment
Guarantee and/or the obligations of any Investment Affiliate under an Affiliate
Investment Instrument. In the case of the limited recourse guarantee given by
the Holder of the Trust Common Securities to the Partnership and the Holder of
the Trust Preferred Securities in respect of the Company's obligations under any
Investment Guarantee and/or any Investment Affiliate's obligations under an
Affiliate Investment
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Instrument, (i) the Trust Common Securities Holder will be deemed to have
pledged the amount due in respect of its Trust Common Securities upon a
liquidation of the Trust to the Partnership and the Holders of Trust Preferred
Securities; (ii) the Trust Common Securities Holder will be deemed to have paid
such amount to the Partnership in respect of such defaulted Investment Guarantee
and/or Affiliate Investment Instrument, as the case may be; (iii) the
Partnership will be deemed to have paid such amount to the Trust; and (iv) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of Trust Preferred Securities (on a pro rata basis among such Trust Preferred
Securities Holders) in respect of the Trust Common Securities Holder's pledge of
such amounts to such Trust Preferred Securities Holders. In the case of a
limited recourse guarantee given by the Holder of the Trust Common Securities to
the Trust and the Holders of the Trust Preferred Securities in respect of the
Company's obligations under the Partnership Guarantee, (i) the Holder of the
Trust Common Securities will be deemed to have pledged the amount due in respect
of its Trust Common Securities upon a liquidation of the Trust to the Trust and
the Holders of the Trust Preferred Securities; (ii) the Holder of the Trust
Common Securities will be deemed to have paid such amount to the Trust in
respect of its obligations under the Partnership Guarantee; and (iii) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of the Trust Preferred Securities (on a pro rata basis among such Trust
Preferred Securities Holders) in respect of the Trust Common Securities Holder's
pledge of such amount to such Trust Preferred Securities Holders.
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ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities.
(a) Trust Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and in
the terms of the Trust Securities. Any transfer or purported transfer of any
Trust Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article X, Trust Preferred Securities shall be
freely transferable.
SECTION 10.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 10.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole Holder of
such Certificate and of the Trust Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Trust Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
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SECTION 10.4 Book Entry Interests.
Unless otherwise specified in the terms of the Trust Preferred
Securities, the Trust Preferred Securities Certificates, on original issuance,
will be issued in the form of one or more fully registered, global Trust
Preferred Security Certificates (each a "Global Certificate"), to be delivered
to DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificates shall initially be registered on the books and records of the Trust
in the name of Cede & Co., the nominee of DTC, and no Trust Preferred Security
Beneficial Owner will receive a definitive Trust Preferred Security Certificate
representing such Trust Preferred Security Beneficial Owner's interests in such
Global Certificates, except as provided in Section 10.7. Unless and until
definitive, fully registered Trust Preferred Security Certificates (the
"Definitive Trust Preferred Security Certificates") have been issued to the
Trust Preferred Security Beneficial Owners pursuant to Section 10.7:
(a) the provisions of this Section 10.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Trust
Preferred Securities and the sole Holder of the Global Certificates and
shall have no obligation to the Trust Preferred Security Beneficial
Owners;
(c) to the extent that the provisions of this Section 10.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 10.4 shall control; and
(d) the rights of the Trust Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be limited
to those established by law and agreements between such Trust Preferred
Security Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants and the Clearing Agency shall receive and transmit
payments of Distributions on the Global Certificates to such Clearing
Agency Participants. The Clearing Agency will make book entry transfers
among the Clearing Agency Participants; provided, that solely for the
purposes of determining whether the Holders of the requisite amount of
Trust Preferred Securities have voted on any matter provided for in this
Declaration, so long as Definitive Trust Preferred Security Certificates
have not been issued,
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the Trustees may conclusively rely on, and shall be fully protected in
relying on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Trust Preferred Security
Beneficial Owners' votes or assigning the right to vote on any matter to
any other Persons either in whole or in part.
SECTION 10.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Trust Preferred
Security Holders is required under this Declaration, unless and until Definitive
Trust Preferred Security Certificates shall have been issued to the Trust
Preferred Security Beneficial Owners pursuant to Section 10.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Trust Preferred Security Holders to the Clearing Agency, and shall
have no notice obligations to the Trust Preferred Security Beneficial Owners.
SECTION 10.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities, the
Regular Trustees may, in their sole discretion, appoint a successor Clearing
Agency with respect to such Trust Preferred Securities.
SECTION 10.7 Definitive Trust Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 10.6 or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with
respect to the Trust Preferred Securities,
(c) there is a Trust Enforcement Event,
then:
(d) Definitive Trust Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to
such Trust Preferred Securities; and
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(e) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Trust Preferred Security Certificates to be
delivered to Trust Preferred Security Beneficial Owners in accordance with
the instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions and
each of them may conclusively rely on and shall be fully protected in
relying on, said instructions of the Clearing Agency. The Definitive Trust
Preferred Security Certificates shall be printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have
such letters, numbers or other marks of identification or designation and
such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Trust Preferred Securities may be listed, or to
conform to usage.
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 10.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Trust Securities, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
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ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability.
(a) Except as expressly set forth in this Declaration, the Trust
Guarantees and the terms of the Trust Securities, the Sponsor and the Trustees
shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Trust
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Trust
Securities any deficit upon dissolution of the Trust or otherwise.
(b) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Trust Securities shall be entitled to the same limitation of
personal liability extended to shareholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 11.2 Exculpation.
(a) No Company Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Company Indemnified Person in good faith on behalf of the Trust
and in a manner such Company Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Company Indemnified Person by this
Declaration or by law, except that a Company Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Company
Indemnified Person's gross negligence (or, in the case of the Property Trustee,
negligence) or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets,
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liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Trust Securities might
properly be paid.
SECTION 11.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Trust Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including
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its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust or any
other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 11.4 Indemnification.
(a) (i) To the fullest extent permitted by applicable law, the
Sponsor shall indemnify and hold harmless any Company Indemnified Person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of
the Trust, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the fullest extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit
by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as
to which such Company Indemnified
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Person shall have been adjudged to be liable to the Trust unless and only
to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity
for such expenses which such Court of Chancery or such other court shall
deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 11.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the fullest
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 11.4(a) (unless ordered by a court) shall be made by the Sponsor
only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall be made (1) by
the Regular Trustees by a majority vote of a quorum consisting of such
Regular Trustees who were not parties to such action, suit or proceeding,
(2) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Regular Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Holder of the Trust Common
Securities.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 11.4(a) shall be paid by the Sponsor in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such Company Indemnified Person to repay
such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Sponsor as authorized in this Section 11.4(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor if
a determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular Trustees,
(ii) if such a quorum is
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not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Holder of the Trust Common Securities, that, based
upon the facts known to the Regular Trustees, counsel or the Holder of the
Trust Common Securities at the time such determination is made, such
Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of
the Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his conduct
was unlawful. In no event shall any advance be made in instances where the
Regular Trustees, independent legal counsel or Holder of the Trust Common
Securities reasonably determine that such person deliberately breached his
duty to the Trust or Holders of Trust Common Securities.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 11.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of shareholders or disinterested directors of the Sponsor
or Holders of the Trust Preferred Securities or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section
11.4(a) shall be deemed to be provided by a contract between the Sponsor
and each Company Indemnified Person who serves in such capacity at any
time while this Section 11.4(a) is in effect. Any repeal or modification
of this Section 11.4(a) shall not affect any rights or obligations then
existing.
(vii) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any person who is or was a Company Indemnified Person against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Sponsor
would have the power to indemnify him against such liability under the
provisions of this Section 11.4(a).
(viii) For purposes of this Section 11.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any person who is or was a
director, trustee, officer or employee of such constituent entity, or is
or was serving at the request of such constituent entity as a director,
trustee, officer, employee or
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agent of another entity, shall stand in the same position under the
provisions of this Section 11.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent entity
if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 11.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be
a Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii)
the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, damage, claim,
liability or expense including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or bad faith on the part of the Trustee
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 11.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 11.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of Trust
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, nor the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the
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Delaware Trustee and the Property Trustee shall have the right to take for its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Covered Person,
the Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
or may act as depositary for, trustee or agent for, or act on any committee or
body of Holders of, securities or other obligations of the Sponsor or its
Affiliates.
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year.
SECTION 12.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the Trust by
a firm of independent certified public accountants selected by the Regular
Trustees.
(b) Within 60 days after December 15 of each year commencing
December 15, 1997, the Property Trustee shall provide to the Holders of the
Trust Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Trust Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Trust Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such
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statements within 30 days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 12.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Partnership Preferred Securities held by the Property Trustee
shall be made directly to the Property Account and no other funds of the Trust
shall be deposited in the Property Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Account.
SECTION 12.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding. Notwithstanding anything herein to the contrary,
the Trust and the Regular Trustees shall, absent receipt of an opinion of
nationally recognized tax counsel to the contrary, withhold thirty percent (30%)
(or such other rate as may be
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imposed as a result of an amendment to the Code or such lower rate as may be
imposed under an applicable income tax treaty) on the gross amount of any
Distributions on Trust Preferred Securities held by a Holder that is not a
"United States person" within the meaning of Section 7701(a)(30) of the Code.
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Trust Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Trust Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee,
the Property Trustee shall have first received an opinion of counsel (who
may be counsel to the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this Declaration (including
the terms of the Trust Securities); and
(iii) to the extent the result of such amendment would be to:
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(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
(B) cause the Partnership to be classified for purposes of
United States federal income tax as an association or publicly
traded partnership taxable as a corporation;
(C) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(D) cause the Trust to be deemed to be an Investment Company
required to be registered under the 1940 Act.
(c) In the event the consent of the Property Trustee, as the Holder
of the Partnership Preferred Securities is required under the Limited
Partnership Agreement with respect to any amendment, modification or termination
of the Limited Partnership Agreement or the Partnership Preferred Securities the
Property Trustee shall request the direction of the Holders of the Trust
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a Majority in liquidation amount of the Trust Securities voting together as a
single class; provided, however, that where a consent under the Limited
Partnership Agreement would require the consent of a Super Majority of the
Holders of Partnership Preferred Securities the Property Trustee may only give
such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super Majority
represents of the aggregate liquidation preference of the Partnership Preferred
Securities outstanding; provided, further, that the Property Trustee shall not
be obligated to take any action in accordance with the directions of the Holders
of the Trust Securities under this Section 13.1(c) unless the Property Trustee
has obtained an opinion of independent tax counsel to the effect that for United
States federal income tax purposes the Trust will continue to be classified as a
grantor trust after consummation of such action and each Holder will be treated
as owning an undivided beneficial ownership interest in the Partnership
Preferred Securities.
(d) At such time after the Trust has issued any Trust Securities
that remain outstanding, any amendment that would (I) adversely affect the
powers, preferences or special rights of the Trust Securities or (II) provide
for the dissolution, winding-up or termination of the Trust other than pursuant
to the terms of
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this Declaration, may be effected only with the approval of the Holders of at
least a Majority in liquidation amount of the Trust Securities affected thereby;
provided, that if any amendment or proposal referred to in clause (I) hereof
would adversely affect only the Trust Preferred Securities or the Trust Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Trust Securities;
(e) Section 11.1(c) and this Section 13.1 shall not be amended
without the consent of all of the Holders of the Trust Securities;
(f) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Trust Common Securities and;
(g) The rights of the Holders of the Trust Common Securities under
Article V to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Trust Common Securities; and
(h) Notwithstanding Section 13.1(c), this Declaration may be amended
without the consent of the Holders of the Trust Securities:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) to add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in the 1940 Act or written change in
interpretation or application of the rules and regulations promulgated
thereunder by any legislative body, court, government agency or regulatory
authority;
(v) to conform to any change in the Trust Indenture Act or written
change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government agency
or regulatory authority; and
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(vi) to modify, eliminate and add to any provision of this
Declaration to such extent as may be necessary;
provided, that such amendments do not have a material adverse effect on the
rights, preferences or privileges of the Holders.
SECTION 13.2 Meetings of the Holders of Trust Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Trust Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Trust Securities) to consider and act on any matter on which Holders of such
class of Trust Securities are entitled to act under the terms of this
Declaration, the terms of the Trust Securities, the Limited Partnership
Agreement, the rules of any stock exchange on which the Trust Preferred
Securities are listed or admitted for trading, the Business Trust Act or other
applicable law. The Regular Trustees shall call a meeting of the Holders of such
class if directed to do so by the Holders of at least 10% in liquidation amount
of such class of Trust Securities. Such direction shall be given by delivering
to the Regular Trustees one or more notices in a writing stating that the
signing Holders of Trust Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Trust Securities calling a meeting shall specify in writing the Certificates
held by the Holders of Trust Securities exercising the right to call a meeting
and only those Trust Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Trust Securities, the following provisions shall apply to meetings of Holders of
Trust Securities:
(i) notice of any such meeting shall be given to all the Holders of
Trust Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Any action that may be
taken at a meeting of the Holders of Trust Securities may be taken without
a meeting if a consent in writing setting forth the action so taken is
signed by the Holders of Trust Securities owning not less than the minimum
amount of Trust Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Trust Securities having a right to vote thereon were present and voting.
Prompt notice of the taking of action without a meeting shall be given to
the Holders of Trust Securities
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entitled to vote who have not consented in writing. The Regular Trustees
may specify that any written ballot submitted to the Holder for the
purpose of taking any action without a meeting shall be returned to the
Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Trust Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Trust Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Holder of
Trust Securities executing it. Except as otherwise provided herein, all
matters relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware relating
to proxies, and judicial interpretations thereunder, as if the Trust were
a Delaware corporation and the Holders of the Trust Securities were
shareholders of a Delaware corporation;
(iii) each meeting of the Holders of the Trust Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Trust Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Trust Preferred Securities are then listed for
trading, otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Trust Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any
Holders of Trust Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
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ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of New York, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of,
the Declaration;
(b) The execution, delivery and performance by the Property Trustee
of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee and constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Property Trustee;
(d) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this
Declaration; and
74
<PAGE>
(e) The Property Trustee, pursuant to this Declaration, shall hold
legal title to, and a valid ownership interest on behalf of the Holders of
the Trust Securities, in the Partnership Preferred Securities and agrees
that, except as expressly provided or contemplated by this Agreement, it
will not create, incur or assume, or suffer to exist any mortgage, pledge,
hypothecation, encumbrance, lien or other charge or security interest upon
the Partnership Preferred Securities.
SECTION 14.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware corporation with, duly
organized, validly existing and in good standing under the laws of the
State of Delaware, with power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration, under Delaware law, constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration; and
(d) The Delaware Trustee is an entity which has its principal place
of business in the State of Delaware.
75
<PAGE>
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Trust Securities):
UDS CAPITAL II
c/o Ultramar Diamond Shamrock
Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer.
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice
of to the other Trustees):
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Attention: Walter N. Gitlin
Senior Trust Officer.
(c) if given to the Property Trustee, at its Corporate Trust Office
to the attention of Walter N. Gitlin, Vice President (or such other
address as the Property Trustee may give notice of to the Holders of the
Trust Securities and the other Trustee).
(d) if given to the Holder of the Trust Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as
the Holder of the Trust Common Securities may give notice of to the
Trust):
76
<PAGE>
UDS CAPITAL II
c/o Ultramar Diamond Shamrock
Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer.
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
77
<PAGE>
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees and a duly authorized officer of the Sponsor
to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and effect
as though all of the signers had signed a single signature page.
78
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused these
presents to be executed as of the day and year first above written.
------------------------------------------
H. Pete Smith, as Regular Trustee
------------------------------------------
Steve Blank, as Regular Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:
--------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By:
--------------------------------------
Name:
Title:
ULTRAMAR DIAMOND SHAMROCK
CORPORATION,
as Sponsor
By:
--------------------------------------
Name:
Title:
79
<PAGE>
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
This Trust Preferred Security is a Global Certificate within the meaning
of the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary. This
Trust Preferred Security is exchangeable for Trust Preferred Securities
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Declaration and no transfer of
this Trust Preferred Security (other than a transfer of this Trust Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Trust Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York), a New York corporation, to the Trust or its agent for registration of
transfer, exchange or payment, and any Trust Preferred Security issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depositary and any payment hereon is made to
Cede & Co. or such other entity as is requested by an authorized representative
of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________ agent to transfer this Trust
Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature:
------------------
(Sign exactly as your name appears on the other side of this Trust Preferred
Security Certificate)
A1-1
<PAGE>
TP-1 [ ]
CUSIP NO. _________
Certificate Evidencing Trust Preferred Securities
of
UDS CAPITAL II
__% Trust Preferred Securities
(liquidation amount $25 per Trust Preferred Security)
UDS CAPITAL II, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of __________ preferred securities of the
Trust representing undivided beneficial ownership interests in the assets of the
Trust designated the __% Trust Preferred Securities (liquidation amount $25 per
Trust Preferred Security) (the "Trust Preferred Securities"). The Trust
Preferred Securities are freely transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, powers, privileges, restrictions, preferences and other terms and
provisions of the Trust Preferred Securities represented hereby are set forth
in, issued under and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust dated as of ________ __, 1997, as the
same may be amended from time to time (the "Declaration"). Capitalized terms
used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Trust Preferred
Securities Guarantee to the extent provided therein. Each Holder of a Trust
Preferred Security, by acceptance of this Certificate and each Certificate
owner, by acquisition of a beneficial interest in a Certificate, agrees to treat
the Debentures, and any other Affiliate Investment Instruments that are treated
as debt instruments by the relevant Investment Affiliate and by the Partnership,
as indebtedness for United States federal income tax purposes. The Sponsor will
provide a copy of the Declaration, the Trust Preferred Securities Guarantee and
the Limited Partnership Agreement to a Holder without charge upon written
request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A1-2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this
____ day of __________, 1997.
UDS CAPITAL II
--------------------------------------------
Name: ,
as Regular Trustee
(See reverse for additional terms)
A1-3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Trust Preferred Security described in the
within-mentioned Declaration.
THE BANK OF NEW YORK,
as Trustee
By:
-------------------------------------
Authorized Signatory
A1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Holders of Trust Preferred Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of __% of the stated
liquidation amount of $25 per Trust Preferred Security. Distributions on the
Trust Preferred Securities shall, from the date of original issue, accumulate
and be cumulative and shall be payable quarterly only to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account. Distributions not paid on the scheduled payment date will accumulate
and compound quarterly (to the extent permitted by applicable law) at the rate
of __% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any such
Compounded Distributions. Amounts available to the Trust for distribution to the
holders of the Trust Preferred Securities will be limited to payments received
by the Trust from the Partnership on the Partnership Preferred Securities or
from the Company on the Partnership Guarantee. Distributions on the Partnership
Preferred Securities will be paid only if, as and when declared in the sole
discretion of the Company, as the General Partner of the Partnership. If and to
the extent that the Partnership makes a distribution on the Partnership
Preferred Securities held by the Property Trustee or the Company makes a payment
under the Partnership Guarantee (the amount of any such partnership
distribution, including any compounded partnership distributions or guarantee
payment being a "Payment Amount"), the Trust shall and the Property Trustee is
directed, to the extent funds are available for that purpose, to make a Pro Rata
Distribution of the Payment Amount to Holders.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, distributions on the Trust
Preferred Securities will be cumulative, will accumulate from the date of
initial issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on _________ __, 1997, if,
as and when available for payment by the Property Trustee. If the Trust
Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) are in book-entry-only form, Distributions will be payable to the
Holders of record of Trust Preferred Securities as they appear on the books and
records of the Trust on the relevant record dates, which will be one Business
Day prior to the relevant payment dates. If the Trust Preferred
A1-5
<PAGE>
Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) do not remain in book-entry-only form, the relevant record dates
shall be the 15th day of the month of the relevant payment dates. In the event
that any date on which distributions are payable is not a Business Day, payment
of such Distribution shall be made on the next succeeding day which is a
Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, with
the same force and effect as if made on such date. Payments of accumulated
Distributions will be payable to Holders of record of Trust Preferred Securities
as they appear on the books and records of the Trust on the record date with
respect to the payment date for the Trust Preferred Securities which corresponds
to the payment date fixed by the Partnership with respect to the payment of
cumulative distributions on the Partnership Preferred Securities.
The Trust Preferred Securities shall be redeemable as provided in
the Declaration.
A1-6
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
CS-1 [ ]
Certificate Evidencing Trust Common Securities
of
UDS CAPITAL II
__% Trust Common Securities
(liquidation amount $25 per Trust Common Security)
UDS CAPITAL II, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Ultramar Diamond
Shamrock Corporation, a Delaware corporation (the "Holder") is the registered
owner of _______ common securities of the Trust representing undivided
beneficial ownership interests in the assets of the Trust designated the % Trust
Common Securities (liquidation amount $25 per Trust Common Security) (the "Trust
Common Securities"). The designation, rights, powers, privileges, restrictions,
preferences and other terms and provisions of the Trust Common Securities
represented hereby are set forth in, issued under and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust dated
as of _________, 1997, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Trust Common Securities Guarantee to the extent provided therein. Each
Holder of a Trust Common Security, by acceptance of this Certificate, agrees to
treat the Debentures, and any other Affiliate Investment Instruments that are
treated as debt instruments by the relevant Investment Affiliate and by the
Partnership, as indebtedness for United States federal income tax purposes. The
Sponsor will provide a copy of the Declaration, the Trust Common Securities
Guarantee and the Limited Partnership Agreement to a Holder without charge upon
written request to the Sponsor at its principal place of business. THE TRUST
COMMON SECURITIES ARE TRANSFERABLE ON THE BOOKS AND RECORDS OF THE TRUST ONLY IN
ACCORDANCE WITH THE TERMS OF THE DECLARATION.
<PAGE>
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trust has executed this certificate this
____ day of __________, 1997.
UDS CAPITAL II
--------------------------------------------
,
as Regular Trustee
(See reverse for additional terms)
A2-2
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Trust Common Security described in the within-mentioned
Declaration.
THE BANK OF NEW YORK,
as Trustee
By:
-------------------------------
Authorized Signatory
A2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Holders of Trust Common Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of __% of the stated
liquidation amount of $25 per Trust Common Security. Distributions on the Trust
Common Securities shall, from the date of original issue, accumulate and be
cumulative and shall be payable quarterly only to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
Distributions not paid on the scheduled payment date will accumulate and
compound quarterly (to the extent permitted by applicable law) at the rate of
__% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any such
Compounded Distributions. Amounts available to the Trust for distribution to the
holders of the Trust Common Securities will be limited to payments received by
the Trust from the Partnership on the Partnership Preferred Securities or from
the Company on the Partnership Guarantee. Distributions on the Partnership
Preferred Securities will be paid only if, as and when declared in the sole
discretion of the Company, as the General Partner of the Partnership. If and to
the extent that the Partnership makes a distribution on the Partnership
Preferred Securities held by the Property Trustee or the Company makes a payment
under the Partnership Guarantee (the amount of any such partnership
distribution, including any compounded partnership distributions or guarantee
payment being a "Payment Amount"), the Trust shall and the Property Trustee is
directed, to the extent funds are available for that purpose, to make a Pro Rata
Distribution of the Payment Amount to Holders.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, distributions on the Trust
Common Securities will be cumulative, will accumulate from the date of initial
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on ______ __, 1997 if, as
and when available for payment by the Property Trustee. Distributions will be
payable to the Holders of record of Trust Common Securities as they appear
A2-4
<PAGE>
on the books and records of the Trust on the relevant record dates, which will
be one Business Day prior to the relevant payment dates. In the event that any
date on which distributions are payable is not a Business Day, payment of the
Distribution shall be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. Payments of accumulated
Distributions will be payable to Holders of record of Trust Common Securities as
they appear on the books and records of the Trust on the record date with
respect to the payment date for the Trust Common Securities which corresponds to
the payment date fixed by the Partnership with respect to the payment of
cumulative distributions on the Partnership Preferred Securities.
The Trust Common Securities shall be redeemable as provided in the
Declaration.
A2-5
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Common
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
______________________________________________ agent to transfer this Trust
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: _______________________
Signature:
------------------
(Sign exactly as your name appears on the other side of this Trust Common
Security Certificate)
A2-6
<PAGE>
EXHIBIT 4.9
========================================
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
UDS FUNDING I, L.P.
Dated as of June __, 1997
========================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS............................................ 2
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP........................ 11
Section 2.2 NAME................................................... 11
Section 2.3 PURPOSES OF THE PARTNERSHIP............................ 12
Section 2.4 TERM................................................... 12
Section 2.5 REGISTERED AGENT AND OFFICE............................ 12
Section 2.6 PRINCIPAL PLACE OF ACTIVITY............................ 12
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER.................... 13
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES.................... 13
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP
PREFERRED SECURITIES; WITHDRAWAL OF
INITIAL LIMITED PARTNER................................ 13
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS................................. 14
Section 3.2 PARTNERSHIP PREFERRED SECURITYHOLDER'S
INTEREST REPRESENTED BY PARTNERSHIP
PREFERRED SECURITIES.................................. 14
Section 3.3 CAPITAL ACCOUNTS...................................... 15
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS..................... 15
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS........ 15
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES.................................... 16
Section 4.2 SPECIAL ALLOCATION.................................... 17
Section 4.3 WITHHOLDING........................................... 19
ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS......................................... 20
Section 5.2 LIMITATIONS ON DISTRIBUTIONS.......................... 20
i
<PAGE>
Page
----
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP
PREFERRED SECURITIES.................................. 21
Section 6.2 PARTNERSHIP PREFERRED SECURITIES...................... 22
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS.............. 34
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE
PARTNERSHIP........................................... 35
ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS..................................... 37
Section 8.2 ACCOUNTING METHOD..................................... 37
Section 8.3 ANNUAL AUDIT.......................................... 38
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES....... 38
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES................. 38
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS........................................... 39
Section 10.2 LIABILITY............................................. 39
Section 10.3 PRIORITY.............................................. 40
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11.1 AUTHORITY............................................. 40
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER.................. 40
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY
GENERAL PARTNER....................................... 42
Section 11.4 LIABILITY............................................. 43
Section 11.5 OUTSIDE ACTIVITIES.................................... 44
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS.................... 44
Section 11.7 EXCULPATION........................................... 45
ii
<PAGE>
Page
----
Section 11.8 FIDUCIARY DUTY......................................... 46
Section 11.9 INDEMNIFICATION........................................ 47
Section 11.10 TAX MATTERS ........................................... 48
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS................ 48
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS.................................. 50
Section 12.2 TRANSFER OF L.P. CERTIFICATES.......................... 51
Section 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED
PARTNERSHIP PREFERRED SECURITY HOLDERS................. 52
Section 12.4 BOOK ENTRY PROVISIONS.................................. 52
Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT............. 55
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS................................. 56
Section 13.2 DISSOLUTION OF THE PARTNERSHIP......................... 56
Section 13.3 LIQUIDATION............................................ 58
Section 13.4 DISTRIBUTION IN LIQUIDATION............................ 59
Section 13.5 RIGHTS OF LIMITED PARTNERS............................. 59
Section 13.6 TERMINATION............................................ 59
ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS............................................. 60
Section 14.2 AMENDMENT OF CERTIFICATE............................... 60
Section 14.3 MEETINGS OF PARTNERS................................... 60
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES................................................ 62
Section 15.2 POWER OF ATTORNEY...................................... 63
Section 15.3 ENTIRE AGREEMENT....................................... 63
Section 15.4 GOVERNING LAW.......................................... 64
Section 15.5 EFFECT................................................. 64
Section 15.6 PRONOUNS AND NUMBER.................................... 64
Section 15.7 CAPTIONS............................................... 64
Section 15.8 PARTIAL ENFORCEABILITY................................. 64
Section 15.9 COUNTERPARTS........................................... 64
Section 15.10 WAIVER OF PARTITION.................................... 64
Section 15.11 REMEDIES............................................... 65
Schedule 1 LIST OF PARTNERS
Annex A FORM OF L.P. CERTIFICATE
Exhibit A FORM OF INDENTURE OF ULTRAMAR DIAMOND SHAMROCK CORPORATION
Exhibit B FORM OF INDENTURE FOR SUBSIDIARIES
iii
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
UDS FUNDING I, L.P.
June __, 1997
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of UDS Funding
I, L.P., a Delaware limited partnership (the "Partnership"), dated as of June
__, 1997, among Ultramar Diamond Shamrock Corporation a Delaware corporation
(the "Company"), as the general partner, H. Pete Smith, as the initial limited
partner (the "Initial Limited Partner") and such other Persons (as defined
herein) who become Limited Partners (as defined herein) as provided herein.
WHEREAS, the Company and the Initial Limited Partner entered into an
Agreement of Limited Partnership of UDS Funding I, L.P. dated as of June 5, 1997
(the "Original Partnership Agreement"), and the Partners (as defined herein)
desire to continue the Partnership under the Act (as defined herein) and to
amend and restate the Original Partnership Agreement in its entirety;
WHEREAS, the Certificate of Limited Partnership of the Partnership
was filed with the Office of the Secretary of State of the State of Delaware on
June 5, 1997;
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
and restate the Original Partnership Agreement as follows:
<PAGE>
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified. Terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Declaration.
"Act" means the Delaware Revised Uniform Limited Partnership Act,
Del. Code Ann. tit. 6, ss. 17-101 et seq., as amended from time to time.
"Affiliate" has the meaning set forth in Section 1.1 of the
Declaration.
"Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of this Agreement.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended or supplemented from time to time.
"Beneficiaries" has the meaning set forth in Section 11.3 of this
Agreement.
"Book-Entry Interest" means a beneficial interest in the L.P.
Certificates, ownership and transfers of which shall be maintained and made
through book entries of a Clearing Agency as set forth in Section 12.4 of this
Agreement.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Capital Account" has the meaning set forth in Section 3.3 of this
Agreement.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on June
5, 1997, as it may be amended and restated from time to time.
"Change in 1940 Act Law" has the meaning set forth in Section 1.1 of
the Declaration.
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"Closing Date" has the meaning set forth in Section 1.1 of the
Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Company" means Ultramar Diamond Shamrock Corporation Corporation, a
Delaware corporation.
"Compounded Distributions" has the meaning set forth in Section 6.2
of this Agreement.
"Declaration" means the Amended and Restated Declaration of Trust by
and among the Company, as Sponsor, the Property Trustee, the Delaware Trustee,
and the Regular Trustees, dated as of June __, 1997.
"Definitive L.P. Certificates" has the meaning set forth in Section
12.4(a) of this Agreement.
"Delaware Partnership Act" means the Revised Uniform Limited
Partnership Act of the State of Delaware (6 Del. C. ss. 17-101, et seq.).
"Delaware Trustee" has the meaning set forth in Section 6.2 of the
Declaration.
"Distribution Payment Date" has the meaning set forth in Section
6.2(b)(ii) of this Agreement.
"Distributions" means the cumulative cash distributions payable by
the Partnership with respect to the Interests represented by the Partnership
Preferred Securities, which amounts will accumulate on the $25 liquidation
preference of each Partnership Preferred Security from the Closing Date and are
payable quarterly in arrears in accordance with Sections 5.1 and 6.2(b) of this
Agreement.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Eligible Debt Securities" means cash or book-entry securities,
negotiable instruments, or other securities of entities not affiliated with the
Company represented by instruments in registered form which evidence
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any of the following: (a) any security issued or guaranteed as to principal or
interest by the United States, or by a person controlled or supervised by and
acting as an instrumentality of the Government of the United States pursuant to
authority granted by the Congress of the United States, or any certificate of
deposit for any of the foregoing; (b) commercial paper issued pursuant to
Section 3(a)(3) of the Securities Act of 1933 (the "Securities Act") and having,
at the time of the investment or contractual commitment to invest therein, a
rating from each of S&P and Moody's in the highest rating category granted by
such rating agency and having a maturity not in excess of nine months; (c)
demand deposits, time deposits and certificates of deposit which are fully
insured by the FDIC, in no case having a maturity greater than nine months; (d)
repurchase obligations, having a maturity of no greater than nine months; with
respect to any security that is a direct obligation of, or fully guaranteed by,
the Government of the United States of America or any agency or instrumentality
thereof, the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with a depository
institution or trust company which is an Eligible Institution and the deposits
of which are insured by the FDIC; and (e) any other security which is identified
as a permitted investment of a finance subsidiary pursuant to Rule 3a-5 under
the 1940 Act at the time it is acquired by the Partnership.
"Eligible Institution" means a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), (1)(i)
which has either (A) a long-term unsecured debt rating of AA or better by S&P
and Aa or better by Moody's or (B) a short-term unsecured debt rating or a
certificate of deposit rating of A-1+ or better by S&P and P-1 or better by
Moody's and (ii) whose deposits are insured by the FDIC or (2)(i) the parent of
which has a long-term or short-term unsecured debt rating which signifies
investment grade and (ii) whose deposits are insured by the FDIC.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
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"Finance Subsidiary" means any wholly-owned subsidiary of the
Company the principal purpose of which is to raise capital for the Company by
issuing securities that are guaranteed by the Company and the proceeds of which
are loaned to or invested in the Company or one or more of its affiliates.
"Fiscal Period" means each calendar quarter.
"Fiscal Year" means the calendar year.
"General Partner" means Ultramar Diamond Shamrock Corporation, in
its capacity as the general partner of the Partnership, its permitted
successors, or any successor general partner in the Partnership admitted as such
pursuant to the terms of this Agreement.
"General Partner Capital Contribution" means the contribution by the
General Partner to the Partnership made contemporaneous with the issuance of the
Partnership Preferred Securities.
"General Partner Interest" means the Interest of the General Partner
in the Partnership.
"Holder" or "Partnership Preferred Security Holder" means a Limited
Partner in whose name an L.P. Certificate representing Partnership Preferred
Securities is registered.
"Indentures" means the Indentures between the Company or certain of
its subsidiaries, as the case may be, and The Bank of New York, as Indenture
Trustee, dated as of June __, 1997, forms of which are attached hereto as
Exhibits A and B, respectively.
"Independent Financial Adviser" shall mean a nationally recognized
accounting firm, bank or investment banking firm which shall be designated by
the Company and which firm does not (and whose directors, officers, employees
and affiliates do not) have a direct or indirect material equity interest in the
Company or any of its subsidiaries.
"Initial Affiliate Debentures" has the meaning set forth in Section
7.1(b) of this Agreement.
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"Initial Company Debenture" has the meaning set forth in Section
7.1(b) of this Agreement.
"Initial Debentures" means collectively, the Initial Company
Debenture and the Initial Affiliate Debentures.
"Initial Limited Partner" means H. Pete Smith.
"Initial Partnership Proceeds" means the aggregate proceeds received
by the Partnership from the sale of the Partnership Preferred Securities and the
General Partner Capital Contribution.
"Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its interest
in the capital, profits, and losses of, and distributions from, the Partnership.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that (i) is controlled by the Company and (ii) is not
an investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
"Investment Event of Default" means an event of default under any
Affiliate Investment Instrument that is a debt instrument or the breach by an
Investment Affiliate of its obligations under any Affiliate Investment
Instrument that is an equity instrument.
"Investment Guarantee" has the meaning specified in Section 1.1 of
the Declaration.
"Investment Offer" has the meaning specified in Section 7.2(b) of
this Agreement.
"Limited Partner" means any Person who is admitted to the
Partnership as a limited partner pursuant to the terms of this Agreement, in
such Person's capacity as a limited partner of the Partnership.
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"Liquidator" has the meaning specified in Section 13.3 of this
Agreement.
"L.P. Certificate" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Partnership Preferred Securities held
by a Limited Partner.
"Majority in Liquidation Preference" means Holder(s) of Partnership
Preferred Securities who are the record owners of Partnership Preferred
Securities whose aggregate liquidation preferences represent more than 50% of
the aggregate liquidation preference of all Partnership Preferred Securities
then outstanding.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Net Income" and "Net Loss", respectively, for any Fiscal Period
mean the income and loss, respectively, of the Partnership for such Fiscal
Period as determined in accordance with the method of accounting followed by the
Partnership for United States federal income tax purposes, including, for all
purposes, the net income, if any, from the Affiliate Investment Instruments,
Eligible Debt Securities and any income exempt from tax and any noncapital,
nondeductible expenditures of the Partnership which are described in the Code.
"1940 Act" has the meaning set forth in Section 1.1 of the
Declaration.
"Original Partnership Agreement" has the meaning set forth in the
recitals to this Agreement.
"Partners" means the General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the term
is used.
"Partnership Covered Person" means any Partner, any Affiliate of a
Partner or any officers, directors, shareholders, partners, members, employees,
representatives or agents of a Partner or its respective Affiliates, or any
employee or agent of the Partnership or its Affiliates or any Special
Representative.
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"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of June __, 1997 by the Company in favor of the Partnership Preferred
Security Holders with respect to the Partnership Preferred Securities, as
amended or supplemented from time to time.
"Partnership Indemnified Person" means the General Partner, any
Special Representative, any Affiliate of the General Partner or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the General Partner or any Special
Representative, or any of their respective Affiliates, or any employee or agent
of the Partnership or its Affiliates.
"Partnership Investment Company Event" means that the General
Partner shall have requested and received an opinion of nationally recognized
independent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a Change in 1940 Act
Law, the Partnership is or will be considered an "investment company" which is
required to be registered under the 1940 Act.
"Partnership Liquidation Distribution" has the meaning set forth in
Section 6.2(g) of this Agreement.
"Partnership Preferred Securities" represent the Interests of
Limited Partners and have the preference and designation set forth in Section
6.2(a) of this Agreement.
"Partnership Preferred Securities Purchase Agreement" means the
partnership purchase agreement between the Trust and the Partnership providing
for the purchase of the Partnership Preferred Securities.
"Partnership Preferred Security Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry Interest
as reflected on the books of DTC, or on the books of a Person maintaining an
account with DTC (directly as a participant or as an indirect participant, in
each case in accordance with the rules of DTC or such participant).
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"Partnership Special Event" means either a Partnership Tax Event or
a Partnership Investment Company Event.
"Partnership Successor Securities" has the meaning set forth in
Section 11.11 of this Agreement.
"Partnership Tax Event" means that the General Partner shall have
requested and received an opinion of nationally recognized independent tax
counsel experienced in such matters to the effect that there has been a Tax
Action which affects any of the events described in (i) through (iii) below and
that there is more than an insubstantial risk that (i) the Partnership is, or
will be, subject to United States federal income tax with respect to income
accrued or received on the Affiliate Investment Instruments or the Eligible Debt
Securities, (ii) the Partnership is, or will be, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by an Investment Affiliate with respect to the Initial
Debentures is not, or will not be, deductible by such Investment Affiliate for
United States federal income tax purposes.
"Paying Agent" shall have the meaning set forth in Section 12.5 of
this Agreement.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Power of Attorney" means the Power of Attorney granted pursuant to
Section 15.2 of this Agreement.
"Property Trustee" has the meaning set forth in Section 1.1 of the
Declaration.
"Purchase Agreement" means the Purchase Agreement dated June __,
1997 among the Company, the Trust, the Partnership and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Record Date" means (i) as long as the Trust Preferred Securities
remain (or, in the event that the
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Trust is liquidated in connection with a Trust Special Event, as long as the
Partnership Preferred Securities remain) in book-entry only form, one Business
Day prior to the relevant payment dates and (ii) in the event that the Trust
Preferred Securities (or in the event that the Trust is liquidated in connection
with a Trust Special Event, the Partnership Preferred Securities) shall not
continue to remain in book-entry only form, the 15th day of the month of the
relevant payment date.
"Redemption Notice" has the meaning set forth in Section 6.2(e) of
this Agreement.
"Redemption Price" has the meaning set forth in Section 6.2(c) of
this Agreement.
"Registrar" has the meaning set forth in Section 12.5 of this
Agreement.
"Regular Trustees" has the meaning set forth in Section 1.1 of the
Declaration.
"Reinvestment Criteria" has the meaning specified in Section
7.2(c) of this Agreement.
"S&P" means Standard & Poor's Ratings Services or any successor
thereof.
"Special Representative" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Tax Action" has the meaning set forth in Section 1.1 of the
Declaration.
"Tax Matters Partner" means the General Partner designated as such
in Section 11.10 of this Agreement.
"10% in Liquidation Preference" means Holder(s) of the Partnership
Preferred Securities voting together as a single class representing 10% of the
aggregate liquidation amount of the Partnership Preferred Securities.
"Treasury Regulations" has the meaning set forth in Section 1.1 of
the Declaration.
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"Trust" means UDS Capital I, a Delaware business trust.
"Trust Common Securities" has the meaning specified in Section 8.1
of the Declaration.
"Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of June __, 1997, entered into by the
Company, as Guarantor, for the benefit of the holders of the Trust Common Secu-
rities.
"Trust Preferred Securities" has the meaning specified in Section
8.1 of the Declaration.
"Trust Preferred Securities Guarantee" means the Trust Preferred
Securities Guarantee Agreement dated as of June __, 1997, entered into by the
Company, as Guarantor, for the benefit of the holders of the Trust
Preferred Securities.
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto
agree to continue the Partnership in accordance with the terms of this
Agreement. The General Partner, for itself and as agent for the Limited
Partners, shall make every reasonable effort to assure that all certificates and
documents are properly executed and shall accomplish all filing, recording,
publishing and other acts necessary or appropriate for compliance with all the
requirements for the continuation of the Partnership as a limited partnership
under the Act and under all other laws of the State of Delaware or such other
jurisdictions in which the General Partner determines that the Partnership may
conduct activities. The rights and duties of the Partners shall be as provided
herein and, subject to the terms hereof, under the Act.
Section 2.2 NAME. The name of the Partnership is "UDS Funding I,
L.P.", as such name may be modified from time to time by the General Partner
following written notice to the Limited Partners.
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Section 2.3 PURPOSES OF THE PARTNERSHIP. The purposes of the
Partnership are (a) to issue limited partnership interests in the Partnership in
the form of Partnership Preferred Securities, (b) to receive the General Partner
Capital Contribution, (c) to use substantially all of the Initial Partnership
Proceeds to purchase, as an investment, the Initial Debentures, (d) to invest,
at all times, an amount equal to at least 1% of the Initial Partnership Proceeds
in Eligible Debt Securities, (e) to receive interest and other payments on the
Affiliate Investment Instruments and the Eligible Debt Securities held by the
Partnership from time to time, (f) to make Distributions on the Partnership
Preferred Securities and distributions on the General Partner Interest if, as
and when declared by the General Partner in its sole discretion, (g) subject to
the restrictions and conditions contained in this Agreement, to make additional
investments in Affiliate Investment Instruments and Eligible Debt Securities and
to dispose of any such investments and (h) except as otherwise limited herein,
to enter into, make and perform all contracts and other undertakings, and engage
in those activities and transactions as the General Partner may reasonably deem
necessary or advisable for the carrying out of the foregoing purposes of the
Partnership. The Partnership may not engage in any other activities or
operations except as contemplated by the preceding sentence.
Section 2.4 TERM. The term of the Partnership shall commence upon
the filing of the Certificate in the Office of the Secretary of State of the
State of Delaware and shall continue until the Partnership is dissolved in
accordance with the provisions of this Agreement.
Section 2.5 REGISTERED AGENT AND OFFICE. The Partnership's
registered agent and office in Delaware shall be [CT Corporation, Corporate
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801]. At any time, the
General Partner may designate another registered agent and/or registered office.
Section 2.6 PRINCIPAL PLACE OF ACTIVITY. The principal place of
activity of the Partnership shall be c/o Ultramar Diamond Shamrock Corporation,
9830 Colonnade Boulevard, San Antonio, Texas 78230. Upon ten days' written
notice to the Partners, the General Partner may
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change the location of the Partnership's principal place of activity, provided
that such change has no material adverse effect upon any Partner.
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER. The name and
address of the General Partner are as follows:
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230.
Attention: Treasurer
The General Partner may change its name or address from time to time, in which
event the General Partner shall promptly notify the Limited Partners of any such
change.
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES. The General Partner
shall cause the Partnership to become qualified, formed or registered under the
applicable qualification, fictitious name or similar laws of any jurisdiction in
which the Partnership conducts activities.
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED
SECURITIES; WITHDRAWAL OF INITIAL LIMITED PARTNER.
(a) Without execution of this Agreement, upon the receipt of an L.P.
Certificate by a Person, whether by purchase, gift, devise or other valid
transfer, which receipt shall be deemed to constitute a request by such Person
that the books and records of the Partnership reflect such Person's admission as
a Limited Partner, such Person shall be admitted to the Partnership as a Limited
Partner and shall become bound by this Agreement.
(b) Following the first admission of a Partnership Preferred
Security Holder to the Partnership as a Limited Partner, the Initial Limited
Partner shall withdraw from the Partnership and shall receive the return of its
capital contribution without interest or deduction.
(c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed on
the books and records of the Partnership. The General Partner
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shall be required to update the books and records from time to time as necessary
to accurately reflect such information.
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS.
(a) The General Partner has, prior to the date hereof, contributed
an aggregate of $15.00 to the capital of the Partnership, which amount is equal
to at least 15% of the total capital contributions to the Partnership, after
taking into account the contribution of the Initial Limited Partner referred to
in Section 3.1(b). Contemporaneous with the issuance of the Partnership
Preferred Securities, the General Partner shall make the General Partner Capital
Contribution. The General Partner shall, from time to time, make such additional
capital contributions as are necessary to maintain at all times a positive
Capital Account balance equal to at least one percent (1%) of the aggregate
positive Capital Account balances of all Partners at the end of such period.
(b) The Initial Limited Partner has, prior to the date hereof,
contributed the amount of $85.00 to the capital of the Partnership, which amount
shall be returned to the Initial Limited Partner as contemplated by Section
2.9(b).
(c) On the Closing Date, the Trust shall, in exchange for a
definitive L.P. Certificate, contribute to the capital of the Partnership on
behalf of the Trust an amount in cash equal to the gross proceeds from the sale
of the Trust Preferred Securities and the Trust Common Securities (such amount
being a capital contribution to the Partnership). On such date, immediately
following the withdrawal of the Initial Limited Partner, the Trust shall be the
sole Limited Partner.
(d) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be required
by law.
Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST
REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES. A Partnership Preferred
Security Holder's
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Interest shall be represented by the Partnership Preferred Securities held by or
on behalf of such Partner. Each Partnership Preferred Security Holder's
respective ownership of Partnership Preferred Securities shall be set forth on
the books and records of the Partnership. Each Partner hereby agrees that its
Interest in the Partnership shall for all purposes be personal property. No
Partner shall have an interest in specific Partnership property.
Section 3.3 CAPITAL ACCOUNTS.
(a) Establishment and Maintenance of Capital Accounts. The
Partnership shall establish and maintain a separate account (the "Capital
Account") for each Partner. The initial balance of the Capital Account for each
Partner shall be the amount as set out opposite the name of each of the Partners
on Schedule 1 attached hereto. The Capital Account of each Partner shall be
increased by (i) the dollar amount of any additional contributions made by such
Partner and (ii) allocations to such Partner of income and gain (including
income exempt from tax). The Capital Account of each Partner shall be decreased
by (i) the dollar amount of any distributions made to such Partner, and (ii)
allocations to such Partner of loss and deduction (including noncapital,
nondeductible expenditures not deductible in computing the Partnership's income
or loss for United States federal income tax purposes).
(b) Compliance with Regulations. Notwithstanding any other provision
of this Agreement to the contrary, the provisions of Section 3.3(a) hereof
regarding the maintenance of Capital Accounts shall be construed so as to comply
with the Treasury Regulations promulgated under section 704 of the Code. The
General Partner, in its sole discretion, is authorized to modify such provisions
to the minimum extent necessary to comply with such Treasury Regulations.
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. Except as provided
herein, no Partner shall be entitled to interest on or with respect to any
capital contribution to the Partnership.
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS. Subject
to Section 3.1(b) hereof, no
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Partner shall be entitled to withdraw any part of such Partner's capital
contribution to the Partnership. No Partner shall be entitled to receive any
distributions from the Partnership, except as provided in this Agreement.
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES. After giving effect to the special
allocation provisions set forth in Section 4.2 which special allocations shall
take precedence over any allocations made pursuant to this Section 4.1,
(a) the Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:
(i) First, to each Holder of a Partnership Preferred Security in an
amount equal to the excess, if any, of (x) all Net Losses, if any,
allocated to each such Holder from the date of issuance of the Partnership
Preferred Security through and including the close of such Fiscal Period
pursuant to Section 4.1(b)(ii) below over (y) the amount of Net Income, if
any, allocated to each such Holder pursuant to this Section 4.1(a)(i) in
all prior Fiscal Periods.
(ii) Second, to the Holders of the Partnership Preferred Securities,
an amount of Net Income equal to the excess of (x) the Distributions
accumulated on the Partnership Preferred Securities from the date of their
issuance through and including the last day of such Fiscal Period,
including any Compounded Distributions payable with respect thereto, over
(y) the amount of Net Income allocated to the Holders of the Partnership
Preferred Securities pursuant to this Section 4.1(a)(ii) in all prior
Fiscal Periods. Amounts allocated to all Partnership Preferred Security
Holders shall be allocated among such Holders in proportion to the number
of Partnership Preferred Securities held by such Holders.
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(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the balance of the General
Partner's Capital Account is reduced to zero, provided, however, that the
aggregate amount of Net Losses allocated to the General Partner pursuant
to this Section 4.1(b)(i) shall not exceed the sum of 14% of the total
capital contributions of all Partners plus the aggregate Net Income
allocated to the General Partner pursuant to this Section 4.1.
(ii) Second, among the Holders in proportion to their respective
aggregate Capital Account balances, until the Capital Account balances of
such Holders are reduced to zero.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) DAILY DETERMINATION. For purposes of determining the profits,
losses or any other items allocable to any period, profits, losses and any such
other items shall be determined on a daily basis, unless the General Partner
determines that another method is permissible under Section 704 of the Code and
the Treasury Regulations promulgated thereunder. Unless otherwise specified,
such profits, losses or other items shall be determined for each Fiscal Period.
Section 4.2 SPECIAL ALLOCATION.
(a) All expenditures that are (i) incurred by, or on behalf of, the
Partnership and (ii) paid, or otherwise reimbursed, by the General Partner out
of its own funds shall be allocated entirely to the General Partner.
(b) In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of the Partnership's income (including
gross income) shall be specially allocated to such Partner in a manner
sufficient to eliminate
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the deficit, if any, in the balance of the Capital Account of such Partner as
quickly as possible. The foregoing is intended to be a "qualified income offset"
provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted and applied in all respects in accordance with such
Treasury Regulation.
(c) SECTION 704 COMPLIANCE. While this Agreement does not
specifically provide for certain provisions required by Treasury Regulation
Sections 1.704-1(b) and 1.704-2 because those provisions apply to transactions
that are not expected to occur as regards the Partnership, the Partners intend
that the allocations under Section 4.1 conform to Treasury Regulations Sections
1.704-1(b) and 1.704-2 (including, without limitation, the minimum gain
chargeback, chargeback of partner nonrecourse debt minimum gain and partner
nonrecourse debt provisions of such Treasury Regulations), and, to the extent
necessary due to the occurrence of unexpected events, the General Partner shall
make such changes in the allocations under Section 4.1 as it believes are
reasonably necessary to meet the requirements of such Treasury Regulations.
(d) ADJUSTMENT OF ALLOCATIONS. If the allocations set forth in
this Article IV are adjusted by the Internal Revenue Service and the Tax Matters
Partner agrees to such adjustments, such allocations shall be amended to the
minimum extent necessary to conform with such adjustments.
(e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon
the final dissolution and termination of the Partnership and after taking into
account all allocations of Net Income and Net Losses (and other tax items) under
this Article IV, the distributions to be made in accordance with the positive
Capital Account balances would result in a distribution that would be different
from a distribution under Article XIII, then gross items of income and gain (and
other tax items) for the taxable year of the final dissolution and termination
(and, to the extent permitted under section 761(c) of the Code, gross items of
income and gain, and other tax items, for the immediately preceding taxable
year) shall be allocated to the Partners to increase or decrease their
respective Capital Account balances so that the
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final distribution will occur in the same manner as a distribution under Section
13.4.
(f) GENERAL PARTNER ALLOCATIONS. Notwithstanding any provision of
this Agreement to the contrary, the interest of the General Partner in each item
of Partnership income, gain, loss, deduction, or credit shall, at all times
during the existence of the Partnership, be equal to at least (A) at any time
that the aggregate capital contributions to the Partnership are equal to or less
than $50,000,000, one percent (1%) of each such item and (B) at any time that
the aggregate capital contributions to the Partnership are greater than
$50,000,000, at least a percentage equal to the product of (i) one percent (1%)
and (ii) a fraction (not exceeding 1 and not less than 0.2), the numerator of
which is $50,000,000 and the denominator of which is the lesser of (x) the
aggregate Capital Account balances of the Capital Accounts of all Partners at
such time and (y) the aggregate capital contributions to the Partnership of all
Partners at such time.
Section 4.3 WITHHOLDING. The Partnership shall comply with
withholding requirements under Federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that the Partnership is required to withhold and pay over any amounts
to any authority with respect to distributions or allocations to any Partner,
the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Partner. In the event of any claimed over-withholding,
Partners shall be limited to an action against the applicable jurisdiction. If
the amount withheld was not withheld from actual distributions, the Partnership
may reduce subsequent distributions by the amount of such withholding. Each
Partner agrees to furnish the Partnership with any representations and forms as
shall reasonably be requested by the Partnership to assist it in determining the
extent of, and in fulfilling, its withholding obligations.
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ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS. Limited Partners shall receive periodic
Distributions and Compounded Distributions, if any, redemption payments and
liquidation distributions in accordance with the terms of the Partnership
Preferred Securities set forth in Article VI. The General Partner shall in its
sole discretion determine whether and when Distributions shall be payable;
provided, however, that if the General Partner shall determine a Distribution
will not be paid on a scheduled Distribution Payment Date, the General Partner
shall give notice of its determination not to pay such Distribution to Limited
Partners of record as of the Record Date for the payment of such Distribution;
provided, further, however, that the General Partner shall not declare
distributions, and no distributions shall be payable by the Partnership to the
General Partner in respect of its General Partner Interest unless all
accumulated and unpaid Distributions, including any Compounded Distributions,
have been paid in full for all prior Fiscal Periods. Subject to the immediately
preceding sentence, to the extent that the aggregate payments of interest (or
dividends) received by the Partnership in respect of Affiliate Investment
Instruments and Eligible Debt Securities for each Fiscal Period exceed the
amount of Distributions, including any Compounded Distributions, paid on the
Partnership Preferred Securities for such Fiscal Period, the General Partner, in
its sole discretion may declare and distribute such excess funds to the General
Partner in respect of its General Partner Interest.
Section 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall not
make a Distribution to any Partner on account of such Partner's Interest if such
Distribution would violate Section 17-607 of the Act or other applicable law.
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ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED
SECURITIES.
(a) There is hereby authorized for issuance and sale Partnership
Preferred Securities having an aggregate liquidation preference not greater than
$___________ and having the designation, annual distribution rate, liquidation
preference, redemption terms, and other powers, preferences and special rights
and limitations set forth in this Article VI.
(b) The payment of Distributions (including payments of
distributions by the Partnership in liquidation or on redemption in respect of
Partnership Preferred Securities) shall be guaranteed by the Company pursuant to
and to the extent set forth in the Partnership Guarantee. The Partnership
Preferred Security Holders hereby authorize the General Partner to hold the
Guarantee on behalf of the Partnership Preferred Security Holders. In the event
of an appointment of a Special Representative pursuant to Section 6.2(i), among
other things, to enforce the Partnership Guarantee, the Special Representative
may take possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the Partnership Preferred Security Holders. The Partnership Preferred Security
Holders, by acceptance of such Partnership Preferred Securities, acknowledge and
agree to the subordination provisions in, and other terms of, the Partnership
Guarantee.
(c) The Partnership may not issue any interests in the Partnership
other than the Partnership Preferred Securities and the General Partner
Interest, provided that the Partnership may accept consideration for additional
capital contributions from the General Partner with respect to the General
Partner Interest. All Partnership Preferred Securities shall rank senior to all
other Interests in the Partnership in respect of the right to receive
Distributions. All Partnership Preferred Securities redeemed, purchased or
otherwise acquired by the Partnership shall be canceled. The Part-
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nership Preferred Securities will be issued in registered form only.
(d) No Holder shall be entitled as a matter of right to subscribe
for or purchase, or have any preemptive right with respect to, any part of any
new or additional limited partnership interests, or of securities convertible
into any Partnership Preferred Securities or other limited partnership
interests, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of a distribution.
(e) Any of the Partnership Preferred Securities that are owned by
the Company or by any entity directly or indirectly controlled by, or under
direct or indirect common control with, the Company, shall not be entitled to
vote or consent with respect to any Partnership Preferred Security owned by it,
and shall, for purposes of such vote or consent, be treated as if they were not
outstanding except for Partnership Preferred Securities purchased or acquired by
the Company or its affiliates in connection with transactions effected by or for
the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such Partnership Preferred
Securities; provided, however, that persons (other than affiliates of the
Company) to whom the Company or any of its subsidiaries have pledged Partnership
Preferred Securities may vote or consent with respect to such pledged
Partnership Preferred Securities under any of the circumstances described in
Section 6.2.
Section 6.2 PARTNERSHIP PREFERRED SECURITIES.
(a) DESIGNATION. A total of __________ Partnership Preferred
Securities, liquidation preference $25 per Partnership Preferred Security, are
hereby designated as "__% Partnership Preferred Securities".
(b) DISTRIBUTIONS. (i) Partnership Preferred Security Holders shall
be entitled to receive cumulative Distributions and Compounded Distributions (as
defined below) (if any), if, as and when declared by the General Partner, in its
sole discretion, out of the assets of the Partnership legally available
therefor, at a rate per annum of __% of the stated liquidation preference of $25
per Partnership Preferred Security, calculated on the
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basis of a 360-day year consisting of twelve 30-day months. For any period
shorter than a full 90-day quarter, Distributions will be computed on the basis
of the actual number of days elapsed in such 90-day quarter. Such Distributions
shall, from the date of original issue, accumulate and be cumulative and shall
be payable quarterly, when, if, and as declared by the General Partner on the
dates specified in Section 6.2(b)(ii) below. Distributions and Compounded
Distributions (as defined below) (if any) on the Partnership Preferred
Securities shall be cumulative from the Closing Date. Distributions not paid on
the scheduled Distribution Payment Date will accumulate and compound quarterly
at the rate of __% per annum ("Compounded Distributions"). In the event that any
date on which Distributions are payable on the Partnership Preferred Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
(ii) Distributions on the Partnership Preferred Securities will be
payable quarterly in arrears if, as and when, declared by the General Partner on
March 31, June 30, September 30 and December 31 of each year, commencing on
___________, 1997 (each a "Distribution Payment Date").
Distributions will be payable to the Holders as they appear on the
books and records of the Partnership on the relevant Record Date. If the Trust
or the Property Trustee is the Holder of the Partnership Preferred Securities,
all Distributions of cash shall be made by wire transfer of same day funds to
such Holder by 10:00 a.m., New York City time, on the applicable Distribution
Payment Date. Distributions payable on any Partnership Preferred Securities that
are not punctually paid on any Distribution Payment Date will cease to be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the relevant record date, and such Distribution will instead be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the special record date or other specified
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date for payment of such defaulted or accumulated Distribution.
(c) OPTIONAL REDEMPTION. Partnership Preferred Securities shall be
redeemable at the option of the General Partner, in whole or in part, from time
to time, on or after _________, 2002, upon not less than 30 nor more than 60
days notice, at an amount per Partnership Preferred Securities equal to $25 plus
accumulated and unpaid Distributions thereon, including any Compounded
Distributions (the "Redemption Price"). The Partnership may not redeem the
Partnership Preferred Securities in part unless all accumulated and unpaid
Distributions, including any Compounded Distributions, have been paid in full on
all Partnership Preferred Securities for all Fiscal Periods terminating on or
prior to the date of redemption. If a partial redemption of the Partnership
Preferred Securities would result in the delisting of the Trust Preferred
Securities (or, if the Trust is liquidated in connection with a Trust Special
Event, or if a partial redemption would result in the delisting of the
Partnership Preferred Securities), the Partnership may only redeem the
Partnership Preferred Securities in whole but not in part.
(d) SPECIAL EVENT REDEMPTIONS. (i) If, at any time, a Partnership
Special Event shall occur and be continuing, the General Partner shall, within
90 days following the occurrence of such Partnership Special Event, elect to
either (i) redeem the Partnership Preferred Securities in whole (but not in
part), upon not less than 30 or more than 60 days notice at the Redemption
Price, provided that if at the time there is available to the Partnership the
opportunity to eliminate, within such 90-day period, the Partnership Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that in the sole
judgment of the General Partner has or will cause no adverse effect on the
Partnership, the Trust, or the Company, the General Partner will pursue such
measure in lieu of redemption; or (ii) cause the Partnership Preferred
Securities to remain outstanding, provided that in the case of this clause (ii),
the General Partner shall pay any and all costs and expenses incurred by or
payable by the Partnership which are attributable to the Partnership Special
Event.
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(e) REDEMPTION PROCEDURES. (i) Notice of any redemption of
Partnership Preferred Securities (a "Redemption Notice") will be given by the
Partnership by mail to each Holder of Partnership Preferred Securities to be
redeemed not fewer than 30 nor more than 60 days before the date fixed for
redemption. For purposes of the calculation of the date of redemption and the
dates on which notices are given pursuant to this Section 6.2(e)(i), a
Redemption Notice shall be deemed to be given on the day such notice is first
mailed, by first-class mail, postage prepaid, to Holders of Partnership
Preferred Securities. Each Redemption Notice shall be addressed to the Holders
of Partnership Preferred Securities at the address of each such Holder appearing
in the books and records of the Partnership. No defect in the Redemption Notice
or in the mailing thereof with respect to any Holder shall affect the validity
of the redemption proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Partnership
Preferred Securities are to be redeemed, the Partnership Preferred Securities to
be redeemed shall be redeemed pro rata provided, that, in the event Partnership
Preferred Securities are held in book-entry only form by DTC or its nominee (or
any successor Clearing Agency or its nominee), DTC will reduce, in accordance
with DTC's customary procedures, the amount of the interest of each Clearing
Agency Participant in the Partnership Preferred Securities to be redeemed;
provided, that if, as a result of such pro rata redemption, Holders would hold
fractional interests in the Partnership Preferred Securities, the General
Partner may adjust the amount of the interest of each Holder to be redeemed to
avoid such fractional interests.
(iii) If the Partnership gives a Redemption Notice (which notice
will be irrevocable), then by 12:00 noon, New York City time, on the redemption
date, the Partnership (A) if the Partnership Preferred Securities are in
book-entry only form with DTC, will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price in respect of the
Partnership Preferred Securities held through DTC in global form or (B) if the
Partnership Preferred Securities are held in certificated form, will deposit
with the Paying Agent, funds sufficient to pay
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the applicable Redemption Price of the amount of any such Partnership Preferred
Securities and will give to the Paying Agent irrevocable instructions and
authority to pay such amounts to the Holders of Partnership Preferred
Securities, upon surrender of their certificates, by check, mailed to the
address of the relevant Holder appearing on the books and records of the
Partnership on the redemption date; provided, however, that for so long as the
Trust or the Property Trustee of the Trust shall hold the Partnership Preferred
Securities, payment of cash shall be made by wire in same day funds to the
Holder by 12:00 Noon, New York City time, on the redemption date. For these
purposes, the applicable Redemption Price shall not include Distributions which
are being paid to Holders who were Holders on a relevant record date. Upon
satisfaction of the foregoing conditions, then immediately prior to the close of
business on the date of such deposit or payment, all rights of Holders of such
Partnership Preferred Securities so called for redemption will cease, except the
right of the Holders to receive the Redemption Price, but without interest on
such Redemption Price, and from and after the date fixed for redemption, such
Partnership Preferred Securities will not accumulate Distributions or bear
interest.
In the event that any date fixed for redemption of Partnership
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding Business Day (and
without any interest in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day in each case, with the same force and effect
as if made on such date fixed for redemption. In the event that payment of the
Redemption Price is improperly withheld or refused and not paid by either the
Partnership or the Company pursuant to the Partnership Guarantee, Distributions
on the Partnership Preferred Securities called for Redemption will continue to
accumulate, to the extent that payment of such interest is legally available,
from the original redemption date until the Redemption Price is actually paid.
The Partnership shall not be required to register or cause to be
registered the transfer of any Partnership Preferred Securities which have been
called for redemption.
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(f) COMPANY PURCHASES. Subject to the provisions of this Section 6.2
and applicable law (including, without limitation, Federal securities laws), if
Partnership Preferred Securities have been distributed to the Holders (as
defined in the Declaration) of Trust Preferred Securities, the Company or any of
its subsidiaries may at any time and from time to time purchase outstanding
Partnership Preferred Securities by tender, in the open market, or by private
agreement.
(g) LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Partnership, the Holders of Partnership Preferred Securities at the time
outstanding will be entitled to receive out of the assets of the Partnership
such amount as is determined in accordance with Section 13.4 (the "Partnership
Liquidation Distribution") payable in cash.
(h) VOTING RIGHTS.
(i) SPECIAL REPRESENTATIVE. (1) If one or more of the following
events shall occur and be continuing (each a "Partnership Enforcement Event"):
(i) arrearages on distributions on the Partnership Preferred Securities shall
exist for six consecutive quarterly distribution periods, (ii) the Company is in
default on any of its obligations under the Partnership Guarantee or (iii) an
Investment Event of Default on any Affiliate Investment Instrument or a default
under any Investment Guarantee, as the case may be, occurs and is continuing
then the Property Trustee, for so long as the Partnership Preferred Securities
are held by the Property Trustee, will have the right, or the Holders of the
Partnership Preferred Securities, upon the affirmative vote of at least a
Majority in Liquidation Preference of the Partnership Preferred Securities,
shall have the right, to the exclusion of the General Partner, (a) to appoint
and authorize a special representative of the Partnership and the Limited
Partners (a "Special Representative") to enforce (1) to the maximum extent
permitted by applicable law, the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments and the Investment
Guarantees, (2) the rights of the Holders of the Partnership Preferred
Securities under the Partnership Guarantee, and (3) the rights of the Holders of
the Partnership Preferred Securities to receive Distri-
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butions (only if, and to the extent, declared by the General Partner, in its
sole discretion, out of funds legally available therefor) on the Partnership
Preferred Securities, and (b) under the Partnership Guarantee to enforce the
terms of the Partnership Guarantee, including the right to enforce the covenant
restricting certain payments of the Company and Finance Subsidiaries. Under no
circumstances, however, shall the Special Representative have authority to cause
the General Partner to declare Distributions on the Partnership Preferred
Securities nor to have any authority concerning the selection of Partnership
Investments. When the Special Representative acts to enforce the Partnership's
creditors' rights and other rights with respect to the Affiliate Investment
Instruments and the Investment Guarantees, the Special Representative acts as an
agent of the Partnership. When the Special Representative acts to enforce the
rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee or their rights to receive Distributions on the
Partnership Preferred Securities, the Special Representative acts as an agent of
the Holders of the Partnership Preferred Securities. In addition, the Special
Representative shall not, by virtue of acting in such capacity, be admitted as a
general or limited partner in the Partnership or otherwise be deemed to be a
general or limited partner in the Partnership and shall have no liability for
the debts, obligations, or liabilities of the Partnership.
(2) In furtherance of the foregoing, and without limiting the powers
of any Special Representative so appointed and to avoid any doubt concerning the
powers of the Special Representative, any Special Representative, in its own
name, in the name of the Partnership, in the name of the Limited Partners, or
otherwise, may institute, or cause to be instituted, a proceeding, including,
without limitation, any suit in equity, an action at law or other judicial or
administrative proceeding, to enforce on behalf of the Partnership the
Partnership's rights directly against the Company or any other obligor in
connection with its obligations to the Partnership, and may prosecute such
proceeding to judgment or final decree, and enforce the same against the Company
or any other obligor in connection with such obligations and collect, out of the
property, wherever situated, of the Company or any such other obligor upon such
obligations, the monies adjudged or decreed to be payable in the
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manner provided by law. The General Partner agrees to execute and deliver such
documents as may be necessary, appropriate or convenient for the Special
Representative to enforce the foregoing rights and obligations on behalf and in
the name of the Partnership.
(3) If the Special Representative fails to enforce its rights under
the Affiliate Investment Instruments after a holder of Partnership Preferred
Securities has made a written request, such holder of record of Partnership
Preferred Securities may to the fullest extent permitted by law directly
institute a legal proceeding against the Company to enforce the rights of the
Special Representative and the Partnership under the Affiliate Investment
Instruments without first instituting any legal proceeding against the Special
Representative, the Partnership or any other person or entity. In any event, if
a Partnership Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument, then a holder of
Partnership Preferred Securities may to the fullest extent permitted by law on
behalf of the Partnership directly institute a proceeding against such
Investment Affiliate with respect to such Affiliate Investment Instrument for
enforcement of payment. In addition, the Partnership acknowledges that, for so
long as the Trust holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership under
the Affiliate Investment Instruments after a holder of Trust Securities has made
a written request, a holder of record of Trust Securities may to the fullest
extent permitted by law on behalf of the Partnership directly institute a legal
proceeding against the Investment Affiliates under the Affiliate Investment
Instruments, without first instituting any legal proceeding against the Property
Trustee, the Trust, the Special Representative or the Partnership. In any event,
for so long as the Trust is the holder of any Partnership Preferred Securities,
if a Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument or the failure of the
Company to make any required payment when due on any Investment Guarantee, then
the Partnership acknowledges that a holder of Trust Securities may to the full-
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est extent permitted by law on behalf of the Partnership directly institute a
proceeding against such Investment Affiliate with respect to such Affiliate
Investment Instrument or against the Company with respect to any such Investment
Guarantee, in each case for enforcement of payment. Under no circumstances shall
the Special Representative, any holder of Partnership Preferred Securities or
any holder of Trust Preferred Securities have authority to cause the General
Partner to declare distributions on the Partnership Preferred Securities.
(4) For purposes of determining whether the Partnership has deferred
payment of Distributions for six (6) consecutive quarters, Distributions shall
be deemed to remain in arrears, notwithstanding any payments in respect thereof,
until full cumulative Distributions, including Compounded Distributions, have
been or contemporaneously are paid with respect to all quarterly Distribution
periods terminating on or prior to the date of payment of such full cumulative
Distributions. Not later than 30 days after such right to appoint a Special
Representative arises, the General Partner will convene a meeting for election
of a Special Representative. If the General Partner fails to convene such
meeting within such 30-day period, the Holders of not less than 10% in
Liquidation Preference of the Outstanding Partnership Preferred Securities will
be entitled to convene such meeting. The provisions of Section 14.3 relating to
the convening and conduct of meetings of the Partners will apply with respect to
any such meeting. In the event that, at any such meeting, Holders of less than a
Majority in Liquidation Preference of Partnership Preferred Securities entitled
to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and/or the Limited Partners if (x) the Partnership (or the Company
pursuant to the Partnership Guarantee) shall have paid in full all accumulated
and unpaid Distributions on the Partnership Preferred Securities, (y) the
relevant Investment Event of Default shall have been cured, and (z) the Company
is in compliance with all its obligations under the Partnership Guarantee, and
the Company, in its capacity as the General Partner, shall continue the
activities of the Partnership without dissolution. Notwithstanding the
appointment of any such Special Representative, the Company
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shall continue as General Partner and shall retain all rights under this
Agreement, including the right to determine whether to declare, in its sole
discretion, the payment of Distributions on the Partnership Preferred
Securities.
(ii) CERTAIN AMENDMENTS; WAIVER. (1) If any proposed amendment of
this Agreement provides for, or the General Partner otherwise proposes to
effect, (x) any action that would adversely affect the powers, preferences or
special rights of the Holders of the Partnership Preferred Securities, whether
by way of amendment of this Agreement or otherwise (including, without
limitation, the authorization or issuance of any limited partnership interests
in the Partnership ranking, as to participation in profits or distributions, or
in the assets of the Partnership, senior to the Partnership Preferred
Securities); or (y) the dissolution, winding-up or termination of the
Partnership, other than (1) in connection with the occurrence of a Partnership
Special Event or (2) as described under Sections 11.11 and 13.2 of this
Agreement, then the Holders of outstanding Partnership Preferred Securities will
be entitled to vote on such amendment or proposal of the General Partner (but
not on any other amendment or proposal) as a class and such amendment or
proposal shall not be effective except with the approval of Holders of a
Majority in Liquidation Preference of such outstanding Partnership Preferred
Securities having a right to vote on the matter; provided, however, that if the
Property Trustee on behalf of the Trust is the Holder of the Partnership
Preferred Securities, any such amendment or proposal not excepted by (1) or (2)
above shall not be effective without the prior or concurrent approval of the
Holders of a majority in liquidation preference of the outstanding Trust
Preferred Securities having a right to vote on such matters; provided, further,
that no such approval shall be required if the dissolution, winding-up or
termination of the Partnership is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the dissolution,
winding-up, liquidation or termination of the Company.
(2) The Holders of a Majority in Liquidation Preference of
Partnership Preferred Securities may, by vote, on behalf of the Holders of all
of the Partnership Preferred Securities, waive any past Partnership Enforcement
Event with respect to the Partnership Preferred
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Securities and its consequences; provided, that if the underlying Investment
Event of Default:
(A) is not waivable under the related Affiliate Investment Instrument,
such Partnership Enforcement Event shall also not be waivable; or
(B) requires the consent or vote of the Holders of greater than a
majority in principal amount or liquidation preference of the
Affiliate Investment Instruments (a "Super Majority") to be waived
under the related Affiliate Investment Instrument, the Partnership
Enforcement Event may only be waived by the vote of the Holders of
the relevant Super Majority in liquidation preference of the
Partnership Preferred Securities.
Upon such waiver, any such Partnership Enforcement Event shall cease to exist,
and shall be deemed to have been cured, for every purpose of this Agreement, but
no such waiver shall extend to any subsequent or other Partnership Enforcement
Event or impair any right consequent thereon.
(3) A waiver of an Investment Event of Default by the Special
Representative, acting at the direction of the Holders of the Partnership
Preferred Securities, constitutes a waiver of the corresponding Partnership
Enforcement Event.
(iii) GENERAL VOTING. (1) The General Partner shall not (i) direct
the time, method and place of conducting any proceeding for any remedy
available, (ii) waive any Investment Event of Default that is waivable under the
Affiliate Investment Instruments, (iii) exercise any right to rescind or annul a
declaration that the principal of any Affiliate Investment Instruments that are
debt instruments shall be due and payable, (iv) waive the breach of the covenant
by the Company in the Partnership Guarantee to restrict certain payments by the
Company, or (v) consent to any amendment, modification or termination of any
Affiliate Investment Instrument, where such consent shall be required from the
investor, without, in each case, obtaining the prior approval of the Holders of
at least a Majority in Liquidation Preference of the Partnership Preferred
Securities; provided, howev-
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er, that if the Property Trustee on behalf of the Trust is the Holder of the
Partnership Preferred Securities, such waiver, consent or amendment or other
action shall not be effective without the prior or concurrent approval of at
least a majority in liquidation amount of the outstanding Trust Preferred
Securities having a right to vote on such matters. The General Partner shall not
revoke any action previously authorized or approved by a vote of the Holders of
the Partnership Preferred Securities without the approval of a Majority in
Liquidation Preference of the Partnership Preferred Securities. The General
Partner shall notify all Holders of the Partnership Preferred Securities of any
notice of an Investment Event of Default received with respect to any Affiliate
Investment Instrument.
(2) Any required approval of Holders of Partnership Preferred
Securities may be given at a separate meeting of such Holders convened for such
purpose or pursuant to written consent. The General Partner will cause a notice
of any meeting at which Holders of Partnership Preferred Securities are entitled
to vote, or of any matter upon which the action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Partnership
Preferred Securities. Each such notice will include a statement setting forth
(x) the date of such meeting or the date by which such action is to be taken,
(y) a description of any matter proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matters upon which written consent
is sought and (z) instructions for the delivery of proxies or consents. No vote
or consent of the Holders of Partnership Preferred Securities will be required
for the Partnership to redeem and cancel Partnership Preferred Securities in
accordance with this Agreement.
(3) Notwithstanding that Holders of Partnership Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Partnership Preferred Securities at such time that are beneficially
owned by the Company or by any entity directly or indirectly controlled by, or
under direct or indirect common control with, the Company, shall not be entitled
to vote or consent and shall, for purposes of such vote or consent, be treated
as if they were not outstanding, except for Partnership Preferred Securities
purchased or acquired by the Company or its affiliates in
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connection with transactions effected by or for the account of customers of the
Company or any of its subsidiaries or in connection with the distribution or
trading of such Partnership Preferred Securities; provided, however, that
persons (other than affiliates of the Company) to whom the Company or any of its
subsidiaries have pledged Partnership Preferred Securities may vote or consent
with respect to such pledged Partnership Preferred Securities pursuant to the
terms of such pledge.
(4) Holders of the Partnership Preferred Securities shall have no
rights to remove or replace the General Partner.
(5) Holders of Partnership Preferred Securities shall have no
preemptive rights.
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS.
(a) All Partnership funds will be invested in the securities of
Investment Affiliates (the "Affiliate Investment Instruments") and Eligible Debt
Securities. No more than 99% of the Initial Partnership Proceeds will be used by
the Partnership to purchase the Initial Debentures meeting the criteria set
forth in this Section 7.1. The remaining funds from the Initial Partnership
Proceeds will be used to purchase Eligible Debt Securities in accordance with
the terms of this Agreement.
(b) The Partnership shall apply approximately 99% of the Initial
Partnership Proceeds to purchase (1) a debt instrument of the Company (the
"Initial Company Debenture") and (2) debt instruments of one or more eligible
controlled affiliates of the Company (such debt instruments collectively
referred to as the "Initial Affiliate Debentures"). The Initial Company
Debenture and the Initial Affiliate Debentures are collectively referred to as
the "Initial Debentures". The Initial Affiliate Debentures may each contain a
provision that allows an affiliate of the issuer of such Debenture to assume the
obligations of such issuer subject to certain conditions. The Partnership may
purchase the Initial
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Debentures only upon receipt of an opinion of the Independent Financial Advisor
to the effect that (i) if such Initial Debentures were to be rated, at least one
Rating Agency would rate all the Initial Debentures investment grade at the time
such Initial Debentures are purchased by the Partnership, (ii) the Company and
each Investment Affiliate which is a subsidiary of the Company would have been
capable of issuing and selling debt instruments with the same terms and
conditions as the applicable Initial Debentures to unrelated third party
investors, (iii) the terms and conditions of the Initial Debentures are
consistent with the terms and conditions of a public offering or a private
placement pursuant to Rule 144A under the Securities Act of 1933 of such Initial
Debentures and are no more favorable to the relevant Investment Affiliate than
could have been obtained by such Investment Affiliate from unrelated third party
investors pursuant to such a public offering or private placement of such
Initial Debentures. On the Closing Date, the Partnership shall invest at least
1% of such Initial Partnership Proceeds in Eligible Debt Securities. The terms
of the Initial Debentures will be as set forth in the Indentures attached hereto
as Exhibits A and B.
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP.
(a) The Partnership must at all times invest an amount equal to at
least 1% of the Initial Partnership Proceeds in Eligible Debt Securities.
(b) The Partnership may reinvest any payments it receives in respect
of its investments in (i) Eligible Debt Securities without limitation or (ii)
additional Affiliate Investment Instruments but only upon (A) the acceptance of
a written offer setting forth the terms and conditions on which an Investment
Affiliate would be willing to issue an Affiliate Investment Instrument to the
Partnership (an "Investment Offer") and (B) the receipt of an opinion of the
Independent Financial Advisor that the terms of such Affiliate Investment
Instrument set forth in such Investment Offer satisfy the Reinvestment Criteria
(as defined below).
(c) If the Independent Financial Advisor determines that the terms
of an Affiliate Investment Instrument (as set forth in the Investment Offer) do
not
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satisfy the Reinvestment Criteria, the Partnership shall be prohibited from
making any investment in such Affiliate Investment Instrument.
(d) Each Affiliate Investment Instrument shall satisfy the following
criteria (the "Reinvestment Criteria"): (i) the economic terms of each Affiliate
Investment Instrument shall be no less favorable to the Partnership than terms
that would otherwise be obtainable through a public offering or private
placement under Rule 144A of the Securities Act of 1933 of securities by the
requesting Investment Affiliate and the other terms and conditions of each
Affiliate Reinvestment Instrument are substantially similar to the terms and
conditions of similar securities and guarantees, if any, included therein, that
are offered to the public in a public offering or private placement under Rule
144A of the Securities Act of 1933 of such securities; (ii) the Partnership
shall not have held any Affiliate Investment Instruments of the Investment
Affiliate submitting the Investment Offer within the three-year period ending on
the date of the Investment Offer; (iii) there shall not have been a default on
any debt obligation of the Investment Affiliate submitting the Investment Offer
that was owned by the Partnership; (iv) no dividend arrearages shall have
existed on any preferred stock of the Investment Affiliate submitting the
Investment Offer that was owned by the Partnership; and (v) the Investment
Affiliate submitting the Investment Offer shall not be deemed to be an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
(e) Any payments received by the Partnership in respect of its
investments that are not invested in additional Affiliate Investment
Instruments, may be reinvested only in Eligible Debt Securities (subject to
restrictions of applicable law, including the 1940 Act).
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ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS.
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner, in which shall be entered
fully and accurately all transactions and other matters relative to the
Partnership's investments. The books and records of the Partnership, together
with a certified copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal office of the General Partner and shall be
open to the inspection and examination of the Partners or their duly authorized
representatives for any proper purpose reasonably related to its Interest during
reasonable business hours.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the General Partner may, to the maximum extent permitted by applicable
law, keep confidential from the Partners any information with respect to the
Partnership, the disclosure of which the General Partner reasonably believes is
not in the best interests of the Partnership, or is adverse to the interests of
the Partnership, or which the Partnership or the General Partner is required by
law or by an agreement with any Person to keep confidential.
(c) (i) For so long as the Partnership Preferred Securities are held
by the Property Trustee on behalf of the Trust, within one month after the close
of each Fiscal Year, the General Partner shall transmit to each Partner a
statement indicating such Partner's share of each item of Partnership income,
gain, loss, deduction or credit, for United States federal income tax purposes,
for such Fiscal Year.
(ii) In the event that the Partnership Preferred Securities are no
longer held by the Property Trustee on behalf of the Trust, as soon as
reasonably possible after the close of the Fiscal Year, the General Partner
shall transmit to each Partner the statement referred to in Section 8.1(c)(i)
hereof.
Section 8.2 ACCOUNTING METHOD. For both financial and tax reporting
purposes, the books and
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records of the Partnership shall be kept on the accrual method of accounting
applied on a consistent basis and shall reflect all Partnership transactions.
Section 8.3 ANNUAL AUDIT. As soon as practical after the end of each
Fiscal Year, but not later than 90 days after such end, the financial statements
of the Partnership shall be audited by a firm of independent certified public
accountants selected by the General Partner in accordance with applicable law.
The cost of such audits will be an expense of the Partnership and shall be paid
by the General Partner.
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. Since
the Trust is being formed solely to facilitate a direct investment in the
Partnership Preferred Securities, the Partnership hereby agrees, at any time
while the Property Trustee is the Holder of any Partnership Preferred
Securities, to pay all the expenses of the Trust, including, but not limited to,
any taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed on the Trust by the United States, or any other
domestic taxing authority, so that the net amounts received and retained by the
Trust and the Property Trustee after paying such expenses will be equal to the
amounts the Trust and the Property Trustee would have received had no such costs
or expenses been incurred by or imposed on the Trust. The General Partner shall
be liable for, and shall pay all such expenses solely out of its own funds. In
addition, if the Partnership is required to pay 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, then, in
any case, the General Partner will pay such taxes, duties, assessments or other
governmental charges out of its own funds.
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES. In connection
with the offering, sale and issuance of the Partnership Preferred Securities by
the Partnership, the General Partner shall:
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(a) pay all costs and expenses of the Partnership (including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of the Partnership Preferred
Securities (including commissions to the underwriters in connection therewith)
the fees and expenses of the Special Representatives (if any), and the costs and
expenses relating to the operation of the Partnership, including, without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses; and
(b) be primarily and fully liable for any indemnification
obligations arising with respect to this Agreement.
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS. The Limited Partners shall not participate
in the management or control of the Partnership's investment activity, property
or other assets, nor shall the Limited Partners engage in any activities for the
Partnership, nor shall the Limited Partners have the power to act for or bind
the Partnership, such powers being vested solely and exclusively in the General
Partner (and, upon appointment, and to the extent set forth herein, the Special
Representative). The Limited Partners shall have such rights as are set forth
herein and in the Partnership Guarantee. The Limited Partners shall have no
interest in the properties or assets of the General Partner, or any equity
therein, or in any proceeds of any sales thereof (which sales shall not be
restricted in any respect), by virtue of acquiring or owning an Interest in the
Partnership.
Section 10.2 LIABILITY. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.
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Section 10.3 PRIORITY. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11.1 AUTHORITY. Subject to the provisions of Section
6.2(h)(i) with respect to the Special Representative, the General Partner shall
have exclusive and complete authority and discretion to manage the operations
and affairs of the Partnership and to make all decisions regarding the
investment activity of the Partnership. Any action taken by the General Partner
shall constitute the act of and serve to bind the Partnership. In dealing with
the General Partner acting on behalf of the Partnership no Person shall be
required to inquire into the authority of the General Partner to bind the
Partnership. Persons dealing with the Partnership are entitled to rely
conclusively on the power and authority of the General Partner as set forth in
this Agreement.
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER. (a) Subject to
the provisions of Section 6.2(h)(i) with respect to the Special Representative,
the General Partner shall have all rights and powers of a general partner under
the Act, and shall have all authority, rights and powers in the management of
the Partnership's investment activity to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of this
Agreement, including by way of illustration but not by way of limitation, the
following:
(i) to secure the necessary goods and services required in
performing the General Partner's duties for the Partnership;
(ii) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights under
the Affiliate Investment Instruments and the Partnership Guarantee;
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(iii) to issue Partnership Preferred Securities and to admit Limited
Partners in connection therewith in accordance with this Agreement;
(iv) to act as registrar and transfer agent for the Partnership
Preferred Securities or designate an entity to act as registrar and
transfer agent;
(v) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to Distributions and voting rights and to make determinations as
to the payment of Distributions, and make or cause to be made all other
required payments to Holders of the Partnership Preferred Securities and
to the General Partner;
(vi) to open, maintain and close bank accounts and to draw checks
and other orders for the payment of money;
(vii) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or
against the Partnership;
(viii) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(ix) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Partnership's valid existence,
rights, franchises and privileges as a limited partnership under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Limited
Partners or to enable the Partnership to invest in the Affiliate
Investment Instruments and Eligible Debt Securities;
(x) to take all action not inconsistent with applicable law, the
Certificate or this Agreement, that the General Partner or, upon
appointment pursuant to Section 6.2(h)(i), the Special Representative
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determines in its sole discretion to be necessary or desirable to ensure,
as long as such action does not adversely affect the interests of the
Partnership Preferred Security Holders, or cause (i) the Partnership to be
deemed to be an "investment company" required to be registered under the
1940 Act, (ii) any Initial Debenture (or any subsequent Affiliate
Investment Instrument that is intended to be classified as debt) to not be
treated as indebtedness for United States federal income tax purposes, or
(iii) the Partnership to be treated as an association, or as a publicly
traded partnership, taxable as a corporation;
(xi) to cause the Partnership to enter into and perform the Purchase
Agreement and the Partnership Preferred Securities Purchase Agreement and
to purchase Eligible Debt Securities and Affiliate Investment Instruments,
as the case may be, without any further act, vote or approval of any
Partner; and
(xii) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary or desirable or incidental to the
foregoing.
(b) For so long as any Partnership Preferred Securities remain
outstanding, the General Partner covenants and agrees (i) subject to Section
12.1(b) hereof, to remain the sole general partner of the Partnership and to
maintain directly 100% ownership of the General Partner's interest in the
Partnership, which interest will at all times represent at least 1% of the total
capital of the Partnership, (ii) to cause the 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 and (iii)
to use its commercially reasonable efforts to ensure that the Partnership will
not be (A) an "investment company" for purposes of the 1940 Act or (B) an
association or a publicly traded partnership taxable as a corporation for United
States federal income tax purposes.
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY GENERAL PARTNER.
(a) The General Partner hereby as-
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sumes and shall be liable for the debts, obligations and liabilities of the
Partnership, including, but not limited to, any liabilities arising under the
Securities Act or the Exchange Act and all costs and expenses relating to the
investment by the Partnership in any Affiliate Investment Instruments (but not
any losses related to any non-payment with respect to such investments), and
agrees to pay to each Person to whom the Partnership is now or hereafter becomes
indebted or liable (the "Beneficiaries"), whether such indebtedness, obligations
or liabilities arise in contract, tort or otherwise (excluding payment
obligations of the Company to Holders of the Partnership Preferred Securities in
such Holders' capacities as Holders of such Partnership Preferred Securities,
such obligations being separately guaranteed under the Partnership Guarantee),
the full payment of such indebtedness and any and all liabilities, when and as
due. This Agreement is intended to be for the benefit of and to be enforceable
by all such Beneficiaries whether or not such Beneficiaries have received notice
hereof.
(b) The General Partner agrees to pay and be responsible for:
(i) all costs and expenses of the Partnership including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of Partnership Preferred
Securities, the costs and expenses relating to the operation of the Partnership
(including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agents, duplicating, travel and telephone and other telecommunications expenses)
and costs and expenses incurred in connection with the acquisition, financing,
and disposition of the Partnership's assets; and
(ii) any and all taxes (other than Federal, state and local
withholding taxes) and all liabilities, costs and expenses with respect to such
taxes of the Partnership.
Section 11.4 LIABILITY. Except as expressly set forth in this
Agreement or in the Guarantee Agreements, (a) the General Partner shall not be
personally
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liable for the return of any portion of the capital contributions (or any return
thereon) of the Limited Partners; (b) the return of such capital contributions
(or any return thereon) shall be made solely from assets of the Partnership; and
(c) the General Partner shall not be required to pay to the Partnership or to
any Limited Partner any deficit in any Limited Partner's Capital Account upon
dissolution, winding up or otherwise. Other than as expressly provided in this
Agreement or under the Act, no Limited Partner shall have the right to demand or
receive property other than cash for its respective Interest in the Partnership.
The General Partner shall be liable to an unlimited extent for the debts and
other obligations of the Partnership.
Section 11.5 OUTSIDE ACTIVITIES. Any Partner or Affiliate thereof
may engage in or possess an interest in other ventures of any nature or
description, independently or with others, similar or dissimilar to the
activities of the Partnership, and the Partnership and the Partners shall have
no rights by virtue of this Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the activities of the Partnership, shall not be deemed
wrongful or improper. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership even if such
opportunity is of a character that, if presented to the Partnership, could be
taken by the Partnership, and any Partner or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity.
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS. Anything in this
Agreement to the contrary notwithstanding, the General Partner shall not cause
or permit the Partnership to:
(i) acquire any assets other than as expressly provided
herein;
(ii) do any act which would make it impractical or impossible
to carry on the ordinary activity of the Partnership as set forth in
Section 2.3;
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(iii) possess Partnership property for other than a
Partnership purpose;
(iv) admit a Person as a Partner, except as expressly provided
in this Agreement;
(v) make any advances of funds to the General Partner or its
Affiliates, other than such as represented by the Affiliate Investment
Instruments;
(vi) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction;
(vii) engage in any activity that is not consistent with the
purposes of the Partnership, as set forth in Section 2.3;
(viii) without the written consent of the Holders of 66-2/3%
in liquidation preference of the Partnership Preferred Securities, have an
order for relief entered with respect to the Partnership or commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of the Partnership's property, or
make any assignment for the benefit of creditors of the Partnership; or
(ix) borrow money or become liable for the borrowings of any
third party or to engage in any financial or other trade or business.
Section 11.7 EXCULPATION. (a) No Partnership Indemnified Person
shall be liable, responsible or accountable in damages or otherwise to the
Partnership or any Partnership Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Partnership Indemnified Person in good faith on behalf of the Partnership and in
a manner such Partnership Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Partnership Indemnified Person by
this Agreement or by law,
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except that a Partnership Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Partnership Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
(b) A Partnership Indemnified Person shall be fully protected in
relying in good faith upon the records of the Partnership and upon such
information, opinions, reports or statements presented to the Partnership by any
Person as to matters the Partnership Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Partnership, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which distributions to Partners might
properly be paid.
Section 11.8 FIDUCIARY DUTY. (a) To the extent that, at law or in
equity, a Partnership Indemnified Person has duties (including fiduciary duties)
and liabilities relating thereto to the Partnership or to any other Partnership
Covered Person, a Partnership Indemnified Person acting under this Agreement
shall not be liable to the Partnership or to any other Partnership Covered
Person for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of a Partnership Indemnified Person otherwise existing at law or in
equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Partnership Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Partnership Covered Persons, or
(ii) whether this Agreement or any other agreement contemplated herein or
therein provides that a Partnership Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Partnership or
any Partner, the Partnership Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the
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benefits and burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Partnership Indemnified
Person, the resolution, action or term so made, taken or provided by the
Partnership Indemnified Person shall not constitute a breach of this Agreement
or any other agreement contemplated herein or of any duty or obligation of the
Partnership Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Agreement a Partnership Indemnified Person is
permitted or required to make a decision (i) in its "discretion" or under a
grant of similar authority, the Partnership Indemnified Person shall be entitled
to consider such interests and factors as it desires, including its own
interest, and shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Partnership or any other Person, or (ii) in
its "good faith" or under another express standard, the Partnership Indemnified
Person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or by applicable law.
Section 11.9 INDEMNIFICATION. (a) To the fullest extent permitted by
applicable law, the Partnership shall indemnify and hold harmless each
Partnership Indemnified Person from and against any loss, damage or claim
incurred by such Partnership Indemnified Person by reason of any act or omission
performed or omitted by such Partnership Indemnified Person in good faith on
behalf of the Partnership and in a manner such Partnership Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Partnership Indemnified Person by this Agreement, except that no Partnership
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Partnership Indemnified Person by reason of
gross negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 11.9 shall be provided
out of and to the extent of Partnership assets only, and no Partnership Covered
Person shall have any personal liability on account thereof.
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(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Partnership Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Partnership Indemnified Person to repay such
amount if it shall be determined that the Partnership Indemnified Person is not
entitled to be indemnified as authorized in Section 11.9(a).
Section 11.10 TAX MATTERS
(a) For purposes of section 6231(a)(7) of the Code, the "Tax Matters
Partner" shall be the Company as long as it remains the general partner of the
Partnership. The Tax Matters Partner shall keep the Limited Partners fully
informed of any inquiry, examination or proceeding.
(b) Neither the Partnership, nor the Tax Matters Partner on behalf
of the Partnership, shall make an election under section 754 of the Code.
(c) The General Partner and the Partnership Preferred Security
Holders acknowledge that they intend, for United States federal income tax
purposes, that the Partnership shall be treated as a "partnership" (other than a
publicly traded partnership taxable as a corporation) and that the General
Partner and the Partnership Preferred Security Holders shall be treated as
"partners" of the Partnership.
(d) The General Partner shall retain, at the expense of the
Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all United States federal,
state, local or other tax and information returns of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar forms or
schedules.
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS. The
Partnership may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, any corporation or other body, except as
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permitted pursuant to this Section 11.11. The Partnership may, without the
consent of the Holders of the Partnership Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by a limited partnership, limited
liability company or trust organized as such under the laws of any state of the
United States of America, provided that (i) such successor entity either (x)
expressly assumes all of the obligations of the Partnership under the
Partnership Preferred Securities or (y) substitutes for the Partnership
Preferred Securities other securities having substantially the same terms as the
Partnership Preferred Securities (the "Partnership Successor Securities") so
long as the Partnership Successor Securities are not junior to any other equity
securities of the successor entity, with respect to participation in the profits
and distributions, and in the assets, of the successor entity, (ii) the
Investment Affiliates expressly acknowledge such successor entity as the holder
of the Affiliate Investment Instruments, (iii) the Partnership Preferred
Securities continue to be or any Partnership Successor Securities are or will be
listed, upon notification of issuance, on any national securities exchange or
other organization on which the Partnership Preferred Securities, if so listed,
are then listed, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Trust Preferred Securities (or, in the event that the Trust
is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities (including any Partnership Successor Securities)) to be
downgraded by any nationally recognized statistical securities rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the powers, preferences and other special rights of the
holders of the Trust Preferred Securities or the Holders of the Partnership
Preferred Securities (including any Partnership Successor Securities)) in any
material respect (other than, in the case of the Partnership Preferred
Securities, with respect to any dilution of the Holders' interest in the new
resulting entity), (vi) such successor entity has a purpose substantially
identical to that of the Partnership, (vii) prior to such merger, consolidation,
amalgamation or replacement, the Company has received an opinion of nationally
recognized independent counsel to the Partnership experienced in such matters to
the effect that (A) such successor entity will be treated as a "partnership" for
United States federal income tax purposes and
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not as an association or a publicly traded partnership taxable as a corporation,
(B) such merger, consolidation, amalgamation or replacement will not cause the
Trust to be classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax purposes, (C)
following such merger, consolidation, amalgamation or replacement, the Company
and such successor entity will be in compliance with the 1940 Act without
registering thereunder as an investment company, and (D) such merger,
consolidation, amalgamation or replacement will not adversely affect the limited
liability of the Holders of the Partnership Preferred Securities and (viii) the
Company guarantees the obligations of such successor entity under the
Partnership Successor Securities at least to the extent provided by the
Partnership Guarantee.
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS.
(a) Partnership Preferred Securities shall be freely transferable by
a Holder.
(b) Except as provided in the next sentence, the General Partner may
not assign or transfer its Interest in the Partnership in whole or in part
unless, prior to such assignment or transfer, the General Partner has obtained
the consent of the Holders of not less than 66-2/3% in Liquidation Preference
of the Partnership Preferred Securities. The General Partner may assign or
transfer its Interest in the Partnership without such consent to an entity that
is the survivor of a merger or consolidation of the General Partner in a
transaction that meets the requirements of Section 11.11 and only if prior to
such assignment or transfer the Company has received an opinion of nationally
recognized independent tax counsel to the Partnership experienced in such
matters to the effect that after such assignment or transfer the Partnership
will continue to be treated as a partnership for United States federal income
tax purposes and will not be treated as an association or a publicly traded
partnership taxable as a corporation. The General Partner may transfer its
Interest to a wholly-owned direct or indirect subsidiary of the Company provided
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that (i) such entity expressly accepts such transfer of the obligations as
General Partner and (ii) prior to such transfer, the Company has received an
opinion of nationally recognized independent counsel to the Partnership
experienced in such matters to the effect that (A) the Partnership will be
treated as a partnership for United States federal income tax purposes, (B) such
transfer would not cause the Trust to be classified as an association taxable as
a corporation for United States federal income tax purposes, (C) following such
transfer, the Company and such successor entity will be in compliance with the
1940 Act without registering thereunder as an investment company, and (D) such
transfer will not adversely affect the limited liability of the holders of the
Partnership Preferred Securities. "Permitted Successor" shall mean an entity
that is an assignee or transferee of the Interest of the General Partner as
permitted by this Section 12.1(b). The admission of a Permitted Successor as a
general partner of the Partnership shall be effective upon the filing of an
amendment to the Certificate with the Secretary of State of the State of
Delaware which indicates that the Permitted Successor has been admitted as a
general partner of the Partnership. If the General Partner assigns its entire
Interest, the General Partner shall cease to be a general partner of the
Partnership simultaneously with the admission of the Permitted Successor as a
general partner of the Partnership. Any such Permitted Successor is hereby
authorized to and shall continue the business of the Partnership without
dissolution.
(c) Except as provided above, no Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Agreement. Any transfer or purported transfer of any Interest not made
in accordance with this Agreement shall be null and void.
Section 12.2 TRANSFER OF L.P. CERTIFICATES. The General Partner
shall provide for the registration of L.P. Certificates and of transfers of L.P.
Certificates. Upon surrender for registration of transfer of any L.P.
Certificate, the General Partner shall cause one or more new L.P. Certificates
to be issued in the name of the designated transferee or transferees. Every L.P.
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form
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satisfactory to the General Partner duly executed by the Partnership Preferred
Security Holder or his or her attorney duly authorized in writing. Each L.P.
Certificate surrendered for registration of transfer shall be cancelled by the
General Partner. A transferee of an L.P. Certificate shall be admitted to the
Partnership as a Limited Partner, shall become bound by this Agreement and shall
be entitled to the rights and subject to the obligations of a Partnership
Preferred Security Holder hereunder upon the receipt by the transferee of an
L.P. Certificate, which receipt shall be deemed to constitute a request by such
transferee that the books and records of the Partnership reflect such
transferee's admission as a limited partner. The transferor of an L.P.
Certificate, in whole, shall cease to be a Limited Partner at the time that the
transferee of such L.P. Certificate is admitted to the Partnership as a Limited
Partner in accordance with this Section 12.2.
Section 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED
PARTNERSHIP PREFERRED SECURITY HOLDERS. (a) DEFINITIVE L.P. CERTIFICATES. Unless
and until the Partnership issues a global L.P. Certificate pursuant to Section
12.4(a), the Partnership shall only issue definitive L.P. Certificates to the
Partnership Preferred Security Holders. (b) The Partnership may treat the Person
in whose name any L.P. Certificate shall be registered on the books and records
of the Partnership as the sole holder of such L.P. Certificate and of the
Partnership Preferred Securities represented by such L.P. Certificate for
purposes of receiving Distributions and for all other purposes whatsoever
(including without limitation, tax returns and information reports) and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such L.P. Certificate or in the Partnership Preferred Securities
represented by such L.P. Certificate on the part of any other Person, whether or
not the Partnership shall have actual or other notice thereof.
Section 12.4 BOOK ENTRY PROVISIONS.
(a) General. The provisions of this Section 12.4 shall apply only in
the event that the Partnership Preferred Securities are distributed to the
Holders of Trust Securities in connection with the involuntary or voluntary
dissolution, winding up or liquidation of the
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Trust as a result of the occurrence of a Trust Special Event. Upon the
occurrence of such event, a global L.P. Certificate representing the Book-Entry
Interests shall be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Partnership and any previously issued and still outstanding
definitive L.P. Certificates shall be of no further force and effect. The global
L.P. Certificate shall initially be registered on the books and records of the
Partnership in the name of Cede & Co., the nominee of DTC, and no Holder of a
Partnership Preferred Security will receive a new definitive L.P. Certificate
representing such Holder's interests in such L.P. Certificate, except as
provided in Section 12.4(c). In connection with the involuntary or voluntary
dissolution, winding up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, Cede & Co., the nominee of DTC, shall
automatically be admitted to the Partnership as a Limited Partner. Receipt of
the global L.P. Certificate shall be deemed to constitute a request by Cede &
Co., the nominee of DTC, that the books and records of the Partnership reflect
its admission as a Limited Partner. Unless and until new definitive, fully
registered L.P. Certificates (the "Definitive L.P. Certificates") have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c):
(i) The provisions of this Section shall be in full force and
effect;
(ii) The Partnership, the General Partner and any Special
Representative shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of Distributions,
Redemption Price and liquidation proceeds on the L.P. Certificates and
receiving approvals, votes or consents hereunder) as the Partnership
Preferred Security Holder and the sole holder of the L.P. Certificates and
shall have no obligation to the Partnership Preferred Security Owners;
(iii) None of the Partnership, the Trust, the General Partner, any
Special Representative or any agents of any of the foregoing shall have
any liability or responsibility for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a global
L.P. Certificate for such beneficial ownership interests
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or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests; and
(iv) Except as provided in Section 12.4(c) below, the Partnership
Preferred Security Owners will not be entitled to receive physical
delivery of the Partnership Preferred Securities in definitive form and
will not be considered Holders thereof for any purpose under this
Agreement, and no global L.P. Certificate representing Partnership
Preferred Securities shall be exchangeable, except for another global L.P.
Certificate of like denomination and tenor to be registered in the name of
DTC or Cede & Co., or to a successor Depositary or its nominee.
Accordingly, each Partnership Preferred Security Owner must rely on the
procedures of DTC or if such person is not a Participant, on the
procedures of the Participant through which such person owns its interest
to exercise any rights of a Holder under the Agreement.
(b) NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Partnership Preferred Security Holders is required under
this Agreement, unless and until Definitive L.P. Certificates shall have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c),
the General Partner and any Special Representative shall give all such notices
and communications specified herein to be given to the Partnership Preferred
Security Holders to the Clearing Agency, and shall have no obligations to the
Partnership Preferred Security Owners.
(c) DEFINITIVE L.P. CERTIFICATES. Definitive L.P. Certificates shall
be prepared by the Partnership and exchangeable for the global L.P. Certificate
or L.P. Certificates if and only if (i) the Depositary notifies the Company that
it is unwilling or unable to continue its services as a securities depositary
and no successor depositary shall have been appointed, (ii) the Depositary, at
any time, ceases to be a clearing agency registered under the Exchange Act at
such time as the Depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, or (iii) the
Company, in its sole discretion, determines that such global L.P. Certificate
shall be so
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exchangeable. Upon surrender of the global L.P. Certificate or L.P. Certificates
representing the Book-Entry Interests by the Clearing Agency, accompanied by
registration instructions, the General Partner shall cause Definitive L.P.
Certificates to be delivered to Partnership Preferred Security Owners in
accordance with the instructions of the Clearing Agency. Neither the General
Partner nor the Partnership shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Any Person receiving a Definitive L.P. Certificate in
accordance with this Section 12.4 shall be admitted to the Partnership as a
Limited Partner upon receipt of such Definitive L.P. Certificate and shall be
registered on the books and records of the Partnership as a Partnership
Preferred Security Holder. The Clearing Agency or the nominee of the Clearing
Agency, as the case may be, shall cease to be a Limited Partner under this
Section 12.4(c) at the time that at least one additional Person is admitted to
the Partnership as a Limited Partner in accordance herewith. The Definitive L.P.
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as may be required by any national securities exchange on which
Partnership Preferred Securities may be listed and is reasonably acceptable to
the General Partner, as evidenced by its execution thereof.
Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT.
(a) The General Partner will act as Registrar, Transfer Agent and
Paying Agent for the Partnership Preferred Securities for so long as the
Partnership Preferred Securities are held by the Trust or, if the Trust is
liquidated in connection with a Trust Special Event, for so long as the
Partnership Preferred Securities remain in book-entry only form.
(b) Except in such case where the General Partner shall act as
Registrar or Paying Agent pursuant to Section 12.5(a) hereof, the Partnership
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Partnership Preferred Securities may be presented
for registration of transfer or for exchange ("Registrar") and (ii) an office or
agency where Partnership Preferred Securities may be
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presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Partnership Preferred Securities and of their transfer and exchange. The
Partnership may appoint the Registrar and the Paying Agent and may appoint one
or more co-registrars and one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Partnership may change any Paying Agent, Registrar or
co-registrar without prior notice to any Holder. If the Partnership fails to
appoint or maintain another entity as Registrar or Paying Agent, the General
Partner shall act as such.
(c) Registration of transfers of Partnership Preferred Securities
shall be effected without charge by or on behalf of the Partnership, but upon
payment (with the giving of such indemnity as the Partnership or the General
Partner may require) in respect of any tax or other governmental charges that
may be imposed.
(d) The Partnership will not be required to register or cause to be
registered the transfer of Partnership Preferred Securities after such
Partnership Preferred Securities have been called for redemption.
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS. The General Partner shall not
at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the General Partner retires or withdraws in
contravention of this Section 13.1, it shall indemnify, defend and hold harmless
the Partnership and the other Partners from and against any losses, expenses,
judgments, fines, settlements or damages suffered or incurred by the Partnership
or such other Partners arising out of or resulting from such retirement or
withdrawal.
Section 13.2 DISSOLUTION OF THE PARTNERSHIP.
(a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. The death, withdrawal,
bankruptcy or dissolution of a Limited Partner, or the occurrence of
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any other event which terminates the Interest of a Limited Partner in the
Partnership, shall not, in and of itself, cause the Partnership to be dissolved
and its affairs wound up. To the fullest extent permitted by applicable law,
upon the occurrence of any such event, the General Partner may, without any
further act, vote on approval of any Partner, admit any Person to the
Partnership as an additional or substitute limited partner in the Partnership,
which admission shall be effective as of the date of the occurrence of such
event, and the business of the Partnership shall be continued without
dissolution.
(b) The Partnership shall be dissolved and its affairs shall be
wound up upon the earliest to occur of any of the following events:
(i) upon the bankruptcy or insolvency of the General Partner;
(ii) upon the assignment by the General Partner of its entire
interest in the Partnership when the assignee is not admitted to the
Partnership as a general partner of the Partnership in accordance with
this Agreement, or the filing of a certificate of dissolution or its
equivalent with respect to the General Partner, or the revocation of the
General Partner's charter and the expiration of 90 days after the date of
notice to the General Partner of revocation without a reinstatement of its
charter, or if any other event occurs that causes the General Partner to
cease to be a general partner of the Partnership under the Delaware
Partnership Act, unless the business of the Partnership is continued in
accordance with the Delaware Partnership Act;
(iii) the Partnership has redeemed or otherwise purchased all of
the Partnership Preferred Securities;
(iv) upon the entry of a decree of judicial dissolution under
Section 17-802 of the Act; or
(v) the written consent of all Partners.
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(c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.
Section 13.3 LIQUIDATION.
(a) In the event of the dissolution of the Partnership for any
reason, the General Partner (or, if the Partnership is dissolved pursuant to
Section 13.2(b)(i) or (ii), then a liquidating agent appointed by Holders of not
less than 66 2/3% in Liquidation Preference of the Partnership Preferred
Securities (the General Partner or such Person so appointed is hereinafter
referred to as the "Liquidator")) shall commence to wind up the affairs of the
Partnership and to liquidate the Partnership's assets; provided, however, that a
reasonable time shall be allowed for the orderly liquidation of the assets of
the Partnership and the satisfaction of liabilities to creditors so as to enable
the Partners to minimize the normal losses attendant upon liquidation. The
Partners shall continue to share all income, losses and distributions during the
period of liquidation in accordance with Articles IV and V. Subject to the
provisions of this Article XIII, the Liquidator shall have full right and
unlimited discretion to determine the time, manner and terms of any sale or
sales of Partnership property pursuant to such liquidation, giving due regard to
the activity and condition of the relevant market and general financial and
economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.
(c) Notwithstanding the foregoing, a Liquidator that is not a
General Partner shall not, by virtue of acting in such capacity, be deemed a
Partner in this Partnership and shall not have any of the economic interests in
the Partnership of a Partner; and such Liquidator may be compensated for its
services to the Partnership at
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normal customary and competitive rates for its services to the Partnership as
reasonably determined by all the Limited Partners.
Section 13.4 DISTRIBUTION IN LIQUIDATION. The proceeds of
liquidation shall be applied in the following order of priority (and without
regard to the non-mandatory provisions of Section 17-804 of the Act):
(i) first, to creditors of the Partnership, including Partners who
are creditors, to the extent otherwise permitted by law, in satisfaction
of the liabilities of the Partnership (whether by payment or the making of
reasonable provisions for payment thereof), other than liabilities for
distributions (including Distributions) to Partners;
(ii) second, following any allocations required under Section 4.2(e)
of the Agreement, to the Limited Partners, an amount equal to the
aggregate liquidation preference of their Partnership Preferred
Securities, plus the amount of Distributions (including any Compounded
Distributions) that are accumulated and unpaid as of the date of such
liquidating distribution; and
(iii) thereafter, to the General Partner.
Section 13.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner shall
look solely to the assets of the Partnership for all distributions with respect
to the Partnership and such Partner's capital contribution (including returns
thereof), and such Partner's share of profits or losses thereof, and shall have
no recourse therefor (upon dissolution or otherwise) against the General
Partner, except under the Partnership Guarantee. No Partner shall have any right
to demand or receive property other than cash upon dissolution and termination
of the Partnership.
Section 13.6 TERMINATION. The Partnership shall terminate when all
of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 13.4 and the Liquidator has
executed and caused to be filed a certificate of cancellation of the
Partnership.
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ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS. Except as provided by Section 3.3(b) and
Section 6.2(i), this Agreement may be amended by, and only by, a written
instrument executed by the General Partner without the consent of any Limited
Partner; provided, however, that no amendment shall be made, and any such
purported amendment shall be void and ineffective, to the extent the result
thereof would be to (A) cause the Partnership to be treated for United States
federal income tax purposes as an association or a publicly traded partnership
taxable as a corporation, (B) require the Partnership to register under the 1940
Act or (C) materially adversely affect the rights, privileges or preferences of
the Partnership Preferred Securities. Notwithstanding any provision to the
contrary, in the event of (i) a liquidation of the Trust for any reason or (ii)
any other distribution which effectively causes Partnership Preferred Securities
to be distributed to Holders of Trust Preferred Securities, the General Partner
may amend this Agreement without the consent of the Limited Partners to provide
for (A) orderly dissemination, purchase, sale, exchange and replacement of such
Partnership Preferred Securities, (B) all other matters to the extent required
by or desirable under then applicable law and (C) such other matters reasonably
incidental or related thereto; provided, however, that no such amendment may
materially adversely affect the rights, privileges, or preferences of the
Partnership Preferred Securities without the consent of a majority in interest
of the Partners so effected.
Section 14.2 AMENDMENT OF CERTIFICATE. In the event this Agreement
shall be amended pursuant to Section 14.1, the General Partner shall amend the
Certificate to reflect such change if it deems such amendment of the Certificate
to be necessary or appropriate.
Section 14.3 MEETINGS OF PARTNERS.
(a) Meetings of the Limited Partners who are Holders may be called
at any time by the General Partner to consider and act on any matter on which
Limited Partners are entitled to act under the terms of this Agreement or the
Act. The General Partner shall call a meeting of Holders if directed to do so by
Holders of no less
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than 10% in Liquidation Preference as permitted by this Agreement. Such
direction shall be given by delivering to the General Partner a request in
writing stating that the signing Limited Partners desire to call a meeting and
indicating the general or specific purpose for which the meeting is to be
called. Any Limited Partners calling a meeting shall specify in writing the L.P.
Certificates held by the Limited Partners exercising the right to call a meeting
and only those specified Interests shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met. Except to the extent otherwise provided in this
Agreement, the following provisions shall apply to meetings of Partners.
(b) Notice of any such meeting shall be given to all Limited
Partners having a right to vote thereat not less than seven Business Days nor
more than 60 days prior to the date of such meeting. Each such notice shall set
forth the date, time and place of the meeting, a description of any matter on
which Holders are entitled to vote and instructions for the delivery of proxies
or written consents.
(c) Any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by Limited Partners owning not less than the
minimum Interests that would be necessary to authorize or take such action at a
meeting in which all Limited Partners having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners entitled to vote who have not consented
in writing. The General Partner may provide that any written ballot submitted to
the Limited Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within a specified time.
(d) Each Partner may authorize any Person to act for it by proxy on
all matters as to which a Partner is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Partner or its attorney-in-fact. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at
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the pleasure of the Partner executing it. Except as otherwise provided herein,
or pursuant to Section 14.3(f), all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Partnership were a Delaware corporation and the Limited Partners were
stockholders of a Delaware corporation.
(e) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
(f) The General Partner may establish all other reasonable
procedures relating to meetings of Limited Partners or the giving of written
consents, in addition to those expressly provided, including notice of time,
place or purpose of any meeting at which any matter is to be voted on by any
Partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES. All notices provided for in this Agreement
shall be in writing, and shall be delivered or mailed by first class or
registered or certified mail or, with respect to the Partnership and General
Partner, telecopied, as follows:
(a) if given to the Partnership, in care of the General Partner at
the Partnership's mailing address set forth below:
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
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(b) if given to the General Partner, at its mailing address set
forth below:
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
(c) if given to any other Partner at the address set forth on the
books and records of the Partnership.
Section 15.2 POWER OF ATTORNEY. Each Holder of a Partnership
Preferred Security does hereby constitute and appoint the General Partner, and
if applicable, any Special Representative appointed pursuant to Section
6.2(h)(i) of this Agreement, as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign, deliver
and file (a) any amendment of the Certificate required because of an amendment
of this Agreement or in order to effect any change in the Partnership, (b) this
Agreement, (c) any amendments to this Agreement and (d) all such other
instruments, documents and certificates which from time to time may be required
by the laws of the United States of America, the State of Delaware or any other
jurisdiction, or any political subdivision or agency thereof, to effectuate,
implement and continue the valid and subsisting existence of the Partnership or
to dissolve the Partnership for any other purpose consistent with this Agreement
and the transactions contemplated hereby.
The power of attorney granted hereby is coupled with an interest and
shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination, or bankruptcy of the Holder granting the
same or the transfer of all or any portion of such Holder's Interest and (b)
extend to such Holder's successors, assigns and legal representatives.
Section 15.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties. It supersedes any prior agreement or understandings
among them, and it may not be modified or amended in any manner other than as
set forth herein.
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Section 15.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY
SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 15.5 EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.
Section 15.6 PRONOUNS AND NUMBER. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.
Section 15.7 CAPTIONS. Captions, headings, and subheadings contained
in this Agreement are included for convenience and identification purposes only
and in no way define, limit or extend the scope or intent of this Agreement or
any provision herein.
Section 15.8 PARTIAL ENFORCEABILITY. If any provision of this
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 15.9 COUNTERPARTS. This Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of the signature of each of the Partners to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
Section 15.10 WAIVER OF PARTITION. Each Partner hereby irrevocably
waives any and all rights (if any) that such Partner may have to maintain any
action for partition of any of the Partnership's property.
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Section 15.11 REMEDIES. The failure of any party to seek redress for
violation of, or to insist upon the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation. The
rights and remedies provided by this Agreement are cumulative and the use of any
one right or remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in addition to any
other rights the parties may have by law, statute, ordinance or otherwise.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.
GENERAL PARTNER:
ULTRAMAR DIAMOND SHAMROCK
CORPORATION,
a Delaware corporation
By:
----------------------------------
Name:
Title:
INITIAL LIMITED PARTNER:
H. PETE SMITH
By:
----------------------------------
Name: H. Pete Smith
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SCHEDULE 1
S-1
<PAGE>
ANNEX A
FORM OF L.P. CERTIFICATE
[IF THE PARTNERSHIP PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT: This Partnership Preferred Security is a Global Certificate within the
meaning of the Partnership Agreement hereinafter referred to and is registered
in the name of The Depository Trust Company (the "Depositary") or a nominee of
the Depositary. This Partnership Preferred Security is exchangeable for
Partnership Preferred Securities registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances described in the
Partnership Agreement and no transfer of this Partnership Preferred Security
(other than a transfer of this Partnership Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Partnership Preferred Security is presented by an
authorized representative of The Depository Trust Company (55 Water Street, New
York, New York), a New York corporation, to the Partnership or its agent for
registration of transfer, exchange or payment, and any Partnership Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary and any payment
hereon is made to Cede & Co. or such other entity as is requested by an
authorized representative of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]
A-1
<PAGE>
PS-1 [ ]
Certificate Evidencing Partnership Preferred Securities
of
UDS FUNDING I, L.P.
__% Partnership Preferred Securities
(liquidation preference $25 per Partnership Preferred Security)
UDS FUNDING I, L.P., a limited partnership formed under the laws of
the State of Delaware (the "Partnership"), hereby certifies that The Bank of New
York, a property trustee pursuant to the Amended and Restated Declaration of
Trust of UDS Capital I, dated as of June __, 1997 (the "Holder") is the
registered owner of preferred securities of the Partnership representing limited
partner interests in the Partnership designated the __% Partnership Preferred
Securities (liquidation preference $25 per Partnership Preferred Security) (the
"Partnership Preferred Securities"). The Partnership Preferred Securities are
freely transferable on the books and records of the Partnership, in person or by
a duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Partnership
Preferred Securities represented hereby are set forth in, issued under and shall
in all respects be subject to the provisions of the Amended and Restated
Agreement of Limited Partnership dated as of June __, 1997, as the same may be
amended from time to time (the "Partnership Agreement"). Capitalized terms used
herein but not defined shall have the meaning given them in the Partnership
Agreement. The Holder is entitled to the benefits of the Partnership Guarantee
to the extent provided therein. The Partnership will provide a copy of the
Partnership Agreement and the Partnership Guarantee to a Holder without charge
upon written request to the Partnership at its principal place of business.
Upon receipt of this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Partnership Agreement and is
entitled to the benefits thereunder. Each Holder of a Partnership Preferred
Security, by acceptance of this Certificate and each Certificate owner, by
acquisition of a beneficial interest in a Certificate, agrees to treat the
Debentures, and any other Affiliate Investment Instruments that are treated as
debt instruments by the relevant Investment Affiliate and by the Partnership, as
indebtedness for United States federal income tax purposes.
A1-1
<PAGE>
IN WITNESS WHEREOF, the Partnership has executed this certificate
this __ day of __________, 1997.
UDS FUNDING I, L.P.
By: ULTRAMAR DIAMOND SHAMROCK CORPORATION,
as General Partner
By:
------------------------------------
Name:
Title:
(See reverse for additional terms)
A1-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Partnership Preferred Security will be
fixed at a rate per annum of __% of the stated liquidation preference of $25 per
Partnership Preferred Security. Distributions not paid on the scheduled payment
date will accumulate and compound quarterly (to the extent permitted by
applicable law) at the rate of __% per annum. The term "Distributions" as used
herein shall mean ordinary cumulative distributions in respect of each Fiscal
Period together with any such Compounded Distributions. Distributions on the
Partnership Preferred Securities will only be made to the extent that the
Partnership has funds legally available for the payment of such distributions.
Amounts available to the Partnership for Distribution to the holders of the
Partnership Preferred Securities will be limited to payments received by the
Partnership from the Company and certain wholly owned subsidiaries on the
Initial Debentures and Affiliate Investment Instruments or from the Company on
the Partnership Guarantee or on the Eligible Debt Securities. Distributions on
the Partnership Preferred Securities will be paid only if, as and when declared
in the sole discretion of the Company, as the General Partner of the
Partnership. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, Distributions on the
Partnership Preferred Securities will be cumulative, will accumulate from the
date of initial issuance and will be payable quarterly in arrears, on March 31,
June 30, September 30 and December 31 of each year, commencing on __________,
1997, if, as and when declared by the General Partner in its sole discretion. If
the Trust Preferred Securities (or, if the Trust is liquidated, the Partnership
Preferred Securities) are in book-entry-only form, Distributions will be payable
to the Holders of record of Partnership Preferred Securities as they appear on
the books and records of the Partnership on the relevant record dates, which
will be one Business Day prior to the relevant payment dates. If the Trust or
the Property Trustee is the Holder of the Partnership Preferred Securities, all
Distributions of cash shall be made by wire transfer of same day funds to such
Holder by 10:00 a.m., New York City time, on the applicable Distribution Payment
Date. Distributions payable on any Partnership Preferred Securities that are not
punctually paid on any Distribution Payment Date will cease to be payable to the
Person in whose name such Partnership Preferred Securities are registered on the
relevant record date, and
A1-3
<PAGE>
such Distribution will instead be payable to the Person in whose name such
Partnership Preferred Securities are registered on the special record date or
other specified date for payment of such defaulted or accumulated Distribution.
If the Trust Preferred Securities (or, if the Trust is liquidated, the
Partnership Preferred Securities) are not in book-entry-only form, the relevant
record dates shall be the 15th day of the month of the relevant payment dates.
In the event that any date on which Distributions are payable is not a Business
Day, payment of such Distribution shall be made on the next succeeding day which
is a Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
The Partnership Preferred Securities shall be redeemable as provided
in the Partnership Agreement.
A1-4
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Partnership
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________ agent to transfer this
Partnership Preferred Security Certificate on the books of the Partnership. The
agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Partnership
Preferred Security Certificate)
A1-5
<PAGE>
EXHIBIT 4.10
================================================================================
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
UDS FUNDING II, L.P.
Dated as of __________ __, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS .................................... 2
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP ................ 11
Section 2.2 NAME ...... .................................... 11
Section 2.3 PURPOSES OF THE PARTNERSHIP .................... 12
Section 2.4 TERM ...... .................................... 12
Section 2.5 REGISTERED AGENT AND OFFICE .................... 12
Section 2.6 PRINCIPAL PLACE OF ACTIVITY .................... 12
Section 2.7 NAME AND ADDRESS OF GENERAL
PARTNER ........................................ 13
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES............. 13
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED
SECURITIES; WITHDRAWAL OF INITIAL LIMITED
PARTNER......................................... 13
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS .......................... 14
Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S
INTEREST REPRESENTED BY PARTNER-
SHIP PREFERRED SECURITIES....................... 14
Section 3.3 CAPITAL ACCOUNTS ............................... 15
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS .............. 15
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBU-
TIONS........................................... 15
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES ............................. 16
Section 4.2 SPECIAL ALLOCATION ............................. 17
Section 4.3 WITHHOLDING .................................... 19
ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS .................................. 20
Section 5.2 LIMITATIONS ON DISTRIBUTIONS ................... 20
i
<PAGE>
Page
----
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP
PREFERRED SECURITIES ........................... 21
Section 6.2 PARTNERSHIP PREFERRED SECURITIES................ 22
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS........ 34
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE
PARTNERSHIP..................................... 35
ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS .............................. 37
Section 8.2 ACCOUNTING METHOD .............................. 37
Section 8.3 ANNUAL AUDIT ................................... 38
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP
TAXES .......................................... 38
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES .......... 38
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10 1 LIMITATIONS .................................... 39
Section 10 2 LIABILITY . .................................... 39
Section 10 3 PRIORITY .. .................................... 40
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11 1 AUTHORITY . .................................... 40
Section 11 2 POWERS AND DUTIES OF GENERAL PARTNER ........... 40
Section 11 3 OBLIGATIONS AND EXPENSES PAYABLE BY GENERAL
PARTNER ........................................ 42
Section 11 4 LIABILITY . .................................... 43
Section 11 5 OUTSIDE ACTIVITIES ............................. 44
Section 11 6 LIMITS ON GENERAL PARTNER'S POWERS.............. 44
Section 11 7 EXCULPATION .................................... 45
Section 11 8 FIDUCIARY DUTY ................................. 46
Section 11 9 INDEMNIFICATION ................................ 47
Section 11 10 TAX MATTERS .................................... 48
Section 11 11 CONSOLIDATION, MERGER OR SALE OF ASSETS ........ 48
ii
<PAGE>
Page
----
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12 1 TRANSFER OF INTERESTS .......................... 50
Section 12 2 TRANSFER OF L.P. CERTIFICATES .................. 51
Section 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED
PARTNERSHIP PREFERRED SECURITY HOLDERS.......... 52
Section 12 4 BOOK ENTRY PROVISIONS .......................... 52
Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT...... 55
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13 1 WITHDRAWAL OF PARTNERS ......................... 56
Section 13 2 DISSOLUTION OF THE PARTNERSHIP ................. 56
Section 13 3 LIQUIDATION .................................... 58
Section 13 4 DISTRIBUTION IN LIQUIDATION .................... 59
Section 13 5 RIGHTS OF LIMITED PARTNERS ..................... 59
Section 13 6 TERMINATION .................................... 59
ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14 1 AMENDMENTS ..................................... 60
Section 14 2 AMENDMENT OF CERTIFICATE ....................... 60
Section 14 3 MEETINGS OF PARTNERS ........................... 60
ARTICLE XV
MISCELLANEOUS
Section 15 1 NOTICES ... .................................... 62
Section 15 2 POWER OF ATTORNEY .............................. 63
Section 15 3 ENTIRE AGREEMENT ............................... 63
Section 15 4 GOVERNING LAW .................................. 64
Section 15 5 EFFECT .... .................................... 64
Section 15 6 PRONOUNS AND NUMBER ............................ 64
Section 15 7 CAPTIONS .. .................................... 64
Section 15 8 PARTIAL ENFORCEABILITY ......................... 64
Section 15 9 COUNTERPARTS ................................... 64
Section 15 10 WAIVER OF PARTITION ............................ 64
Section 15 11 REMEDIES .. .................................... 65
Schedule 1 LIST OF PARTNERS
Annex A FORM OF L.P. CERTIFICATE
Exhibit A FORM OF INDENTURE OF ULTRAMAR DIAMOND SHAMROCK
CORPORATION
Exhibit B FORM OF INDENTURE FOR SUBSIDIARIES
iii
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
UDS FUNDING II, L.P.
___________ __, 1997
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of UDS
Funding II, L.P., a Delaware limited partnership (the "Partnership"), dated as
of ________ __, 1997, among Ultramar Diamond Shamrock Corporation a Delaware
corporation (the "Company"), as the general partner, H. Pete Smith, as the
initial limited partner (the "Initial Limited Partner") and such other Persons
(as defined herein) who become Limited Partners (as defined herein) as provided
herein.
WHEREAS, the Company and the Initial Limited Partner entered
into an Agreement of Limited Partnership of UDS Funding II, L.P. dated as of
June 5, 1997 (the "Original Partnership Agreement"), and the Partners (as
defined herein) desire to continue the Partnership under the Act (as defined
herein) and to amend and restate the Original Partnership Agreement in its
entirety;
WHEREAS, the Certificate of Limited Partnership of the
Partnership was filed with the Office of the Secretary of State of the State of
Delaware on June 5, 1997;
NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend and restate the Original Partnership Agreement as follows:
<PAGE>
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified. Terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Declaration.
"Act" means the Delaware Revised Uniform Limited Partnership Act,
Del. Code Ann. tit. 6, ss. 17-101 et seq., as amended from time to time.
"Affiliate" has the meaning set forth in Section 1.1 of the
Declaration.
"Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of this Agreement.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended or supplemented from time to time.
"Beneficiaries" has the meaning set forth in Section 11.3 of this
Agreement.
"Book-Entry Interest" means a beneficial interest in the L.P.
Certificates, ownership and transfers of which shall be maintained and made
through book entries of a Clearing Agency as set forth in Section 12.4 of this
Agreement.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Capital Account" has the meaning set forth in Section 3.3 of this
Agreement.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on June
5, 1997, as it may be amended and restated from time to time.
"Change in 1940 Act Law" has the meaning set forth in Section 1.1 of
the Declaration.
2
<PAGE>
"Closing Date" has the meaning set forth in Section 1.1 of the
Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Company" means Ultramar Diamond Shamrock Corporation Corporation, a
Delaware corporation.
"Compounded Distributions" has the meaning set forth in Section 6.2
of this Agreement.
"Declaration" means the Amended and Restated Declaration of Trust by
and among the Company, as Sponsor, the Property Trustee, the Delaware Trustee,
and the Regular Trustees, dated as of ___________, 1997.
"Definitive L.P. Certificates" has the meaning set forth in Section
12.4(a) of this Agreement.
"Delaware Partnership Act" means the Revised Uniform Limited
Partnership Act of the State of Delaware (6 Del. C. ss. 17-101, et seq.).
"Delaware Trustee" has the meaning set forth in Section 6.2 of the
Declaration.
"Distribution Payment Date" has the meaning set forth in Section
6.2(b)(ii) of this Agreement.
"Distributions" means the cumulative cash distributions payable by
the Partnership with respect to the Interests represented by the Partnership
Preferred Securities, which amounts will accumulate on the $25 liquidation
preference of each Partnership Preferred Security from the Closing Date and are
payable quarterly in arrears in accordance with Sections 5.1 and 6.2(b) of this
Agreement.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Eligible Debt Securities" means cash or book-entry securities,
negotiable instruments, or other securities of entities not affiliated with the
Company represented by instruments in registered form which evidence
3
<PAGE>
any of the following: (a) any security issued or guaranteed as to principal or
interest by the United States, or by a person controlled or supervised by and
acting as an instrumentality of the Government of the United States pursuant to
authority granted by the Congress of the United States, or any certificate of
deposit for any of the foregoing; (b) commercial paper issued pursuant to
Section 3(a)(3) of the Securities Act of 1933 (the "Securities Act") and having,
at the time of the investment or contractual commitment to invest therein, a
rating from each of S&P and Moody's in the highest rating category granted by
such rating agency and having a maturity not in excess of nine months; (c)
demand deposits, time deposits and certificates of deposit which are fully
insured by the FDIC, in no case having a maturity greater than nine months; (d)
repurchase obligations, having a maturity of no greater than nine months; with
respect to any security that is a direct obligation of, or fully guaranteed by,
the Government of the United States of America or any agency or instrumentality
thereof, the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with a depository
institution or trust company which is an Eligible Institution and the deposits
of which are insured by the FDIC; and (e) any other security which is identified
as a permitted investment of a finance subsidiary pursuant to Rule 3a-5 under
the 1940 Act at the time it is acquired by the Partnership.
"Eligible Institution" means a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), (1)(i)
which has either (A) a long-term unsecured debt rating of AA or better by S&P
and Aa or better by Moody's or (B) a short-term unsecured debt rating or a
certificate of deposit rating of A-1+ or better by S&P and P-1 or better by
Moody's and (ii) whose deposits are insured by the FDIC or (2)(i) the parent of
which has a long-term or short-term unsecured debt rating which signifies
investment grade and (ii) whose deposits are insured by the FDIC.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
4
<PAGE>
"Finance Subsidiary" means any wholly-owned subsidiary of the
Company the principal purpose of which is to raise capital for the Company by
issuing securities that are guaranteed by the Company and the proceeds of which
are loaned to or invested in the Company or one or more of its affiliates.
"Fiscal Period" means each calendar quarter.
"Fiscal Year" means the calendar year.
"General Partner" means Ultramar Diamond Shamrock Corporation, in
its capacity as the general partner of the Partnership, its permitted
successors, or any successor general partner in the Partnership admitted as such
pursuant to the terms of this Agreement.
"General Partner Capital Contribution" means the contribution by the
General Partner to the Partnership made contemporaneous with the issuance of the
Partnership Preferred Securities.
"General Partner Interest" means the Interest of the General Partner
in the Partnership.
"Holder" or "Partnership Preferred Security Holder" means a Limited
Partner in whose name an L.P. Certificate representing Partnership Preferred
Securities is registered.
"Indentures" means the Indentures between the Company or certain of
its subsidiaries, as the case may be, and The Bank of New York, as Indenture
Trustee, dated as of __________ __, 1997, forms of which are attached hereto as
Exhibits A and B, respectively.
"Independent Financial Adviser" shall mean a nationally recognized
accounting firm, bank or investment banking firm which shall be designated by
the Company and which firm does not (and whose directors, officers, employees
and affiliates do not) have a direct or indirect material equity interest in the
Company or any of its subsidiaries.
"Initial Affiliate Debentures" has the meaning set forth in Section
7.1(b) of this Agreement.
5
<PAGE>
"Initial Company Debenture" has the meaning set forth in Section
7.1(b) of this Agreement.
"Initial Debentures" means collectively, the Initial Company
Debenture and the Initial Affiliate Debentures.
"Initial Limited Partner" means H. Pete Smith.
"Initial Partnership Proceeds" means the aggregate proceeds received
by the Partnership from the sale of the Partnership Preferred Securities and the
General Partner Capital Contribution.
"Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its interest
in the capital, profits, and losses of, and distributions from, the Partnership.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that (i) is controlled by the Company and (ii) is not
an investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
"Investment Event of Default" means an event of default under any
Affiliate Investment Instrument that is a debt instrument or the breach by an
Investment Affiliate of its obligations under any Affiliate Investment
Instrument that is an equity instrument.
"Investment Guarantee" has the meaning specified in Section 1.1 of
the Declaration.
"Investment Offer" has the meaning specified in Section 7.2(b) of
this Agreement.
"Limited Partner" means any Person who is admitted to the
Partnership as a limited partner pursuant to the terms of this Agreement, in
such Person's capacity as a limited partner of the Partnership.
6
<PAGE>
"Liquidator" has the meaning specified in Section 13.3 of this
Agreement.
"L.P. Certificate" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Partnership Preferred Securities held
by a Limited Partner.
"Majority in Liquidation Preference" means Holder(s) of Partnership
Preferred Securities who are the record owners of Partnership Preferred
Securities whose aggregate liquidation preferences represent more than 50% of
the aggregate liquidation preference of all Partnership Preferred Securities
then outstanding.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Net Income" and "Net Loss", respectively, for any Fiscal Period
mean the income and loss, respectively, of the Partnership for such Fiscal
Period as determined in accordance with the method of accounting followed by the
Partnership for United States federal income tax purposes, including, for all
purposes, the net income, if any, from the Affiliate Investment Instruments,
Eligible Debt Securities and any income exempt from tax and any noncapital,
nondeductible expenditures of the Partnership which are described in the Code.
"1940 Act" has the meaning set forth in Section 1.1 of the
Declaration.
"Original Partnership Agreement" has the meaning set forth in the
recitals to this Agreement.
"Partners" means the General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the term
is used.
"Partnership Covered Person" means any Partner, any Affiliate of a
Partner or any officers, directors, shareholders, partners, members, employees,
representatives or agents of a Partner or its respective Affiliates, or any
employee or agent of the Partnership or its Affiliates or any Special
Representative.
7
<PAGE>
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of _____________, 1997 by the Company in favor of the Partnership
Preferred Security Holders with respect to the Partnership Preferred Securities,
as amended or supplemented from time to time.
"Partnership Indemnified Person" means the General Partner, any
Special Representative, any Affiliate of the General Partner or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the General Partner or any Special
Representative, or any of their respective Affiliates, or any employee or agent
of the Partnership or its Affiliates.
"Partnership Investment Company Event" means that the General
Partner shall have requested and received an opinion of nationally recognized
independent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a Change in 1940 Act
Law, the Partnership is or will be considered an "investment company" which is
required to be registered under the 1940 Act.
"Partnership Liquidation Distribution" has the meaning set forth in
Section 6.2(g) of this Agreement.
"Partnership Preferred Securities" represent the Interests of
Limited Partners and have the preference and designation set forth in Section
6.2(a) of this Agreement.
"Partnership Preferred Securities Purchase Agreement" means the
partnership purchase agreement between the Trust and the Partnership providing
for the purchase of the Partnership Preferred Securities.
"Partnership Preferred Security Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry Interest
as reflected on the books of DTC, or on the books of a Person maintaining an
account with DTC (directly as a participant or as an indirect participant, in
each case in accordance with the rules of DTC or such participant).
8
<PAGE>
"Partnership Special Event" means either a Partnership Tax Event or
a Partnership Investment Company Event.
"Partnership Successor Securities" has the meaning set forth in
Section 11.11 of this Agreement.
"Partnership Tax Event" means that the General Partner shall have
requested and received an opinion of nationally recognized independent tax
counsel experienced in such matters to the effect that there has been a Tax
Action which affects any of the events described in (i) through (iii) below and
that there is more than an insubstantial risk that (i) the Partnership is, or
will be, subject to United States federal income tax with respect to income
accrued or received on the Affiliate Investment Instruments or the Eligible Debt
Securities, (ii) the Partnership is, or will be, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by an Investment Affiliate with respect to the Initial
Debentures is not, or will not be, deductible by such Investment Affiliate for
United States federal income tax purposes.
"Paying Agent" shall have the meaning set forth in Section 12.5 of
this Agreement.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Power of Attorney" means the Power of Attorney granted pursuant to
Section 15.2 of this Agreement.
"Property Trustee" has the meaning set forth in Section 1.1 of the
Declaration.
"Purchase Agreement" means the Purchase Agreement dated ___________,
1997 among the Company, the Trust, the Partnership and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Record Date" means (i) as long as the Trust Preferred Securities
remain (or, in the event that the
9
<PAGE>
Trust is liquidated in connection with a Trust Special Event, as long as the
Partnership Preferred Securities remain) in book-entry only form, one Business
Day prior to the relevant payment dates and (ii) in the event that the Trust
Preferred Securities (or in the event that the Trust is liquidated in connection
with a Trust Special Event, the Partnership Preferred Securities) shall not
continue to remain in book-entry only form, the 15th day of the month of the
relevant payment date.
"Redemption Notice" has the meaning set forth in Section 6.2(e) of
this Agreement.
"Redemption Price" has the meaning set forth in Section 6.2(c) of
this Agreement.
"Registrar" has the meaning set forth in Section 12.5 of this
Agreement.
"Regular Trustees" has the meaning set forth in Section 1.1 of the
Declaration.
"Reinvestment Criteria" has the meaning specified in Section
7.2(c) of this Agreement.
"S&P" means Standard & Poor's Ratings Services or any successor
thereof.
"Special Representative" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Tax Action" has the meaning set forth in Section 1.1 of the
Declaration.
"Tax Matters Partner" means the General Partner designated as such
in Section 11.10 of this Agreement.
"10% in Liquidation Preference" means Holder(s) of the Partnership
Preferred Securities voting together as a single class representing 10% of the
aggregate liquidation amount of the Partnership Preferred Securities.
"Treasury Regulations" has the meaning set forth in Section 1.1 of
the Declaration.
10
<PAGE>
"Trust" means UDS Capital II, a Delaware business trust.
"Trust Common Securities" has the meaning specified in Section 8.1
of the Declaration.
"Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of ____________, 1997, entered into by
the Company, as Guarantor, for the benefit of the holders of the Trust Common
Securities.
"Trust Preferred Securities" has the meaning specified in Section
8.1 of the Declaration.
"Trust Preferred Securities Guarantee" means the Trust Preferred
Securities Guarantee Agreement dated as of _____________, 1997, entered into by
the Company, as Guarantor, for the benefit of the holders of the Trust
Preferred Securities.
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto
agree to continue the Partnership in accordance with the terms of this
Agreement. The General Partner, for itself and as agent for the Limited
Partners, shall make every reasonable effort to assure that all certificates and
documents are properly executed and shall accomplish all filing, recording,
publishing and other acts necessary or appropriate for compliance with all the
requirements for the continuation of the Partnership as a limited partnership
under the Act and under all other laws of the State of Delaware or such other
jurisdictions in which the General Partner determines that the Partnership may
conduct activities. The rights and duties of the Partners shall be as provided
herein and, subject to the terms hereof, under the Act.
Section 2.2 NAME. The name of the Partnership is "UDS Funding II,
L.P.", as such name may be modified from time to time by the General Partner
following written notice to the Limited Partners.
11
<PAGE>
Section 2.3 PURPOSES OF THE PARTNERSHIP. The purposes of the
Partnership are (a) to issue limited partnership interests in the Partnership in
the form of Partnership Preferred Securities, (b) to receive the General Partner
Capital Contribution, (c) to use substantially all of the Initial Partnership
Proceeds to purchase, as an investment, the Initial Debentures, (d) to invest,
at all times, an amount equal to at least 1% of the Initial Partnership Proceeds
in Eligible Debt Securities, (e) to receive interest and other payments on the
Affiliate Investment Instruments and the Eligible Debt Securities held by the
Partnership from time to time, (f) to make Distributions on the Partnership
Preferred Securities and distributions on the General Partner Interest if, as
and when declared by the General Partner in its sole discretion, (g) subject to
the restrictions and conditions contained in this Agreement, to make additional
investments in Affiliate Investment Instruments and Eligible Debt Securities and
to dispose of any such investments and (h) except as otherwise limited herein,
to enter into, make and perform all contracts and other undertakings, and engage
in those activities and transactions as the General Partner may reasonably deem
necessary or advisable for the carrying out of the foregoing purposes of the
Partnership. The Partnership may not engage in any other activities or
operations except as contemplated by the preceding sentence.
Section 2.4 TERM. The term of the Partnership shall commence upon
the filing of the Certificate in the Office of the Secretary of State of the
State of Delaware and shall continue until the Partnership is dissolved in
accordance with the provisions of this Agreement.
Section 2.5 REGISTERED AGENT AND OFFICE. The Partnership's
registered agent and office in Delaware shall be [CT Corporation, Corporate
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801]. At any time, the
General Partner may designate another registered agent and/or registered office.
Section 2.6 PRINCIPAL PLACE OF ACTIVITY. The principal place of
activity of the Partnership shall be c/o Ultramar Diamond Shamrock Corporation,
9830 Colonnade Boulevard, San Antonio, Texas 78230. Upon ten days' written
notice to the Partners, the General Partner may
12
<PAGE>
change the location of the Partnership's principal place of activity, provided
that such change has no material adverse effect upon any Partner.
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER. The name and
address of the General Partner are as follows:
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230.
Attention: Treasurer
The General Partner may change its name or address from time to time, in which
event the General Partner shall promptly notify the Limited Partners of any such
change.
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES. The General Partner
shall cause the Partnership to become qualified, formed or registered under the
applicable qualification, fictitious name or similar laws of any jurisdiction in
which the Partnership conducts activities.
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED
SECURITIES; WITHDRAWAL OF INITIAL LIMITED PARTNER.
(a) Without execution of this Agreement, upon the receipt of an L.P.
Certificate by a Person, whether by purchase, gift, devise or other valid
transfer, which receipt shall be deemed to constitute a request by such Person
that the books and records of the Partnership reflect such Person's admission as
a Limited Partner, such Person shall be admitted to the Partnership as a Limited
Partner and shall become bound by this Agreement.
(b) Following the first admission of a Partnership Preferred
Security Holder to the Partnership as a Limited Partner, the Initial Limited
Partner shall withdraw from the Partnership and shall receive the return of its
capital contribution without interest or deduction.
(c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed on
the books and records of the Partnership. The General Partner
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shall be required to update the books and records from time to time as necessary
to accurately reflect such information.
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS.
(a) The General Partner has, prior to the date hereof, contributed
an aggregate of $15.00 to the capital of the Partnership, which amount is equal
to at least 15% of the total capital contributions to the Partnership, after
taking into account the contribution of the Initial Limited Partner referred to
in Section 3.1(b). Contemporaneous with the issuance of the Partnership
Preferred Securities, the General Partner shall make the General Partner Capital
Contribution. The General Partner shall, from time to time, make such additional
capital contributions as are necessary to maintain at all times a positive
Capital Account balance equal to at least one percent (1%) of the aggregate
positive Capital Account balances of all Partners at the end of such period.
(b) The Initial Limited Partner has, prior to the date hereof,
contributed the amount of $85.00 to the capital of the Partnership, which amount
shall be returned to the Initial Limited Partner as contemplated by Section
2.9(b).
(c) On the Closing Date, the Trust shall, in exchange for a
definitive L.P. Certificate, contribute to the capital of the Partnership on
behalf of the Trust an amount in cash equal to the gross proceeds from the sale
of the Trust Preferred Securities and the Trust Common Securities (such amount
being a capital contribution to the Partnership). On such date, immediately
following the withdrawal of the Initial Limited Partner, the Trust shall be the
sole Limited Partner.
(d) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be required
by law.
Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST
REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES. A Partnership Preferred
Security Holder's
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Interest shall be represented by the Partnership Preferred Securities held by or
on behalf of such Partner. Each Partnership Preferred Security Holder's
respective ownership of Partnership Preferred Securities shall be set forth on
the books and records of the Partnership. Each Partner hereby agrees that its
Interest in the Partnership shall for all purposes be personal property. No
Partner shall have an interest in specific Partnership property.
Section 3.3 CAPITAL ACCOUNTS.
(a) Establishment and Maintenance of Capital Accounts. The
Partnership shall establish and maintain a separate account (the "Capital
Account") for each Partner. The initial balance of the Capital Account for each
Partner shall be the amount as set out opposite the name of each of the Partners
on Schedule 1 attached hereto. The Capital Account of each Partner shall be
increased by (i) the dollar amount of any additional contributions made by such
Partner and (ii) allocations to such Partner of income and gain (including
income exempt from tax). The Capital Account of each Partner shall be decreased
by (i) the dollar amount of any distributions made to such Partner, and (ii)
allocations to such Partner of loss and deduction (including noncapital,
nondeductible expenditures not deductible in computing the Partnership's income
or loss for United States federal income tax purposes).
(b) Compliance with Regulations. Notwithstanding any other provision
of this Agreement to the contrary, the provisions of Section 3.3(a) hereof
regarding the maintenance of Capital Accounts shall be construed so as to comply
with the Treasury Regulations promulgated under section 704 of the Code. The
General Partner, in its sole discretion, is authorized to modify such provisions
to the minimum extent necessary to comply with such Treasury Regulations.
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. Except as provided
herein, no Partner shall be entitled to interest on or with respect to any
capital contribution to the Partnership.
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS. Subject
to Section 3.1(b) hereof, no
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Partner shall be entitled to withdraw any part of such Partner's capital
contribution to the Partnership. No Partner shall be entitled to receive any
distributions from the Partnership, except as provided in this Agreement.
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES. After giving effect to the special
allocation provisions set forth in Section 4.2 which special allocations shall
take precedence over any allocations made pursuant to this Section 4.1,
(a) the Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:
(i) First, to each Holder of a Partnership Preferred Security in an
amount equal to the excess, if any, of (x) all Net Losses, if any,
allocated to each such Holder from the date of issuance of the Partnership
Preferred Security through and including the close of such Fiscal Period
pursuant to Section 4.1(b)(ii) below over (y) the amount of Net Income, if
any, allocated to each such Holder pursuant to this Section 4.1(a)(i) in
all prior Fiscal Periods.
(ii) Second, to the Holders of the Partnership Preferred Securities,
an amount of Net Income equal to the excess of (x) the Distributions
accumulated on the Partnership Preferred Securities from the date of their
issuance through and including the last day of such Fiscal Period,
including any Compounded Distributions payable with respect thereto, over
(y) the amount of Net Income allocated to the Holders of the Partnership
Preferred Securities pursuant to this Section 4.1(a)(ii) in all prior
Fiscal Periods. Amounts allocated to all Partnership Preferred Security
Holders shall be allocated among such Holders in proportion to the number
of Partnership Preferred Securities held by such Holders.
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(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the balance of the General
Partner's Capital Account is reduced to zero, provided, however, that the
aggregate amount of Net Losses allocated to the General Partner pursuant
to this Section 4.1(b)(i) shall not exceed the sum of 14% of the total
capital contributions of all Partners plus the aggregate Net Income
allocated to the General Partner pursuant to this Section 4.1.
(ii) Second, among the Holders in proportion to their respective
aggregate Capital Account balances, until the Capital Account balances of
such Holders are reduced to zero.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) DAILY DETERMINATION. For purposes of determining the profits,
losses or any other items allocable to any period, profits, losses and any such
other items shall be determined on a daily basis, unless the General Partner
determines that another method is permissible under Section 704 of the Code and
the Treasury Regulations promulgated thereunder. Unless otherwise
specified, such profits, losses or other items shall be determined for each
Fiscal Period.
Section 4.2 SPECIAL ALLOCATION.
(a) All expenditures that are (i) incurred by, or on behalf of, the
Partnership and (ii) paid, or otherwise reimbursed, by the General Partner out
of its own funds shall be allocated entirely to the General Partner.
(b) In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of the Partnership's income (including
gross income) shall be specially allocated to such Partner in a manner
sufficient to eliminate
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the deficit, if any, in the balance of the Capital Account of such Partner as
quickly as possible. The foregoing is intended to be a "qualified income offset"
provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted and applied in all respects in accordance with such
Treasury Regulation.
(c) SECTION 704 COMPLIANCE. While this Agreement does not
specifically provide for certain provisions required by Treasury Regulation
Sections 1.704-1(b) and 1.704-2 because those provisions apply to transactions
that are not expected to occur as regards the Partnership, the Partners intend
that the allocations under Section 4.1 conform to Treasury Regulations Sections
1.704-1(b) and 1.704-2 (including, without limitation, the minimum gain
chargeback, chargeback of partner nonrecourse debt minimum gain and partner
nonrecourse debt provisions of such Treasury Regulations), and, to the extent
necessary due to the occurrence of unexpected events, the General Partner shall
make such changes in the allocations under Section 4.1 as it believes are
reasonably necessary to meet the requirements of such Treasury Regulations.
(d) ADJUSTMENT OF ALLOCATIONS. If the allocations set forth in
this Article IV are adjusted by the Internal Revenue Service and the Tax Matters
Partner agrees to such adjustments, such allocations shall be amended to the
minimum extent necessary to conform with such adjustments.
(e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon
the final dissolution and termination of the Partnership and after taking into
account all allocations of Net Income and Net Losses (and other tax items) under
this Article IV, the distributions to be made in accordance with the positive
Capital Account balances would result in a distribution that would be different
from a distribution under Article XIII, then gross items of income and gain (and
other tax items) for the taxable year of the final dissolution and termination
(and, to the extent permitted under section 761(c) of the Code, gross items of
income and gain, and other tax items, for the immediately preceding taxable
year) shall be allocated to the Partners to increase or decrease their
respective Capital Account balances so that the
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final distribution will occur in the same manner as a distribution under
Section 13.4.
(f) GENERAL PARTNER ALLOCATIONS. Notwithstanding any provision of
this Agreement to the contrary, the interest of the General Partner in each item
of Partnership income, gain, loss, deduction, or credit shall, at all times
during the existence of the Partnership, be equal to at least (A) at any time
that the aggregate capital contributions to the Partnership are equal to or less
than $50,000,000, one percent (1%) of each such item and (B) at any time that
the aggregate capital contributions to the Partnership are greater than
$50,000,000, at least a percentage equal to the product of (i) one percent (1%)
and (ii) a fraction (not exceeding 1 and not less than 0.2), the numerator of
which is $50,000,000 and the denominator of which is the lesser of (x) the
aggregate Capital Account balances of the Capital Accounts of all Partners at
such time and (y) the aggregate capital contributions to the Partnership of all
Partners at such time.
Section 4.3 WITHHOLDING. The Partnership shall comply with
withholding requirements under Federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that the Partnership is required to withhold and pay over any amounts
to any authority with respect to distributions or allocations to any Partner,
the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Partner. In the event of any claimed over-withholding,
Partners shall be limited to an action against the applicable jurisdiction. If
the amount withheld was not withheld from actual distributions, the Partnership
may reduce subsequent distributions by the amount of such withholding. Each
Partner agrees to furnish the Partnership with any representations and forms as
shall reasonably be requested by the Partnership to assist it in determining the
extent of, and in fulfilling, its withholding obligations.
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ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS. Limited Partners shall receive periodic
Distributions and Compounded Distributions, if any, redemption payments and
liquidation distributions in accordance with the terms of the Partnership
Preferred Securities set forth in Article VI. The General Partner shall in its
sole discretion determine whether and when Distributions shall be payable;
provided, however, that if the General Partner shall determine a Distribution
will not be paid on a scheduled Distribution Payment Date, the General Partner
shall give notice of its determination not to pay such Distribution to Limited
Partners of record as of the Record Date for the payment of such Distribution;
provided, further, however, that the General Partner shall not declare
distributions, and no distributions shall be payable by the Partnership to the
General Partner in respect of its General Partner Interest unless all
accumulated and unpaid Distributions, including any Compounded Distributions,
have been paid in full for all prior Fiscal Periods. Subject to the immediately
preceding sentence, to the extent that the aggregate payments of interest (or
dividends) received by the Partnership in respect of Affiliate Investment
Instruments and Eligible Debt Securities for each Fiscal Period exceed the
amount of Distributions, including any Compounded Distributions, paid on the
Partnership Preferred Securities for such Fiscal Period, the General Partner, in
its sole discretion may declare and distribute such excess funds to the General
Partner in respect of its General Partner Interest.
Section 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall not
make a Distribution to any Partner on account of such Partner's Interest if such
Distribution would violate Section 17-607 of the Act or other applicable law.
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ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED
SECURITIES.
(a) There is hereby authorized for issuance and sale Partnership
Preferred Securities having an aggregate liquidation preference not greater than
$___________ and having the designation, annual distribution rate, liquidation
preference, redemption terms, and other powers, preferences and special rights
and limitations set forth in this Article VI.
(b) The payment of Distributions (including payments of
distributions by the Partnership in liquidation or on redemption in respect of
Partnership Preferred Securities) shall be guaranteed by the Company pursuant to
and to the extent set forth in the Partnership Guarantee. The Partnership
Preferred Security Holders hereby authorize the General Partner to hold the
Guarantee on behalf of the Partnership Preferred Security Holders. In the event
of an appointment of a Special Representative pursuant to Section 6.2(i), among
other things, to enforce the Partnership Guarantee, the Special Representative
may take possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the Partnership Preferred Security Holders. The Partnership Preferred Security
Holders, by acceptance of such Partnership Preferred Securities, acknowledge and
agree to the subordination provisions in, and other terms of, the Partnership
Guarantee.
(c) The Partnership may not issue any interests in the Partnership
other than the Partnership Preferred Securities and the General Partner
Interest, provided that the Partnership may accept consideration for additional
capital contributions from the General Partner with respect to the General
Partner Interest. All Partnership Preferred Securities shall rank senior to all
other Interests in the Partnership in respect of the right to receive
Distributions. All Partnership Preferred Securities redeemed, purchased or
otherwise acquired by the Partnership shall be canceled. The Part-
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nership Preferred Securities will be issued in registered form only.
(d) No Holder shall be entitled as a matter of right to subscribe
for or purchase, or have any preemptive right with respect to, any part of any
new or additional limited partnership interests, or of securities convertible
into any Partnership Preferred Securities or other limited partnership
interests, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of a distribution.
(e) Any of the Partnership Preferred Securities that are owned by
the Company or by any entity directly or indirectly controlled by, or under
direct or indirect common control with, the Company, shall not be entitled to
vote or consent with respect to any Partnership Preferred Security owned by it,
and shall, for purposes of such vote or consent, be treated as if they were not
outstanding except for Partnership Preferred Securities purchased or acquired by
the Company or its affiliates in connection with transactions effected by or for
the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such Partnership Preferred
Securities; provided, however, that persons (other than affiliates of the
Company) to whom the Company or any of its subsidiaries have pledged Partnership
Preferred Securities may vote or consent with respect to such pledged
Partnership Preferred Securities under any of the circumstances described in
Section 6.2.
Section 6.2 PARTNERSHIP PREFERRED SECURITIES.
(a) DESIGNATION. A total of __________ Partnership Preferred
Securities, liquidation preference $25 per Partnership Preferred Security, are
hereby designated as "__% Partnership Preferred Securities".
(b) DISTRIBUTIONS. (i) Partnership Preferred Security Holders shall
be entitled to receive cumulative Distributions and Compounded Distributions (as
defined below) (if any), if, as and when declared by the General Partner, in its
sole discretion, out of the assets of the Partnership legally available
therefor, at a rate per annum of __% of the stated liquidation preference of $25
per Partnership Preferred Security, calculated on the
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basis of a 360-day year consisting of twelve 30-day months. For any period
shorter than a full 90-day quarter, Distributions will be computed on the basis
of the actual number of days elapsed in such 90-day quarter. Such Distributions
shall, from the date of original issue, accumulate and be cumulative and shall
be payable quarterly, when, if, and as declared by the General Partner on the
dates specified in Section 6.2(b)(ii) below. Distributions and Compounded
Distributions (as defined below) (if any) on the Partnership Preferred
Securities shall be cumulative from the Closing Date. Distributions not paid on
the scheduled Distribution Payment Date will accumulate and compound quarterly
at the rate of __% per annum ("Compounded Distributions"). In the event that any
date on which Distributions are payable on the Partnership Preferred Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
(ii) Distributions on the Partnership Preferred Securities will be
payable quarterly in arrears if, as and when, declared by the General Partner on
March 31, June 30, September 30 and December 31 of each year, commencing on
___________, 1997 (each a "Distribution Payment Date").
Distributions will be payable to the Holders as they appear on the
books and records of the Partnership on the relevant Record Date. If the Trust
or the Property Trustee is the Holder of the Partnership Preferred Securities,
all Distributions of cash shall be made by wire transfer of same day funds to
such Holder by 10:00 a.m., New York City time, on the applicable Distribution
Payment Date. Distributions payable on any Partnership Preferred Securities that
are not punctually paid on any Distribution Payment Date will cease to be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the relevant record date, and such Distribution will instead be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the special record date or other specified
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date for payment of such defaulted or accumulated Distribution.
(c) OPTIONAL REDEMPTION. Partnership Preferred Securities shall be
redeemable at the option of the General Partner, in whole or in part, from time
to time, on or after _________, ____, upon not less than 30 nor more than 60
days notice, at an amount per Partnership Preferred Securities equal to $25 plus
accumulated and unpaid Distributions thereon, including any Compounded
Distributions (the "Redemption Price"). The Partnership may not redeem the
Partnership Preferred Securities in part unless all accumulated and unpaid
Distributions, including any Compounded Distributions, have been paid in full on
all Partnership Preferred Securities for all Fiscal Periods terminating on or
prior to the date of redemption. If a partial redemption of the Partnership
Preferred Securities would result in the delisting of the Trust Preferred
Securities (or, if the Trust is liquidated in connection with a Trust Special
Event, or if a partial redemption would result in the delisting of the
Partnership Preferred Securities), the Partnership may only redeem the
Partnership Preferred Securities in whole but not in part.
(d) SPECIAL EVENT REDEMPTIONS. (i) If, at any time, a Partnership
Special Event shall occur and be continuing, the General Partner shall, within
90 days following the occurrence of such Partnership Special Event, elect to
either (i) redeem the Partnership Preferred Securities in whole (but not in
part), upon not less than 30 or more than 60 days notice at the Redemption
Price, provided that if at the time there is available to the Partnership the
opportunity to eliminate, within such 90-day period, the Partnership Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that in the sole
judgment of the General Partner has or will cause no adverse effect on the
Partnership, the Trust, or the Company, the General Partner will pursue such
measure in lieu of redemption; or (ii) cause the Partnership Preferred
Securities to remain outstanding, provided that in the case of this clause (ii),
the General Partner shall pay any and all costs and expenses incurred by or
payable by the Partnership which are attributable to the Partnership Special
Event.
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(e) REDEMPTION PROCEDURES. (i) Notice of any redemption of
Partnership Preferred Securities (a "Redemption Notice") will be given by the
Partnership by mail to each Holder of Partnership Preferred Securities to be
redeemed not fewer than 30 nor more than 60 days before the date fixed for
redemption. For purposes of the calculation of the date of redemption and the
dates on which notices are given pursuant to this Section 6.2(e)(i), a
Redemption Notice shall be deemed to be given on the day such notice is first
mailed, by first-class mail, postage prepaid, to Holders of Partnership
Preferred Securities. Each Redemption Notice shall be addressed to the Holders
of Partnership Preferred Securities at the address of each such Holder appearing
in the books and records of the Partnership. No defect in the Redemption Notice
or in the mailing thereof with respect to any Holder shall affect the validity
of the redemption proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Partnership
Preferred Securities are to be redeemed, the Partnership Preferred Securities to
be redeemed shall be redeemed pro rata provided, that, in the event Partnership
Preferred Securities are held in book-entry only form by DTC or its nominee (or
any successor Clearing Agency or its nominee), DTC will reduce, in accordance
with DTC's customary procedures, the amount of the interest of each Clearing
Agency Participant in the Partnership Preferred Securities to be redeemed;
provided, that if, as a result of such pro rata redemption, Holders would hold
fractional interests in the Partnership Preferred Securities, the General
Partner may adjust the amount of the interest of each Holder to be redeemed to
avoid such fractional interests.
(iii) If the Partnership gives a Redemption Notice (which notice
will be irrevocable), then by 12:00 noon, New York City time, on the redemption
date, the Partnership (A) if the Partnership Preferred Securities are in
book-entry only form with DTC, will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price in respect of the
Partnership Preferred Securities held through DTC in global form or (B) if the
Partnership Preferred Securities are held in certificated form, will deposit
with the Paying Agent, funds sufficient to pay
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the applicable Redemption Price of the amount of any such Partnership Preferred
Securities and will give to the Paying Agent irrevocable instructions and
authority to pay such amounts to the Holders of Partnership Preferred
Securities, upon surrender of their certificates, by check, mailed to the
address of the relevant Holder appearing on the books and records of the
Partnership on the redemption date; provided, however, that for so long as the
Trust or the Property Trustee of the Trust shall hold the Partnership Preferred
Securities, payment of cash shall be made by wire in same day funds to the
Holder by 12:00 Noon, New York City time, on the redemption date. For these
purposes, the applicable Redemption Price shall not include Distributions which
are being paid to Holders who were Holders on a relevant record date. Upon
satisfaction of the foregoing conditions, then immediately prior to the close of
business on the date of such deposit or payment, all rights of Holders of such
Partnership Preferred Securities so called for redemption will cease, except the
right of the Holders to receive the Redemption Price, but without interest on
such Redemption Price, and from and after the date fixed for redemption, such
Partnership Preferred Securities will not accumulate Distributions or bear
interest.
In the event that any date fixed for redemption of Partnership
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding Business Day (and
without any interest in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day in each case, with the same force and effect
as if made on such date fixed for redemption. In the event that payment of the
Redemption Price is improperly withheld or refused and not paid by either the
Partnership or the Company pursuant to the Partnership Guarantee, Distributions
on the Partnership Preferred Securities called for Redemption will continue to
accumulate, to the extent that payment of such interest is legally available,
from the original redemption date until the Redemption Price is actually paid.
The Partnership shall not be required to register or cause to be
registered the transfer of any Partnership Preferred Securities which have been
called for redemption.
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(f) COMPANY PURCHASES. Subject to the provisions of this Section 6.2
and applicable law (including, without limitation, Federal securities laws), if
Partnership Preferred Securities have been distributed to the Holders (as
defined in the Declaration) of Trust Preferred Securities, the Company or any of
its subsidiaries may at any time and from time to time purchase outstanding
Partnership Preferred Securities by tender, in the open market, or by private
agreement.
(g) LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Partnership, the Holders of Partnership Preferred Securities at the time
outstanding will be entitled to receive out of the assets of the Partnership
such amount as is determined in accordance with Section 13.4 (the "Partnership
Liquidation Distribution") payable in cash.
(h) VOTING RIGHTS.
(i) SPECIAL REPRESENTATIVE. (1) If one or more of the following
events shall occur and be continuing (each a "Partnership Enforcement Event"):
(i) arrearages on distributions on the Partnership Preferred Securities shall
exist for six consecutive quarterly distribution periods, (ii) the Company is in
default on any of its obligations under the Partnership Guarantee or (iii) an
Investment Event of Default on any Affiliate Investment Instrument or a default
under any Investment Guarantee, as the case may be, occurs and is continuing
then the Property Trustee, for so long as the Partnership Preferred Securities
are held by the Property Trustee, will have the right, or the Holders of the
Partnership Preferred Securities, upon the affirmative vote of at least a
Majority in Liquidation Preference of the Partnership Preferred Securities,
shall have the right, to the exclusion of the General Partner, (a) to appoint
and authorize a special representative of the Partnership and the Limited
Partners (a "Special Representative") to enforce (1) to the maximum extent
permitted by applicable law, the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments and the Investment
Guarantees, (2) the rights of the Holders of the Partnership Preferred
Securities under the Partnership Guarantee, and (3) the rights of the Holders of
the Partnership Preferred Securities to receive Distri-
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butions (only if, and to the extent, declared by the General Partner, in its
sole discretion, out of funds legally available therefor) on the Partnership
Preferred Securities, and (b) under the Partnership Guarantee to enforce the
terms of the Partnership Guarantee, including the right to enforce the covenant
restricting certain payments of the Company and Finance Subsidiaries. Under no
circumstances, however, shall the Special Representative have authority to cause
the General Partner to declare Distributions on the Partnership Preferred
Securities nor to have any authority concerning the selection of Partnership
Investments. When the Special Representative acts to enforce the Partnership's
creditors' rights and other rights with respect to the Affiliate Investment
Instruments and the Investment Guarantees, the Special Representative acts as an
agent of the Partnership. When the Special Representative acts to enforce the
rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee or their rights to receive Distributions on the
Partnership Preferred Securities, the Special Representative acts as an agent of
the Holders of the Partnership Preferred Securities. In addition, the Special
Representative shall not, by virtue of acting in such capacity, be admitted as a
general or limited partner in the Partnership or otherwise be deemed to be a
general or limited partner in the Partnership and shall have no liability for
the debts, obligations, or liabilities of the Partnership.
(2) In furtherance of the foregoing, and without limiting the powers
of any Special Representative so appointed and to avoid any doubt concerning the
powers of the Special Representative, any Special Representative, in its own
name, in the name of the Partnership, in the name of the Limited Partners, or
otherwise, may institute, or cause to be instituted, a proceeding, including,
without limitation, any suit in equity, an action at law or other judicial or
administrative proceeding, to enforce on behalf of the Partnership the
Partnership's rights directly against the Company or any other obligor in
connection with its obligations to the Partnership, and may prosecute such
proceeding to judgment or final decree, and enforce the same against the Company
or any other obligor in connection with such obligations and collect, out of the
property, wherever situated, of the Company or any such other obligor upon such
obligations, the monies adjudged or decreed to be payable in the
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manner provided by law. The General Partner agrees to execute and deliver such
documents as may be necessary, appropriate or convenient for the Special
Representative to enforce the foregoing rights and obligations on behalf and in
the name of the Partnership.
(3) If the Special Representative fails to enforce its rights under
the Affiliate Investment Instruments after a holder of Partnership Preferred
Securities has made a written request, such holder of record of Partnership
Preferred Securities may to the fullest extent permitted by law directly
institute a legal proceeding against the Company to enforce the rights of the
Special Representative and the Partnership under the Affiliate Investment
Instruments without first instituting any legal proceeding against the Special
Representative, the Partnership or any other person or entity. In any event, if
a Partnership Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument, then a holder of
Partnership Preferred Securities may to the fullest extent permitted by law on
behalf of the Partnership directly institute a proceeding against such
Investment Affiliate with respect to such Affiliate Investment Instrument for
enforcement of payment. In addition, the Partnership acknowledges that, for so
long as the Trust holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership under
the Affiliate Investment Instruments after a holder of Trust Securities has made
a written request, a holder of record of Trust Securities may to the fullest
extent permitted by law on behalf of the Partnership directly institute a legal
proceeding against the Investment Affiliates under the Affiliate Investment
Instruments, without first instituting any legal proceeding against the Property
Trustee, the Trust, the Special Representative or the Partnership. In any event,
for so long as the Trust is the holder of any Partnership Preferred Securities,
if a Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument or the failure of the
Company to make any required payment when due on any Investment Guarantee, then
the Partnership acknowledges that a holder of Trust Securities may to the full-
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est extent permitted by law on behalf of the Partnership directly institute a
proceeding against such Investment Affiliate with respect to such Affiliate
Investment Instrument or against the Company with respect to any such Investment
Guarantee, in each case for enforcement of payment. Under no circumstances shall
the Special Representative, any holder of Partnership Preferred Securities or
any holder of Trust Preferred Securities have authority to cause the General
Partner to declare distributions on the Partnership Preferred Securities.
(4) For purposes of determining whether the Partnership has deferred
payment of Distributions for six (6) consecutive quarters, Distributions shall
be deemed to remain in arrears, notwithstanding any payments in respect thereof,
until full cumulative Distributions, including Compounded Distributions, have
been or contemporaneously are paid with respect to all quarterly Distribution
periods terminating on or prior to the date of payment of such full cumulative
Distributions. Not later than 30 days after such right to appoint a Special
Representative arises, the General Partner will convene a meeting for election
of a Special Representative. If the General Partner fails to convene such
meeting within such 30-day period, the Holders of not less than 10% in
Liquidation Preference of the Outstanding Partnership Preferred Securities will
be entitled to convene such meeting. The provisions of Section 14.3 relating to
the convening and conduct of meetings of the Partners will apply with respect to
any such meeting. In the event that, at any such meeting, Holders of less than a
Majority in Liquidation Preference of Partnership Preferred Securities entitled
to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and/or the Limited Partners if (x) the Partnership (or the Company
pursuant to the Partnership Guarantee) shall have paid in full all accumulated
and unpaid Distributions on the Partnership Preferred Securities, (y) the
relevant Investment Event of Default shall have been cured, and (z) the Company
is in compliance with all its obligations under the Partnership Guarantee, and
the Company, in its capacity as the General Partner, shall continue the
activities of the Partnership without dissolution. Notwithstanding the
appointment of any such Special Representative, the Company
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shall continue as General Partner and shall retain all rights under this
Agreement, including the right to determine whether to declare, in its sole
discretion, the payment of Distributions on the Partnership Preferred
Securities.
(ii) CERTAIN AMENDMENTS; WAIVER. (1) If any proposed amendment of
this Agreement provides for, or the General Partner otherwise proposes to
effect, (x) any action that would adversely affect the powers, preferences or
special rights of the Holders of the Partnership Preferred Securities, whether
by way of amendment of this Agreement or otherwise (including, without
limitation, the authorization or issuance of any limited partnership interests
in the Partnership ranking, as to participation in profits or distributions, or
in the assets of the Partnership, senior to the Partnership Preferred
Securities); or (y) the dissolution, winding-up or termination of the
Partnership, other than (1) in connection with the occurrence of a Partnership
Special Event or (2) as described under Sections 11.11 and 13.2 of this
Agreement, then the Holders of outstanding Partnership Preferred Securities will
be entitled to vote on such amendment or proposal of the General Partner (but
not on any other amendment or proposal) as a class and such amendment or
proposal shall not be effective except with the approval of Holders of a
Majority in Liquidation Preference of such outstanding Partnership Preferred
Securities having a right to vote on the matter; provided, however, that if the
Property Trustee on behalf of the Trust is the Holder of the Partnership
Preferred Securities, any such amendment or proposal not excepted by (1) or (2)
above shall not be effective without the prior or concurrent approval of the
Holders of a majority in liquidation preference of the outstanding Trust
Preferred Securities having a right to vote on such matters; provided, further,
that no such approval shall be required if the dissolution, winding-up or
termination of the Partnership is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the dissolution,
winding-up, liquidation or termination of the Company.
(2) The Holders of a Majority in Liquidation Preference of
Partnership Preferred Securities may, by vote, on behalf of the Holders of all
of the Partnership Preferred Securities, waive any past Partnership Enforcement
Event with respect to the Partnership Preferred
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Securities and its consequences; provided, that if the underlying Investment
Event of Default:
(A) is not waivable under the related Affiliate Investment Instrument,
such Partnership Enforcement Event shall also not be waivable; or
(B) requires the consent or vote of the Holders of greater than a
majority in principal amount or liquidation preference of the
Affiliate Investment Instruments (a "Super Majority") to be waived
under the related Affiliate Investment Instrument, the Partnership
Enforcement Event may only be waived by the vote of the Holders of
the relevant Super Majority in liquidation preference of the
Partnership Preferred Securities.
Upon such waiver, any such Partnership Enforcement Event shall cease to exist,
and shall be deemed to have been cured, for every purpose of this Agreement, but
no such waiver shall extend to any subsequent or other Partnership Enforcement
Event or impair any right consequent thereon.
(3) A waiver of an Investment Event of Default by the Special
Representative, acting at the direction of the Holders of the Partnership
Preferred Securities, constitutes a waiver of the corresponding Partnership
Enforcement Event.
(iii) GENERAL VOTING. (1) The General Partner shall not (i) direct
the time, method and place of conducting any proceeding for any remedy
available, (ii) waive any Investment Event of Default that is waivable under the
Affiliate Investment Instruments, (iii) exercise any right to rescind or annul a
declaration that the principal of any Affiliate Investment Instruments that are
debt instruments shall be due and payable, (iv) waive the breach of the covenant
by the Company in the Partnership Guarantee to restrict certain payments by the
Company, or (v) consent to any amendment, modification or termination of any
Affiliate Investment Instrument, where such consent shall be required from the
investor, without, in each case, obtaining the prior approval of the Holders of
at least a Majority in Liquidation Preference of the Partnership Preferred
Securities; provided, howev-
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er, that if the Property Trustee on behalf of the Trust is the Holder of the
Partnership Preferred Securities, such waiver, consent or amendment or other
action shall not be effective without the prior or concurrent approval of at
least a majority in liquidation amount of the outstanding Trust Preferred
Securities having a right to vote on such matters. The General Partner shall not
revoke any action previously authorized or approved by a vote of the Holders of
the Partnership Preferred Securities without the approval of a Majority in
Liquidation Preference of the Partnership Preferred Securities. The General
Partner shall notify all Holders of the Partnership Preferred Securities of any
notice of an Investment Event of Default received with respect to any Affiliate
Investment Instrument.
(2) Any required approval of Holders of Partnership Preferred
Securities may be given at a separate meeting of such Holders convened for such
purpose or pursuant to written consent. The General Partner will cause a notice
of any meeting at which Holders of Partnership Preferred Securities are entitled
to vote, or of any matter upon which the action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Partnership
Preferred Securities. Each such notice will include a statement setting forth
(x) the date of such meeting or the date by which such action is to be taken,
(y) a description of any matter proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matters upon which written consent
is sought and (z) instructions for the delivery of proxies or consents. No vote
or consent of the Holders of Partnership Preferred Securities will be required
for the Partnership to redeem and cancel Partnership Preferred Securities in
accordance with this Agreement.
(3) Notwithstanding that Holders of Partnership Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Partnership Preferred Securities at such time that are beneficially
owned by the Company or by any entity directly or indirectly controlled by, or
under direct or indirect common control with, the Company, shall not be entitled
to vote or consent and shall, for purposes of such vote or consent, be treated
as if they were not outstanding, except for Partnership Preferred Securities
purchased or acquired by the Company or its affiliates in
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connection with transactions effected by or for the account of customers of the
Company or any of its subsidiaries or in connection with the distribution or
trading of such Partnership Preferred Securities; provided, however, that
persons (other than affiliates of the Company) to whom the Company or any of its
subsidiaries have pledged Partnership Preferred Securities may vote or consent
with respect to such pledged Partnership Preferred Securities pursuant to the
terms of such pledge.
(4) Holders of the Partnership Preferred Securities shall have no
rights to remove or replace the General Partner.
(5) Holders of Partnership Preferred Securities shall have no
preemptive rights.
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS.
(a) All Partnership funds will be invested in the securities of
Investment Affiliates (the "Affiliate Investment Instruments") and Eligible Debt
Securities. No more than 99% of the Initial Partnership Proceeds will be used by
the Partnership to purchase the Initial Debentures meeting the criteria set
forth in this Section 7.1. The remaining funds from the Initial Partnership
Proceeds will be used to purchase Eligible Debt Securities in accordance with
the terms of this Agreement.
(b) The Partnership shall apply approximately 99% of the Initial
Partnership Proceeds to purchase (1) a debt instrument of the Company (the
"Initial Company Debenture") and (2) debt instruments of one or more eligible
controlled affiliates of the Company (such debt instruments collectively
referred to as the "Initial Affiliate Debentures"). The Initial Company
Debenture and the Initial Affiliate Debentures are collectively referred to as
the "Initial Debentures". The Initial Affiliate Debentures may each contain a
provision that allows an affiliate of the issuer of such Debenture to assume the
obligations of such issuer subject to certain conditions. The Partnership may
purchase the Initial
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Debentures only upon receipt of an opinion of the Independent Financial Advisor
to the effect that (i) if such Initial Debentures were to be rated, at least one
Rating Agency would rate all the Initial Debentures investment grade at the time
such Initial Debentures are purchased by the Partnership, (ii) the Company and
each Investment Affiliate which is a subsidiary of the Company would have been
capable of issuing and selling debt instruments with the same terms and
conditions as the applicable Initial Debentures to unrelated third party
investors, (iii) the terms and conditions of the Initial Debentures are
consistent with the terms and conditions of a public offering or a private
placement pursuant to Rule 144A under the Securities Act of 1933 of such Initial
Debentures and are no more favorable to the relevant Investment Affiliate than
could have been obtained by such Investment Affiliate from unrelated third party
investors pursuant to such a public offering or private placement of such
Initial Debentures. On the Closing Date, the Partnership shall invest at least
1% of such Initial Partnership Proceeds in Eligible Debt Securities. The terms
of the Initial Debentures will be as set forth in the Indentures attached hereto
as Exhibits A and B.
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP.
(a) The Partnership must at all times invest an amount equal to at
least 1% of the Initial Partnership Proceeds in Eligible Debt Securities.
(b) The Partnership may reinvest any payments it receives in respect
of its investments in (i) Eligible Debt Securities without limitation or (ii)
additional Affiliate Investment Instruments but only upon (A) the acceptance of
a written offer setting forth the terms and conditions on which an Investment
Affiliate would be willing to issue an Affiliate Investment Instrument to the
Partnership (an "Investment Offer") and (B) the receipt of an opinion of the
Independent Financial Advisor that the terms of such Affiliate Investment
Instrument set forth in such Investment Offer satisfy the Reinvestment Criteria
(as defined below).
(c) If the Independent Financial Advisor determines that the terms
of an Affiliate Investment Instrument (as set forth in the Investment Offer) do
not
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satisfy the Reinvestment Criteria, the Partnership shall be prohibited from
making any investment in such Affiliate Investment Instrument.
(d) Each Affiliate Investment Instrument shall satisfy the following
criteria (the "Reinvestment Criteria"): (i) the economic terms of each Affiliate
Investment Instrument shall be no less favorable to the Partnership than terms
that would otherwise be obtainable through a public offering or private
placement under Rule 144A of the Securities Act of 1933 of securities by the
requesting Investment Affiliate and the other terms and conditions of each
Affiliate Reinvestment Instrument are substantially similar to the terms and
conditions of similar securities and guarantees, if any, included therein, that
are offered to the public in a public offering or private placement under Rule
144A of the Securities Act of 1933 of such securities; (ii) the Partnership
shall not have held any Affiliate Investment Instruments of the Investment
Affiliate submitting the Investment Offer within the three-year period ending on
the date of the Investment Offer; (iii) there shall not have been a default on
any debt obligation of the Investment Affiliate submitting the Investment Offer
that was owned by the Partnership; (iv) no dividend arrearages shall have
existed on any preferred stock of the Investment Affiliate submitting the
Investment Offer that was owned by the Partnership; and (v) the Investment
Affiliate submitting the Investment Offer shall not be deemed to be an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.
(e) Any payments received by the Partnership in respect of its
investments that are not invested in additional Affiliate Investment
Instruments, may be reinvested only in Eligible Debt Securities (subject to
restrictions of applicable law, including the 1940 Act).
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ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS.
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner, in which shall be entered
fully and accurately all transactions and other matters relative to the
Partnership's investments. The books and records of the Partnership, together
with a certified copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal office of the General Partner and shall be
open to the inspection and examination of the Partners or their duly authorized
representatives for any proper purpose reasonably related to its Interest during
reasonable business hours.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the General Partner may, to the maximum extent permitted by applicable
law, keep confidential from the Partners any information with respect to the
Partnership, the disclosure of which the General Partner reasonably believes is
not in the best interests of the Partnership, or is adverse to the interests of
the Partnership, or which the Partnership or the General Partner is required by
law or by an agreement with any Person to keep confidential.
(c) (i) For so long as the Partnership Preferred Securities are held
by the Property Trustee on behalf of the Trust, within one month after the close
of each Fiscal Year, the General Partner shall transmit to each Partner a
statement indicating such Partner's share of each item of Partnership income,
gain, loss, deduction or credit, for United States federal income tax purposes,
for such Fiscal Year.
(ii) In the event that the Partnership Preferred Securities are no
longer held by the Property Trustee on behalf of the Trust, as soon as
reasonably possible after the close of the Fiscal Year, the General Partner
shall transmit to each Partner the statement referred to in Section 8.1(c)(i)
hereof.
Section 8.2 ACCOUNTING METHOD. For both financial and tax reporting
purposes, the books and
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records of the Partnership shall be kept on the accrual method of accounting
applied on a consistent basis and shall reflect all Partnership transactions.
Section 8.3 ANNUAL AUDIT. As soon as practical after the end of each
Fiscal Year, but not later than 90 days after such end, the financial statements
of the Partnership shall be audited by a firm of independent certified public
accountants selected by the General Partner in accordance with applicable law.
The cost of such audits will be an expense of the Partnership and shall be paid
by the General Partner.
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. Since
the Trust is being formed solely to facilitate a direct investment in the
Partnership Preferred Securities, the Partnership hereby agrees, at any time
while the Property Trustee is the Holder of any Partnership Preferred
Securities, to pay all the expenses of the Trust, including, but not limited to,
any taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed on the Trust by the United States, or any other
domestic taxing authority, so that the net amounts received and retained by the
Trust and the Property Trustee after paying such expenses will be equal to the
amounts the Trust and the Property Trustee would have received had no such costs
or expenses been incurred by or imposed on the Trust. The General Partner shall
be liable for, and shall pay all such expenses solely out of its own funds. In
addition, if the Partnership is required to pay 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, then, in
any case, the General Partner will pay such taxes, duties, assessments or other
governmental charges out of its own funds.
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES. In connection
with the offering, sale and issuance of the Partnership Preferred Securities by
the Partnership, the General Partner shall:
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(a) pay all costs and expenses of the Partnership (including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of the Partnership Preferred
Securities (including commissions to the underwriters in connection therewith)
the fees and expenses of the Special Representatives (if any), and the costs and
expenses relating to the operation of the Partnership, including, without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses; and
(b) be primarily and fully liable for any indemnification
obligations arising with respect to this Agreement.
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS. The Limited Partners shall not participate
in the management or control of the Partnership's investment activity, property
or other assets, nor shall the Limited Partners engage in any activities for the
Partnership, nor shall the Limited Partners have the power to act for or bind
the Partnership, such powers being vested solely and exclusively in the General
Partner (and, upon appointment, and to the extent set forth herein, the Special
Representative). The Limited Partners shall have such rights as are set forth
herein and in the Partnership Guarantee. The Limited Partners shall have no
interest in the properties or assets of the General Partner, or any equity
therein, or in any proceeds of any sales thereof (which sales shall not be
restricted in any respect), by virtue of acquiring or owning an Interest in the
Partnership.
Section 10.2 LIABILITY. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.
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Section 10.3 PRIORITY. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11.1 AUTHORITY. Subject to the provisions of Section
6.2(h)(i) with respect to the Special Representative, the General Partner shall
have exclusive and complete authority and discretion to manage the operations
and affairs of the Partnership and to make all decisions regarding the
investment activity of the Partnership. Any action taken by the General Partner
shall constitute the act of and serve to bind the Partnership. In dealing with
the General Partner acting on behalf of the Partnership no Person shall be
required to inquire into the authority of the General Partner to bind the
Partnership. Persons dealing with the Partnership are entitled to rely
conclusively on the power and authority of the General Partner as set forth in
this Agreement.
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER. (a) Subject to
the provisions of Section 6.2(h)(i) with respect to the Special Representative,
the General Partner shall have all rights and powers of a general partner under
the Act, and shall have all authority, rights and powers in the management of
the Partnership's investment activity to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of this
Agreement, including by way of illustration but not by way of limitation, the
following:
(i) to secure the necessary goods and services required in
performing the General Partner's duties for the Partnership;
(ii) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights under
the Affiliate Investment Instruments and the Partnership
Guarantee;
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(iii) to issue Partnership Preferred Securities and to admit Limited
Partners in connection therewith in accordance with this Agreement;
(iv) to act as registrar and transfer agent for the Partnership
Preferred Securities or designate an entity to act as registrar and
transfer agent;
(v) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to Distributions and voting rights and to make determinations as
to the payment of Distributions, and make or cause to be made all other
required payments to Holders of the Partnership Preferred Securities and
to the General Partner;
(vi) to open, maintain and close bank accounts and to draw checks
and other orders for the payment of money;
(vii) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or
against the Partnership;
(viii) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(ix) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Partnership's valid existence,
rights, franchises and privileges as a limited partnership under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Limited
Partners or to enable the Partnership to invest in the Affiliate
Investment Instruments and Eligible Debt Securities;
(x) to take all action not inconsistent with applicable law, the
Certificate or this Agreement, that the General Partner or, upon
appointment pursuant to Section 6.2(h)(i), the Special Representative
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determines in its sole discretion to be necessary or desirable to ensure,
as long as such action does not adversely affect the interests of the
Partnership Preferred Security Holders, or cause (i) the Partnership to be
deemed to be an "investment company" required to be registered under the
1940 Act, (ii) any Initial Debenture (or any subsequent Affiliate
Investment Instrument that is intended to be classified as debt) to not be
treated as indebtedness for United States federal income tax purposes, or
(iii) the Partnership to be treated as an association, or as a publicly
traded partnership, taxable as a corporation;
(xi) to cause the Partnership to enter into and perform the Purchase
Agreement and the Partnership Preferred Securities Purchase Agreement and
to purchase Eligible Debt Securities and Affiliate Investment Instruments,
as the case may be, without any further act, vote or approval of any
Partner; and
(xii) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary or desirable or incidental to the
foregoing.
(b) For so long as any Partnership Preferred Securities remain
outstanding, the General Partner covenants and agrees (i) subject to Section
12.1(b) hereof, to remain the sole general partner of the Partnership and to
maintain directly 100% ownership of the General Partner's interest in the
Partnership, which interest will at all times represent at least 1% of the total
capital of the Partnership, (ii) to cause the 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 and (iii)
to use its commercially reasonable efforts to ensure that the Partnership will
not be (A) an "investment company" for purposes of the 1940 Act or (B) an
association or a publicly traded partnership taxable as a corporation for United
States federal income tax purposes.
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY GENERAL PARTNER.
(a) The General Partner hereby as-
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sumes and shall be liable for the debts, obligations and liabilities of the
Partnership, including, but not limited to, any liabilities arising under the
Securities Act or the Exchange Act and all costs and expenses relating to the
investment by the Partnership in any Affiliate Investment Instruments (but not
any losses related to any non-payment with respect to such investments), and
agrees to pay to each Person to whom the Partnership is now or hereafter becomes
indebted or liable (the "Beneficiaries"), whether such indebtedness, obligations
or liabilities arise in contract, tort or otherwise (excluding payment
obligations of the Company to Holders of the Partnership Preferred Securities in
such Holders' capacities as Holders of such Partnership Preferred Securities,
such obligations being separately guaranteed under the Partnership Guarantee),
the full payment of such indebtedness and any and all liabilities, when and as
due. This Agreement is intended to be for the benefit of and to be enforceable
by all such Beneficiaries whether or not such Beneficiaries have received notice
hereof.
(b) The General Partner agrees to pay and be
responsible for:
(i) all costs and expenses of the Partnership including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of Partnership Preferred
Securities, the costs and expenses relating to the operation of the Partnership
(including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agents, duplicating, travel and telephone and other telecommunications expenses)
and costs and expenses incurred in connection with the acquisition, financing,
and disposition of the Partnership's assets; and
(ii) any and all taxes (other than Federal, state and local
withholding taxes) and all liabilities, costs and expenses with respect to such
taxes of the Partnership.
Section 11.4 LIABILITY. Except as expressly set forth in this
Agreement or in the Guarantee Agreements, (a) the General Partner shall not be
personally
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liable for the return of any portion of the capital contributions (or any return
thereon) of the Limited Partners; (b) the return of such capital contributions
(or any return thereon) shall be made solely from assets of the Partnership; and
(c) the General Partner shall not be required to pay to the Partnership or to
any Limited Partner any deficit in any Limited Partner's Capital Account upon
dissolution, winding up or otherwise. Other than as expressly provided in this
Agreement or under the Act, no Limited Partner shall have the right to demand or
receive property other than cash for its respective Interest in the Partnership.
The General Partner shall be liable to an unlimited extent for the debts and
other obligations of the Partnership.
Section 11.5 OUTSIDE ACTIVITIES. Any Partner or Affiliate thereof
may engage in or possess an interest in other ventures of any nature or
description, independently or with others, similar or dissimilar to the
activities of the Partnership, and the Partnership and the Partners shall have
no rights by virtue of this Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the activities of the Partnership, shall not be deemed
wrongful or improper. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership even if such
opportunity is of a character that, if presented to the Partnership, could be
taken by the Partnership, and any Partner or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity.
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS. Anything in this
Agreement to the contrary notwithstanding, the General Partner shall not cause
or permit the Partnership to:
(i) acquire any assets other than as expressly provided
herein;
(ii) do any act which would make it impractical or impossible
to carry on the ordinary activity of the Partnership as set forth in
Section 2.3;
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(iii) possess Partnership property for other than a
Partnership purpose;
(iv) admit a Person as a Partner, except as expressly
provided in this Agreement;
(v) make any advances of funds to the General Partner or its
Affiliates, other than such as represented by the Affiliate Investment
Instruments;
(vi) perform any act that would subject any Limited Partner
to liability as a general partner in any jurisdiction;
(vii) engage in any activity that is not consistent with the
purposes of the Partnership, as set forth in Section 2.3;
(viii) without the written consent of the Holders of 66-2/3%
in liquidation preference of the Partnership Preferred Securities, have an
order for relief entered with respect to the Partnership or commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of the Partnership's property, or
make any assignment for the benefit of creditors of the Partnership; or
(ix) borrow money or become liable for the borrowings of any
third party or to engage in any financial or other trade or business.
Section 11.7 EXCULPATION. (a) No Partnership Indemnified Person
shall be liable, responsible or accountable in damages or otherwise to the
Partnership or any Partnership Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Partnership Indemnified Person in good faith on behalf of the Partnership and in
a manner such Partnership Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Partnership Indemnified Person by
this Agreement or by law,
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except that a Partnership Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Partnership Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
(b) A Partnership Indemnified Person shall be fully protected in
relying in good faith upon the records of the Partnership and upon such
information, opinions, reports or statements presented to the Partnership by any
Person as to matters the Partnership Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Partnership, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which distributions to Partners might
properly be paid.
Section 11.8 FIDUCIARY DUTY. (a) To the extent that, at law or in
equity, a Partnership Indemnified Person has duties (including fiduciary duties)
and liabilities relating thereto to the Partnership or to any other Partnership
Covered Person, a Partnership Indemnified Person acting under this Agreement
shall not be liable to the Partnership or to any other Partnership Covered
Person for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of a Partnership Indemnified Person otherwise existing at law or in
equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Partnership Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Partnership Covered Persons, or
(ii) whether this Agreement or any other agreement contemplated herein or
therein provides that a Partnership Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Partnership or
any Partner, the Partnership Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the
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benefits and burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Partnership Indemnified
Person, the resolution, action or term so made, taken or provided by the
Partnership Indemnified Person shall not constitute a breach of this Agreement
or any other agreement contemplated herein or of any duty or obligation of the
Partnership Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Agreement a Partnership Indemnified Person is
permitted or required to make a decision (i) in its "discretion" or under a
grant of similar authority, the Partnership Indemnified Person shall be entitled
to consider such interests and factors as it desires, including its own
interest, and shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Partnership or any other Person, or (ii) in
its "good faith" or under another express standard, the Partnership Indemnified
Person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or by applicable law.
Section 11.9 INDEMNIFICATION. (a) To the fullest extent permitted by
applicable law, the Partnership shall indemnify and hold harmless each
Partnership Indemnified Person from and against any loss, damage or claim
incurred by such Partnership Indemnified Person by reason of any act or omission
performed or omitted by such Partnership Indemnified Person in good faith on
behalf of the Partnership and in a manner such Partnership Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Partnership Indemnified Person by this Agreement, except that no Partnership
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Partnership Indemnified Person by reason of
gross negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 11.9 shall be provided
out of and to the extent of Partnership assets only, and no Partnership Covered
Person shall have any personal liability on account thereof.
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(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Partnership Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Partnership Indemnified Person to repay such
amount if it shall be determined that the Partnership Indemnified Person is not
entitled to be indemnified as authorized in Section 11.9(a).
Section 11.10 TAX MATTERS
(a) For purposes of section 6231(a)(7) of the Code, the "Tax Matters
Partner" shall be the Company as long as it remains the general partner of the
Partnership. The Tax Matters Partner shall keep the Limited Partners fully
informed of any inquiry, examination or proceeding.
(b) Neither the Partnership, nor the Tax Matters Partner on behalf
of the Partnership, shall make an election under section 754 of the Code.
(c) The General Partner and the Partnership Preferred Security
Holders acknowledge that they intend, for United States federal income tax
purposes, that the Partnership shall be treated as a "partnership" (other than a
publicly traded partnership taxable as a corporation) and that the General
Partner and the Partnership Preferred Security Holders shall be treated as
"partners" of the Partnership.
(d) The General Partner shall retain, at the expense of the
Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all United States federal,
state, local or other tax and information returns of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar forms or
schedules.
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS. The
Partnership may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, any corporation or other body, except as
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permitted pursuant to this Section 11.11. The Partnership may, without the
consent of the Holders of the Partnership Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by a limited partnership, limited
liability company or trust organized as such under the laws of any state of the
United States of America, provided that (i) such successor entity either (x)
expressly assumes all of the obligations of the Partnership under the
Partnership Preferred Securities or (y) substitutes for the Partnership
Preferred Securities other securities having substantially the same terms as the
Partnership Preferred Securities (the "Partnership Successor Securities") so
long as the Partnership Successor Securities are not junior to any other equity
securities of the successor entity, with respect to participation in the profits
and distributions, and in the assets, of the successor entity, (ii) the
Investment Affiliates expressly acknowledge such successor entity as the holder
of the Affiliate Investment Instruments, (iii) the Partnership Preferred
Securities continue to be or any Partnership Successor Securities are or will be
listed, upon notification of issuance, on any national securities exchange or
other organization on which the Partnership Preferred Securities, if so listed,
are then listed, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Trust Preferred Securities (or, in the event that the Trust
is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities (including any Partnership Successor Securities)) to be
downgraded by any nationally recognized statistical securities rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the powers, preferences and other special rights of the
holders of the Trust Preferred Securities or the Holders of the Partnership
Preferred Securities (including any Partnership Successor Securities)) in any
material respect (other than, in the case of the Partnership Preferred
Securities, with respect to any dilution of the Holders' interest in the new
resulting entity), (vi) such successor entity has a purpose substantially
identical to that of the Partnership, (vii) prior to such merger, consolidation,
amalgamation or replacement, the Company has received an opinion of nationally
recognized independent counsel to the Partnership experienced in such matters to
the effect that (A) such successor entity will be treated as a "partnership" for
United States federal income tax purposes and
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not as an association or a publicly traded partnership taxable as a corporation,
(B) such merger, consolidation, amalgamation or replacement will not cause the
Trust to be classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax purposes, (C)
following such merger, consolidation, amalgamation or replacement, the Company
and such successor entity will be in compliance with the 1940 Act without
registering thereunder as an investment company, and (D) such merger,
consolidation, amalgamation or replacement will not adversely affect the limited
liability of the Holders of the Partnership Preferred Securities and (viii) the
Company guarantees the obligations of such successor entity under the
Partnership Successor Securities at least to the extent provided by the
Partnership Guarantee.
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS.
(a) Partnership Preferred Securities shall be freely transferable by
a Holder.
(b) Except as provided in the next sentence, the General Partner may
not assign or transfer its Interest in the Partnership in whole or in part
unless, prior to such assignment or transfer, the General Partner has obtained
the consent of the Holders of not less than 66-2/3% in Liquidation Preference
of the Partnership Preferred Securities. The General Partner may assign or
transfer its Interest in the Partnership without such consent to an entity that
is the survivor of a merger or consolidation of the General Partner in a
transaction that meets the requirements of Section 11.11 and only if prior to
such assignment or transfer the Company has received an opinion of nationally
recognized independent tax counsel to the Partnership experienced in such
matters to the effect that after such assignment or transfer the Partnership
will continue to be treated as a partnership for United States federal income
tax purposes and will not be treated as an association or a publicly traded
partnership taxable as a corporation. The General Partner may transfer its
Interest to a wholly-owned direct or indirect subsidiary of the Company provided
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that (i) such entity expressly accepts such transfer of the obligations as
General Partner and (ii) prior to such transfer, the Company has received an
opinion of nationally recognized independent counsel to the Partnership
experienced in such matters to the effect that (A) the Partnership will be
treated as a partnership for United States federal income tax purposes, (B) such
transfer would not cause the Trust to be classified as an association taxable as
a corporation for United States federal income tax purposes, (C) following such
transfer, the Company and such successor entity will be in compliance with the
1940 Act without registering thereunder as an investment company, and (D) such
transfer will not adversely affect the limited liability of the holders of the
Partnership Preferred Securities. "Permitted Successor" shall mean an entity
that is an assignee or transferee of the Interest of the General Partner as
permitted by this Section 12.1(b). The admission of a Permitted Successor as a
general partner of the Partnership shall be effective upon the filing of an
amendment to the Certificate with the Secretary of State of the State of
Delaware which indicates that the Permitted Successor has been admitted as a
general partner of the Partnership. If the General Partner assigns its entire
Interest, the General Partner shall cease to be a general partner of the
Partnership simultaneously with the admission of the Permitted Successor as a
general partner of the Partnership. Any such Permitted Successor is hereby
authorized to and shall continue the business of the Partnership without
dissolution.
(c) Except as provided above, no Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Agreement. Any transfer or purported transfer of any Interest not made
in accordance with this Agreement shall be null and void.
Section 12.2 TRANSFER OF L.P. CERTIFICATES. The General Partner
shall provide for the registration of L.P. Certificates and of transfers of L.P.
Certificates. Upon surrender for registration of transfer of any L.P.
Certificate, the General Partner shall cause one or more new L.P. Certificates
to be issued in the name of the designated transferee or transferees. Every L.P.
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form
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satisfactory to the General Partner duly executed by the Partnership Preferred
Security Holder or his or her attorney duly authorized in writing. Each L.P.
Certificate surrendered for registration of transfer shall be cancelled by the
General Partner. A transferee of an L.P. Certificate shall be admitted to the
Partnership as a Limited Partner, shall become bound by this Agreement and shall
be entitled to the rights and subject to the obligations of a Partnership
Preferred Security Holder hereunder upon the receipt by the transferee of an
L.P. Certificate, which receipt shall be deemed to constitute a request by such
transferee that the books and records of the Partnership reflect such
transferee's admission as a limited partner. The transferor of an L.P.
Certificate, in whole, shall cease to be a Limited Partner at the time that the
transferee of such L.P. Certificate is admitted to the Partnership as a Limited
Partner in accordance with this Section 12.2.
Section 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED
PARTNERSHIP PREFERRED SECURITY HOLDERS. (a) DEFINITIVE L.P. CERTIFICATES. Unless
and until the Partnership issues a global L.P. Certificate pursuant to Section
12.4(a), the Partnership shall only issue definitive L.P. Certificates to the
Partnership Preferred Security Holders. (b) The Partnership may treat the Person
in whose name any L.P. Certificate shall be registered on the books and records
of the Partnership as the sole holder of such L.P. Certificate and of the
Partnership Preferred Securities represented by such L.P. Certificate for
purposes of receiving Distributions and for all other purposes whatsoever
(including without limitation, tax returns and information reports) and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such L.P. Certificate or in the Partnership Preferred Securities
represented by such L.P. Certificate on the part of any other Person, whether or
not the Partnership shall have actual or other notice thereof.
Section 12.4 BOOK ENTRY PROVISIONS.
(a) General. The provisions of this Section 12.4 shall apply only in
the event that the Partnership Preferred Securities are distributed to the
Holders of Trust Securities in connection with the involuntary or voluntary
dissolution, winding up or liquidation of the
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Trust as a result of the occurrence of a Trust Special Event. Upon the
occurrence of such event, a global L.P. Certificate representing the Book-Entry
Interests shall be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Partnership and any previously issued and still outstanding
definitive L.P. Certificates shall be of no further force and effect. The global
L.P. Certificate shall initially be registered on the books and records of the
Partnership in the name of Cede & Co., the nominee of DTC, and no Holder of a
Partnership Preferred Security will receive a new definitive L.P. Certificate
representing such Holder's interests in such L.P. Certificate, except as
provided in Section 12.4(c). In connection with the involuntary or voluntary
dissolution, winding up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, Cede & Co., the nominee of DTC, shall
automatically be admitted to the Partnership as a Limited Partner. Receipt of
the global L.P. Certificate shall be deemed to constitute a request by Cede &
Co., the nominee of DTC, that the books and records of the Partnership reflect
its admission as a Limited Partner. Unless and until new definitive, fully
registered L.P. Certificates (the "Definitive L.P. Certificates") have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c):
(i) The provisions of this Section shall be in full force and
effect;
(ii) The Partnership, the General Partner and any Special
Representative shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of Distributions,
Redemption Price and liquidation proceeds on the L.P. Certificates and
receiving approvals, votes or consents hereunder) as the Partnership
Preferred Security Holder and the sole holder of the L.P. Certificates and
shall have no obligation to the Partnership Preferred Security Owners;
(iii) None of the Partnership, the Trust, the General Partner, any
Special Representative or any agents of any of the foregoing shall have
any liability or responsibility for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a global
L.P. Certificate for such beneficial ownership interests
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or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests; and
(iv) Except as provided in Section 12.4(c) below, the Partnership
Preferred Security Owners will not be entitled to receive physical
delivery of the Partnership Preferred Securities in definitive form and
will not be considered Holders thereof for any purpose under this
Agreement, and no global L.P. Certificate representing Partnership
Preferred Securities shall be exchangeable, except for another global L.P.
Certificate of like denomination and tenor to be registered in the name of
DTC or Cede & Co., or to a successor Depositary or its nominee.
Accordingly, each Partnership Preferred Security Owner must rely on the
procedures of DTC or if such person is not a Participant, on the
procedures of the Participant through which such person owns its interest
to exercise any rights of a Holder under the Agreement.
(b) NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Partnership Preferred Security Holders is required under
this Agreement, unless and until Definitive L.P. Certificates shall have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c),
the General Partner and any Special Representative shall give all such notices
and communications specified herein to be given to the Partnership Preferred
Security Holders to the Clearing Agency, and shall have no obligations to the
Partnership Preferred Security Owners.
(c) DEFINITIVE L.P. CERTIFICATES. Definitive L.P. Certificates shall
be prepared by the Partnership and exchangeable for the global L.P. Certificate
or L.P. Certificates if and only if (i) the Depositary notifies the Company that
it is unwilling or unable to continue its services as a securities depositary
and no successor depositary shall have been appointed, (ii) the Depositary, at
any time, ceases to be a clearing agency registered under the Exchange Act at
such time as the Depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, or (iii) the
Company, in its sole discretion, determines that such global L.P. Certificate
shall be so
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exchangeable. Upon surrender of the global L.P. Certificate or L.P. Certificates
representing the Book-Entry Interests by the Clearing Agency, accompanied by
registration instructions, the General Partner shall cause Definitive L.P.
Certificates to be delivered to Partnership Preferred Security Owners in
accordance with the instructions of the Clearing Agency. Neither the General
Partner nor the Partnership shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Any Person receiving a Definitive L.P. Certificate in
accordance with this Section 12.4 shall be admitted to the Partnership as a
Limited Partner upon receipt of such Definitive L.P. Certificate and shall be
registered on the books and records of the Partnership as a Partnership
Preferred Security Holder. The Clearing Agency or the nominee of the Clearing
Agency, as the case may be, shall cease to be a Limited Partner under this
Section 12.4(c) at the time that at least one additional Person is admitted to
the Partnership as a Limited Partner in accordance herewith. The Definitive L.P.
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as may be required by any national securities exchange on which
Partnership Preferred Securities may be listed and is reasonably acceptable to
the General Partner, as evidenced by its execution thereof.
Section 12.5 REGISTRAR, TRANSFER AGENT AND
PAYING AGENT.
(a) The General Partner will act as Registrar, Transfer Agent and
Paying Agent for the Partnership Preferred Securities for so long as the
Partnership Preferred Securities are held by the Trust or, if the Trust is
liquidated in connection with a Trust Special Event, for so long as the
Partnership Preferred Securities remain in book-entry only form.
(b) Except in such case where the General Partner shall act as
Registrar or Paying Agent pursuant to Section 12.5(a) hereof, the Partnership
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Partnership Preferred Securities may be presented
for registration of transfer or for exchange ("Registrar") and (ii) an office or
agency where Partnership Preferred Securities may be
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presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Partnership Preferred Securities and of their transfer and exchange. The
Partnership may appoint the Registrar and the Paying Agent and may appoint one
or more co-registrars and one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Partnership may change any Paying Agent, Registrar or
co-registrar without prior notice to any Holder. If the Partnership fails to
appoint or maintain another entity as Registrar or Paying Agent, the General
Partner shall act as such.
(c) Registration of transfers of Partnership Preferred Securities
shall be effected without charge by or on behalf of the Partnership, but upon
payment (with the giving of such indemnity as the Partnership or the General
Partner may require) in respect of any tax or other governmental charges that
may be imposed.
(d) The Partnership will not be required to register or cause to be
registered the transfer of Partnership Preferred Securities after such
Partnership Preferred Securities have been called for redemption.
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS. The General Partner shall not
at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the General Partner retires or withdraws in
contravention of this Section 13.1, it shall indemnify, defend and hold harmless
the Partnership and the other Partners from and against any losses, expenses,
judgments, fines, settlements or damages suffered or incurred by the Partnership
or such other Partners arising out of or resulting from such retirement or
withdrawal.
Section 13.2 DISSOLUTION OF THE PARTNERSHIP.
(a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. The death, withdrawal,
bankruptcy or dissolution of a Limited Partner, or the occurrence of
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any other event which terminates the Interest of a Limited Partner in the
Partnership, shall not, in and of itself, cause the Partnership to be dissolved
and its affairs wound up. To the fullest extent permitted by applicable law,
upon the occurrence of any such event, the General Partner may, without any
further act, vote on approval of any Partner, admit any Person to the
Partnership as an additional or substitute limited partner in the Partnership,
which admission shall be effective as of the date of the occurrence of such
event, and the business of the Partnership shall be continued without
dissolution.
(b) The Partnership shall be dissolved and its affairs shall be
wound up upon the earliest to occur of any of the following events:
(i) upon the bankruptcy or insolvency of the General Partner;
(ii) upon the assignment by the General Partner of its entire
interest in the Partnership when the assignee is not admitted to the
Partnership as a general partner of the Partnership in accordance with
this Agreement, or the filing of a certificate of dissolution or its
equivalent with respect to the General Partner, or the revocation of the
General Partner's charter and the expiration of 90 days after the date of
notice to the General Partner of revocation without a reinstatement of its
charter, or if any other event occurs that causes the General Partner to
cease to be a general partner of the Partnership under the Delaware
Partnership Act, unless the business of the Partnership is continued in
accordance with the Delaware Partnership Act;
(iii) the Partnership has redeemed or otherwise purchased all of
the Partnership Preferred Securities;
(iv) upon the entry of a decree of judicial dissolution under
Section 17-802 of the Act; or
(v) the written consent of all Partners.
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(c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.
Section 13.3 LIQUIDATION.
(a) In the event of the dissolution of the Partnership for any
reason, the General Partner (or, if the Partnership is dissolved pursuant to
Section 13.2(b)(i) or (ii), then a liquidating agent appointed by Holders of not
less than 66 2/3% in Liquidation Preference of the Partnership Preferred
Securities (the General Partner or such Person so appointed is hereinafter
referred to as the "Liquidator")) shall commence to wind up the affairs of the
Partnership and to liquidate the Partnership's assets; provided, however, that a
reasonable time shall be allowed for the orderly liquidation of the assets of
the Partnership and the satisfaction of liabilities to creditors so as to enable
the Partners to minimize the normal losses attendant upon liquidation. The
Partners shall continue to share all income, losses and distributions during the
period of liquidation in accordance with Articles IV and V. Subject to the
provisions of this Article XIII, the Liquidator shall have full right and
unlimited discretion to determine the time, manner and terms of any sale or
sales of Partnership property pursuant to such liquidation, giving due regard to
the activity and condition of the relevant market and general financial and
economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.
(c) Notwithstanding the foregoing, a Liquidator that is not a
General Partner shall not, by virtue of acting in such capacity, be deemed a
Partner in this Partnership and shall not have any of the economic interests in
the Partnership of a Partner; and such Liquidator may be compensated for its
services to the Partnership at
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normal customary and competitive rates for its services to the Partnership as
reasonably determined by all the Limited Partners.
Section 13.4 DISTRIBUTION IN LIQUIDATION. The proceeds of
liquidation shall be applied in the following order of priority (and without
regard to the non-mandatory provisions of Section 17-804 of the Act):
(i) first, to creditors of the Partnership, including Partners who
are creditors, to the extent otherwise permitted by law, in satisfaction
of the liabilities of the Partnership (whether by payment or the making of
reasonable provisions for payment thereof), other than liabilities for
distributions (including Distributions) to Partners;
(ii) second, following any allocations required under Section 4.2(e)
of the Agreement, to the Limited Partners, an amount equal to the
aggregate liquidation preference of their Partnership Preferred
Securities, plus the amount of Distributions (including any Compounded
Distributions) that are accumulated and unpaid as of the date of such
liquidating distribution; and
(iii) thereafter, to the General Partner.
Section 13.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner shall
look solely to the assets of the Partnership for all distributions with respect
to the Partnership and such Partner's capital contribution (including returns
thereof), and such Partner's share of profits or losses thereof, and shall have
no recourse therefor (upon dissolution or otherwise) against the General
Partner, except under the Partnership Guarantee. No Partner shall have any right
to demand or receive property other than cash upon dissolution and termination
of the Partnership.
Section 13.6 TERMINATION. The Partnership shall terminate when all
of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 13.4 and the Liquidator has
executed and caused to be filed a certificate of cancellation of the
Partnership.
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ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS. Except as provided by Section 3.3(b) and
Section 6.2(i), this Agreement may be amended by, and only by, a written
instrument executed by the General Partner without the consent of any Limited
Partner; provided, however, that no amendment shall be made, and any such
purported amendment shall be void and ineffective, to the extent the result
thereof would be to (A) cause the Partnership to be treated for United States
federal income tax purposes as an association or a publicly traded partnership
taxable as a corporation, (B) require the Partnership to register under the 1940
Act or (C) materially adversely affect the rights, privileges or preferences of
the Partnership Preferred Securities. Notwithstanding any provision to the
contrary, in the event of (i) a liquidation of the Trust for any reason or (ii)
any other distribution which effectively causes Partnership Preferred Securities
to be distributed to Holders of Trust Preferred Securities, the General Partner
may amend this Agreement without the consent of the Limited Partners to provide
for (A) orderly dissemination, purchase, sale, exchange and replacement of such
Partnership Preferred Securities, (B) all other matters to the extent required
by or desirable under then applicable law and (C) such other matters reasonably
incidental or related thereto; provided, however, that no such amendment may
materially adversely affect the rights, privileges, or preferences of the
Partnership Preferred Securities without the consent of a majority in interest
of the Partners so effected.
Section 14.2 AMENDMENT OF CERTIFICATE. In the event this Agreement
shall be amended pursuant to Section 14.1, the General Partner shall amend the
Certificate to reflect such change if it deems such amendment of the Certificate
to be necessary or appropriate.
Section 14.3 MEETINGS OF PARTNERS.
(a) Meetings of the Limited Partners who are Holders may be called
at any time by the General Partner to consider and act on any matter on which
Limited Partners are entitled to act under the terms of this Agreement or the
Act. The General Partner shall call a meeting of Holders if directed to do so by
Holders of no less
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than 10% in Liquidation Preference as permitted by this Agreement. Such
direction shall be given by delivering to the General Partner a request in
writing stating that the signing Limited Partners desire to call a meeting and
indicating the general or specific purpose for which the meeting is to be
called. Any Limited Partners calling a meeting shall specify in writing the L.P.
Certificates held by the Limited Partners exercising the right to call a meeting
and only those specified Interests shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met. Except to the extent otherwise provided in this
Agreement, the following provisions shall apply to meetings of Partners.
(b) Notice of any such meeting shall be given to all Limited
Partners having a right to vote thereat not less than seven Business Days nor
more than 60 days prior to the date of such meeting. Each such notice shall set
forth the date, time and place of the meeting, a description of any matter on
which Holders are entitled to vote and instructions for the delivery of proxies
or written consents.
(c) Any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by Limited Partners owning not less than the
minimum Interests that would be necessary to authorize or take such action at a
meeting in which all Limited Partners having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners entitled to vote who have not consented
in writing. The General Partner may provide that any written ballot submitted to
the Limited Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within a specified time.
(d) Each Partner may authorize any Person to act for it by proxy on
all matters as to which a Partner is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Partner or its attorney-in-fact. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at
61
<PAGE>
the pleasure of the Partner executing it. Except as otherwise provided herein,
or pursuant to Section 14.3(f), all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Partnership were a Delaware corporation and the Limited Partners were
stockholders of a Delaware corporation.
(e) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
(f) The General Partner may establish all other reasonable
procedures relating to meetings of Limited Partners or the giving of written
consents, in addition to those expressly provided, including notice of time,
place or purpose of any meeting at which any matter is to be voted on by any
Partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES. All notices provided for in this Agreement
shall be in writing, and shall be delivered or mailed by first class or
registered or certified mail or, with respect to the Partnership and General
Partner, telecopied, as follows:
(a) if given to the Partnership, in care of
the General Partner at the Partnership's mailing
address set forth below:
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
62
<PAGE>
(b) if given to the General Partner, at its mailing address set
forth below:
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
(c) if given to any other Partner at the address set forth on the
books and records of the Partnership.
Section 15.2 POWER OF ATTORNEY. Each Holder of a Partnership
Preferred Security does hereby constitute and appoint the General Partner, and
if applicable, any Special Representative appointed pursuant to Section
6.2(h)(i) of this Agreement, as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign, deliver
and file (a) any amendment of the Certificate required because of an amendment
of this Agreement or in order to effect any change in the Partnership, (b) this
Agreement, (c) any amendments to this Agreement and (d) all such other
instruments, documents and certificates which from time to time may be required
by the laws of the United States of America, the State of Delaware or any other
jurisdiction, or any political subdivision or agency thereof, to effectuate,
implement and continue the valid and subsisting existence of the Partnership or
to dissolve the Partnership for any other purpose consistent with this Agreement
and the transactions contemplated hereby.
The power of attorney granted hereby is coupled with an interest and
shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination, or bankruptcy of the Holder granting the
same or the transfer of all or any portion of such Holder's Interest and (b)
extend to such Holder's successors, assigns and legal representatives.
Section 15.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties. It supersedes any prior agreement or understandings
among them, and it may not be modified or amended in any manner other than as
set forth herein.
63
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Section 15.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY
SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 15.5 EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.
Section 15.6 PRONOUNS AND NUMBER. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.
Section 15.7 CAPTIONS. Captions, headings, and subheadings contained
in this Agreement are included for convenience and identification purposes only
and in no way define, limit or extend the scope or intent of this Agreement or
any provision herein.
Section 15.8 PARTIAL ENFORCEABILITY. If any provision of this
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 15.9 COUNTERPARTS. This Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of the signature of each of the Partners to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
Section 15.10 WAIVER OF PARTITION. Each Partner hereby irrevocably
waives any and all rights (if any) that such Partner may have to maintain any
action for partition of any of the Partnership's property.
64
<PAGE>
Section 15.11 REMEDIES. The failure of any party to seek redress for
violation of, or to insist upon the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation. The
rights and remedies provided by this Agreement are cumulative and the use of any
one right or remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in addition to any
other rights the parties may have by law, statute, ordinance or otherwise.
65
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.
GENERAL PARTNER:
ULTRAMAR DIAMOND SHAMROCK
CORPORATION,
a Delaware corporation
By:
-------------------------------------
Name:
Title:
INITIAL LIMITED PARTNER:
H. PETE SMITH
By:
-------------------------------------
Name: H. Pete Smith
66
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SCHEDULE 1
S-1
<PAGE>
ANNEX A
FORM OF L.P. CERTIFICATE
[IF THE PARTNERSHIP PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT: This Partnership Preferred Security is a Global Certificate within the
meaning of the Partnership Agreement hereinafter referred to and is registered
in the name of The Depository Trust Company (the "Depositary") or a nominee of
the Depositary. This Partnership Preferred Security is exchangeable for
Partnership Preferred Securities registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances described in the
Partnership Agreement and no transfer of this Partnership Preferred Security
(other than a transfer of this Partnership Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Partnership Preferred Security is presented by an
authorized representative of The Depository Trust Company (55 Water Street, New
York, New York), a New York corporation, to the Partnership or its agent for
registration of transfer, exchange or payment, and any Partnership Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary and any payment
hereon is made to Cede & Co. or such other entity as is requested by an
authorized representative of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]
A-1
<PAGE>
PS-1 [ ]
Certificate Evidencing Partnership Preferred Securities
of
UDS FUNDING II, L.P.
__% Partnership Preferred Securities
(liquidation preference $25 per Partnership Preferred Security)
UDS FUNDING II, L.P., a limited partnership formed under the laws of
the State of Delaware (the "Partnership"), hereby certifies that The Bank of New
York, a property trustee pursuant to the Amended and Restated Declaration of
Trust of UDS Capital II, dated as of ___________, 1997 (the "Holder") is the
registered owner of preferred securities of the Partnership representing limited
partner interests in the Partnership designated the __% Partnership Preferred
Securities (liquidation preference $25 per Partnership Preferred Security) (the
"Partnership Preferred Securities"). The Partnership Preferred Securities are
freely transferable on the books and records of the Partnership, in person or by
a duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Partnership
Preferred Securities represented hereby are set forth in, issued under and shall
in all respects be subject to the provisions of the Amended and Restated
Agreement of Limited Partnership dated as of ____________, 1997, as the same may
be amended from time to time (the "Partnership Agreement"). Capitalized terms
used herein but not defined shall have the meaning given them in the Partnership
Agreement. The Holder is entitled to the benefits of the Partnership Guarantee
to the extent provided therein. The Partnership will provide a copy of the
Partnership Agreement and the Partnership Guarantee to a Holder without charge
upon written request to the Partnership at its principal place of business.
Upon receipt of this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Partnership Agreement and is
entitled to the benefits thereunder. Each Holder of a Partnership Preferred
Security, by acceptance of this Certificate and each Certificate owner, by
acquisition of a beneficial interest in a Certificate, agrees to treat the
Debentures, and any other Affiliate Investment Instruments that are treated as
debt instruments by the relevant Investment Affiliate and by the Partnership, as
indebtedness for United States federal income tax purposes.
A1-1
<PAGE>
IN WITNESS WHEREOF, the Partnership has executed this certificate
this __ day of __________, 1997.
UDS FUNDING II, L.P.
By: ULTRAMAR DIAMOND SHAMROCK CORPORATION,
as General Partner
By:
-------------------------------------
Name:
Title:
(See reverse for additional terms)
A1-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Partnership Preferred Security will be
fixed at a rate per annum of __% of the stated liquidation preference of $25 per
Partnership Preferred Security. Distributions not paid on the scheduled payment
date will accumulate and compound quarterly (to the extent permitted by
applicable law) at the rate of __% per annum. The term "Distributions" as used
herein shall mean ordinary cumulative distributions in respect of each Fiscal
Period together with any such Compounded Distributions. Distributions on the
Partnership Preferred Securities will only be made to the extent that the
Partnership has funds legally available for the payment of such distributions.
Amounts available to the Partnership for Distribution to the holders of the
Partnership Preferred Securities will be limited to payments received by the
Partnership from the Company and certain wholly owned subsidiaries on the
Initial Debentures and Affiliate Investment Instruments or from the Company on
the Partnership Guarantee or on the Eligible Debt Securities. Distributions on
the Partnership Preferred Securities will be paid only if, as and when declared
in the sole discretion of the Company, as the General Partner of the
Partnership. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.
Except as otherwise described herein, Distributions on the
Partnership Preferred Securities will be cumulative, will accumulate from the
date of initial issuance and will be payable quarterly in arrears, on March 31,
June 30, September 30 and December 31 of each year, commencing on __________,
1997, if, as and when declared by the General Partner in its sole discretion. If
the Trust Preferred Securities (or, if the Trust is liquidated, the Partnership
Preferred Securities) are in book-entry-only form, Distributions will be payable
to the Holders of record of Partnership Preferred Securities as they appear on
the books and records of the Partnership on the relevant record dates, which
will be one Business Day prior to the relevant payment dates. If the Trust or
the Property Trustee is the Holder of the Partnership Preferred Securities, all
Distributions of cash shall be made by wire transfer of same day funds to such
Holder by 10:00 a.m., New York City time, on the applicable Distribution Payment
Date. Distributions payable on any Partnership Preferred Securities that are not
punctually paid on any Distribution Payment Date will cease to be payable to the
Person in whose name such Partnership Preferred Securities are registered on the
relevant record date, and
A1-3
<PAGE>
such Distribution will instead be payable to the Person in whose name such
Partnership Preferred Securities are registered on the special record date or
other specified date for payment of such defaulted or accumulated Distribution.
If the Trust Preferred Securities (or, if the Trust is liquidated, the
Partnership Preferred Securities) are not in book-entry-only form, the relevant
record dates shall be the 15th day of the month of the relevant payment dates.
In the event that any date on which Distributions are payable is not a Business
Day, payment of such Distribution shall be made on the next succeeding day which
is a Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
The Partnership Preferred Securities shall be redeemable as
provided in the Partnership Agreement.
A1-4
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Partnership
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
___________________________________________________________________
________________________________________________________________________________
_________________________________________________ agent to transfer this
Partnership Preferred Security Certificate on the books of the Partnership. The
agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Partnership
Preferred Security Certificate)
A1-5
<PAGE>
EXHIBIT 4.11
====================================
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
UDS Capital I
Dated as of June __, 1997
====================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation........................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 6
SECTION 2.2 Lists of Holders of Securities........................... 6
SECTION 2.3 Reports by the Trust Preferred Guarantee
Trustee.................................................. 6
SECTION 2.4 Periodic Reports to Trust Preferred
Guarantee Trustee........................................ 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent................................................ 7
SECTION 2.6 Events of Default; Waiver................................ 7
SECTION 2.7 Event of Default; Notice................................. 7
SECTION 2.8 Conflicting Interests.................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred
Guarantee Trustee........................................ 8
SECTION 3.2 Certain Rights of Trust Preferred Guarantee
Trustee.................................................. 10
SECTION 3.3. Not Responsible for Recitals or Issuance
of Trust Preferred Securities Guarantee.................. 13
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee;
Eligibility.............................................. 13
SECTION 4.2 Appointment, Removal and Resignation
of Trust Preferred Guarantee Trustee..................... 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................ 15
SECTION 5.2 Waiver of Notice and Demand.............................. 15
<PAGE>
Page
----
SECTION 5.3 Obligations Not Affected................................. 15
SECTION 5.4 Rights of Holders........................................ 16
SECTION 5.5 Guarantee of Payment..................................... 17
SECTION 5.6 Subrogation.............................................. 17
SECTION 5.7 Independent Obligations.................................. 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................... 17
SECTION 6.2 Ranking.................................................. 18
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................. 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.............................................. 19
SECTION 8.2 Indemnification.......................................... 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................... 20
SECTION 9.2 Amendments............................................... 20
SECTION 9.3 Consolidations and Mergers............................... 20
SECTION 9.4 Notices.................................................. 21
SECTION 9.5 Benefit.................................................. 21
SECTION 9.6 Governing Law............................................ 22
ii
<PAGE>
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
This TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Trust
Preferred Securities Guarantee"), dated as of June __, 1997 is executed and
delivered by Ultramar Diamond Shamrock Corporation, a Delaware corporation (the
"Guarantor"), and The Bank of New York, a national banking association, as
trustee (the "Trust Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Trust Preferred Securities
(as defined herein) of UDS Capital I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of June __, 1997, among the trustees of the Issuer
named therein, Ultramar Diamond Shamrock Corporation, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof 6,000,000 Trust Originated
Preferred Securities, having an aggregate liquidation amount of $150,000,000,
designated the __% Trust Originated Preferred Securities (the "Trust Preferred
Securities");
WHEREAS, as incentive for the Holders to purchase the Trust
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Trust Preferred Securities Guarantee, to
pay to the Holders of the Trust Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein and;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Trust Common Securities Guarantee"), with substantially
identical terms to this Trust Preferred Securities Guarantee for the benefit of
the holders of the Trust Common Securities (as defined herein), except that if
the Guarantor is in default on any of its obligations under the Trust Preferred
Securities Guarantee, the Partnership Guarantee (as defined herein), or any
Investment Guarantee (as defined herein), or any default has occurred and is
continuing with respect to an Affiliate Investment Instrument (as defined
herein), the rights of holders of the Trust Common Securities to receive
Guarantee Payments under the Trust Common Securities Guarantee are subordinated,
to the extent and in the manner set forth in the Trust Common Securities
Guarantee, to the rights of Holders of Trust Preferred Securities to receive
Guarantee Payments under this Trust Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Trust Preferred Securities, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the
<PAGE>
Guarantor executes and delivers this Trust Preferred Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Capitalized terms used in this Trust Preferred Securities
Guarantee but not otherwise defined herein shall have the
meanings assigned to them in the Declaration or the
Partnership Agreement, as the case may be.
(c) a term defined anywhere in this Trust Preferred
Securities Guarantee has the same meaning throughout;
(d) all references to "the Trust Preferred Securities Guarantee"
or "this Trust Preferred Securities Guarantee" are to this
Trust Preferred Securities Guarantee as modified, supplemented
or amended from time to time;
(e) all references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Trust Preferred Securities Guarantee, unless otherwise
specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless
otherwise defined in this Trust Preferred Securities Guarantee
or unless the context otherwise requires; and
(g) a reference to the singular includes the plural
and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
2
<PAGE>
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Corporate Trust Office" means the principal trust office of the
Trust Preferred Guarantee Trustee in the Borough of Manhattan, The City of New
York, which office at the date hereof is located at 101 Barclay Street, Floor 21
West, New York, New York 10286.
"Covered Person" means any Holder or beneficial owner of Trust
Preferred Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Trust Preferred Securities Guarantee.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Guarantor the principal purpose of which is to raise capital for the Guarantor
by issuing securities that are guaranteed by the Guarantor and the proceeds of
which are loaned to or invested in the Guarantor or one or more of its
affiliates.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Trust Preferred Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Trust Preferred Securities, to the extent the Issuer has funds legally
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price"), to the extent the Issuer has funds legally available therefor at such
time, with respect to any Trust Preferred Securities called for redemption by
the Issuer, and (iii) upon a voluntary or involuntary termination or liquidation
of the Issuer (other than in connection with the distribution of Partnership
Preferred Securities to the Holders in exchange for Trust Preferred Securities
as provided in the Declaration or the redemption of all of the Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Trust Preferred Securities to the
date of payment, to the extent the Issuer has funds legally available therefor,
and (b) the amount of assets of the Issuer, after satisfaction of all
liabilities, remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Trust Preferred Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Trust
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder"
3
<PAGE>
shall not apply to Trust Preferred Securities beneficially owned by the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Trust Preferred Guarantee Trustee,
any Affiliate of the Trust Preferred Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Trust Preferred Guarantee Trustee.
"Majority in liquidation amount of the Trust Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Trust Preferred Securities, voting separately as a class, of more than 50% of
the aggregate liquidation amount (including the amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all Trust
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, the President, a Vice President
or the Treasurer, and by an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Preferred
Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Partnership" means UDS Funding I, L.P.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of June __, 1997, among
Ultramar Diamond Shamrock Corporation, a Delaware corporation, as general
partner, H. Pete Smith, as initial limited partner and such other persons who
become limited partners as provided therein.
4
<PAGE>
"Partnership Preferred Securities" means those securities
representing limited partnership interests in the Partnership.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, the chairman or vice-chairman of the board of directors, the
chairman or vice-chairman of the executive committee of the board of directors,
the president, any vice president (whether or not designated by a number or a
word or words added before or after the title "vice president"), the secretary,
any assistant secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust officer, or any
other officer of the Trust Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Rights Agreement" means the Rights Agreement dated June 25, 1992,
as amended, between the Guarantor and Registrar and Transfer Company, or any
successor to such Rights Agreement.
"Senior Indebtedness" means any indebtedness of the Guarantor for
money borrowed, except for any such indebtedness that is by its terms
subordinated to or pari passu with the debt instrument of the Guarantor
purchased by the Partnership (the "Company Debenture"), as the case may be.
"Successor Trust Preferred Guarantee Trustee" means a successor
Trust Preferred Guarantee Trustee possessing the qualifications to act as Trust
Preferred Guarantee Trustee under Section 4.1.
"Trust Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Preferred Guarantee Trustee" means The Bank of New York, a
New York banking corporation, until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Trust Preferred
5
<PAGE>
Securities Guarantee and thereafter means each such Successor Trust Preferred
Guarantee Trustee.
"Trust Securities" means the Trust Common Securities together with
the Trust Preferred Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Trust Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this Trust
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this Trust Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Trust Guarantee Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of Holders of Trust Preferred Securities. If the Trust Guarantee
Trustee is not the Registrar, the Guarantor shall furnish to the Trust Guarantee
Trustee semi-annually on or before June 15 and December 15 in each year, and at
such other times as the Trust Guarantee Trustee may request in writing, a list,
in such form and as of such date as the Trust Guarantee Trustee may require,
containing all the information in the possession or control of the Registrar,
the Guarantor or any of its Paying Agents other than the Trust Guarantee Trustee
as to the names and addresses of Holders of Trust Preferred Securities. If there
are unregistered securities outstanding, even if the Trust Guarantee Trustee is
the Registrar, the Guarantor shall furnish to the Trust Guarantee Trustee such a
list containing such information with respect to Holders of such unregistered
securities only.
(b) The Trust Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee
Within 60 days after December 15 of each year, commencing December
15, 1997, the Trust Preferred Guarantee Trustee shall provide to the Holders of
the Trust Preferred Securities
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such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture
Act. The Trust Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Trust Preferred Guarantee
Trustee
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Trust Preferred Securities Guarantee that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of the Holders of all of the Trust Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Trust Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Trust Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Trust Preferred Securities, notices of
all Events of Default actually known to a Responsible Officer of the Trust
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice, provided, that, except in the case of default in any
Guarantee Payment, the Trust Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Trust
Preferred Guarantee Trustee in good faith determines that the withholding of
such
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notice is in the interests of the Holders of the Trust Preferred Securities
Trust Preferred Securities.
(b) The Trust Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Trust Preferred Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Trust Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Trust Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Guarantee
Trustee
(a) This Trust Preferred Securities Guarantee shall be held by the
Trust Preferred Guarantee Trustee for the benefit of the Holders of the Trust
Preferred Securities, and the Trust Preferred Guarantee Trustee shall not
transfer this Trust Preferred Securities Guarantee to any Person except a Holder
of Trust Preferred Securities exercising his or her rights pursuant to Section
5.4(b) or to a Successor Trust Preferred Guarantee Trustee on acceptance by such
Successor Trust Preferred Guarantee Trustee of its appointment to act as
Successor Trust Preferred Guarantee Trustee. The right, title and interest of
the Trust Preferred Guarantee Trustee shall automatically vest in any Successor
Trust Preferred Guarantee Trustee, and such vesting and succession of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Trust Preferred
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Trust Preferred Guarantee Trustee has occurred and is continuing, the
Trust Preferred Guarantee Trustee shall enforce this Trust Preferred Securities
Guarantee for the benefit of the Holders of the Trust Preferred Securities.
(c) The Trust Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing or waiver of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Preferred Securities Guarantee, and no
implied covenants
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shall be read into this Trust Preferred Securities Guarantee against the Trust
Preferred Guarantee Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6) and is actually known to a
Responsible Officer of the Trust Preferred Guarantee Trustee, the Trust
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Trust Preferred Securities Guarantee, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Preferred Securities Guarantee shall
be construed to relieve the Trust Preferred Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Trust Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Trust Preferred Securities Guarantee, and the
Trust Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Trust Preferred Securities Guarantee, and no implied
covenants or obligations shall be read into this Trust Preferred
Securities Guarantee against the Trust Preferred Guarantee Trustee;
and
(B) in the absence of bad faith on the part of the Trust
Preferred Guarantee Trustee, the Trust Preferred Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trust Preferred Guarantee Trustee and
conforming to the requirements of this Trust Preferred Securities
Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Trust Preferred Guarantee Trustee, the Trust Preferred Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Trust
Preferred Securities Guarantee;
(ii) the Trust Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Trust Preferred Guarantee Trustee, unless it shall be proved that the
Trust Preferred Guar-
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antee Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Trust Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in liquidation
amount of the Trust Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Trust
Preferred Guarantee Trustee, or exercising any trust or power conferred
upon the Trust Preferred Guarantee Trustee under this Trust Preferred
Securities Guarantee; and
(iv) no provision of this Trust Preferred Securities Guarantee shall
require the Trust Preferred Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or powers, if
the Trust Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not assured to
it under the terms of this Trust Preferred Securities Guarantee or
indemnity, reasonably satisfactory to the Trust Preferred Guarantee
Trustee, against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Trust Preferred Guarantee
Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Trust Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Trust Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Trust Preferred
Securities Guarantee, the Trust Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering
or omitting any action hereunder, the Trust Preferred Guarantee Trustee
(unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon re-
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ceipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Trust Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Trust Preferred Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect
to legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel may
be counsel to the Guarantor or any of its Affiliates and may include any
of its employees. The Trust Preferred Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of
this Trust Preferred Securities Guarantee from any court of competent
jurisdiction.
(vi) The Trust Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Trust Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Trust Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Trust Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Preferred
Guarantee Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Trust
Preferred Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Trust Preferred Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Preferred
Securities Guarantee.
(vii) The Trust Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trust Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Trust Preferred Guarantee Trustee may
execute any of the trusts or powers hereunder or perform any
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duties hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Trust Preferred Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Trust Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Trust Preferred
Securities, and the signature of the Trust Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the authority of
the Trust Preferred Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Trust Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the Trust
Preferred Guarantee Trustee or its agent taking such action.
(x) Whenever in the administration of this Trust Preferred
Securities Guarantee the Trust Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Trust Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Trust Preferred Securities, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in
conclusively relying on or acting in accordance with such instructions.
(xi) The Trust Preferred Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Trust
Preferred Securities Guarantee.
(b) No provision of this Trust Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Trust Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Trust Preferred Guarantee Trustee shall be unqualified
or incompetent in accordance with applicable law, to perform any such act or
acts or to exercise any such right, power, duty or obligation. No permissive
power or authority available to the Trust Preferred Guarantee Trustee shall be
construed to be a duty.
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SECTION 3.3. Not Responsible for Recitals or Issuance of Trust
Preferred Securities Guarantee
The recitals contained in this Trust Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Trust Preferred
Guarantee Trustee does not assume any responsibility for their correctness. The
Trust Preferred Guarantee Trustee makes no representation as to the validity or
sufficiency of this Trust Preferred Securities Guarantee.
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Trust Preferred
Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Trust Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Trust Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section
4.2(c).
(c) If the Trust Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Trust Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
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SECTION 4.2 Appointment, Removal and Resignation of Trust
Preferred Guarantee Trustee
(a) Subject to Section 4.2(b), the Trust Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor except
during an Event of Default.
(b) The Trust Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Trust Preferred Guarantee Trustee and
delivered to the Guarantor.
(c) The Trust Preferred Guarantee Trustee shall hold office until a
Successor Trust Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Trust Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Trust Preferred Guarantee Trustee and delivered to
the Guarantor, which resignation shall not take effect until a Successor Trust
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Trust Preferred Guarantee
Trustee and delivered to the Guarantor and the resigning Trust Preferred
Guarantee Trustee.
(d) If no Successor Trust Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery of an instrument of removal or resignation, the Trust
Preferred Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Trust Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trust Preferred Guarantee Trustee.
(e) No Trust Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Trust Preferred Guarantee Trustee.
(f) Upon termination of this Trust Preferred Securities Guarantee or
removal or resignation of the Trust Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Trust Preferred Guarantee Trustee
all amounts due to the Trust Preferred Guarantee Trustee accumulated to the date
of such termination, removal or resignation.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), if, as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Trust Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Trust Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Trust Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Trust Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Trust Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Trust
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust Preferred
Guarantee Trustee in respect of this Trust Preferred Securities Guarantee or
exercising any trust or power conferred upon the Trust Preferred Guarantee
Trustee under this Trust Preferred Securities Guarantee.
(b) If the Trust Preferred Guarantee Trustee fails to enforce its
rights under the Trust Preferred Securities Guarantee after a Holder of Trust
Preferred Securities has made a written request, such Holder of Trust Preferred
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Trust Preferred Guarantee Trustee's rights under this Trust
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Trust Preferred Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Guarantor has failed to make a
guarantee payment, a Holder of Trust Preferred Securities may directly institute
a proceeding in such Holder's own name against the Guarantor for enforcement of
the Trust Preferred Securities Guarantee for such payment. The Guarantor waives
any right or remedy to require that any action be brought first against the
Issuer or any other person or entity before proceeding directly against the
Guarantor.
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SECTION 5.5 Guarantee of Payment
This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Trust Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Trust Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Trust Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Trust Preferred Securities Guarantee. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Trust
Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Trust Preferred Securities remain outstanding, if (a)
for any distribution period, full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid or declared and set apart for
payment, (b) an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred and is continuing,
or (c) the Guarantor is in default of its obligations under the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee, the Partnership
Guarantee or any Investment Guarantee, then, during such period (i) the
Guarantor 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 or comparable equity
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interest (except for (x) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, its capital stock and
conversions or exchanges of common stock of one class into common stock of
another class, (y) redemptions or purchases of any rights pursuant to the Rights
Agreement and the issuance of preferred stock pursuant to such rights and (z)
purchases or acquisitions by the Guarantor or its affiliates in connection with
transactions effected by or for the account of customers of the Guarantor or any
of its subsidiaries or in connection with the distribution or trading of such
capital stock or comparable equity interest) and (ii) the Guarantor shall not
make, or permit any Finance Subsidiary to make, any payments that would enable
any Finance Subsidiary to make, any payment of any dividends on, any
distribution with respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any preferred security or
comparable equity interest of any Finance Subsidiary.
SECTION 6.2 Ranking
(a) This Trust Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any other guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Guarantor with respect to Trust Preferred
Securities that is silent as to seniority will rank pari passu with this Trust
Preferred Securities Guarantee.
(b) The holders of obligations of the Guarantor that are senior to
the obligations under the Trust Preferred Securities Guarantee (including, but
not limited to, obligations constituting Senior Indebtedness) will be entitled
to the same rights upon payment default or dissolution, liquidation and
reorganization in respect of the Trust Preferred Securities Guarantee that inure
to the holders of "Senior Indebtedness" under Article [Eleven] of the Indenture
dated as of June __, 1997 between Ultramar Diamond Shamrock Corporation and The
Bank of New York as against the holders of the Company Debenture, and the
holders of the Trust Preferred Securities will be subject to all the terms and
conditions of such Article [Eleven] with respect to any claims or rights
hereunder with the same effect as though fully set forth herein.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Trust Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Trust Preferred Securities, (ii)
upon the distribution of the Partnership Preferred Securities to the Holders of
all of the Trust Preferred Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Trust Preferred Securities 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 must restore payment of any sums
paid under the Trust Preferred Securities or under this Trust Preferred
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Trust
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Trust Preferred Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Trust Preferred
Securities might properly be paid.
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SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Trust Preferred Securities Guarantee or the earlier resignation or removal of
the Trust Preferred Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Trust Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Trust Preferred Securities Guarantee may only be amended with
the prior approval of the Holders of at least a Majority in liquidation amount
of the Trust Preferred Securities (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined). The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Consolidations and Mergers
The Guarantor may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation;
provided, that in any such case, (i) either the Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to
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Section 5.1 hereof and the due and punctual performance and observance of all of
the covenants and conditions of this Trust Preferred Securities Guarantee to be
performed by the Guarantor by a separate guarantee satisfactory to the Trust
Preferred Guarantee Trustee, executed and delivered to the Trust Preferred
Guarantee Trustee by such corporation, and (ii) the Guarantor or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale, lease or conveyance, be in default in the
performance of any such covenant or condition.
SECTION 9.4 Notices
All notices provided for in this Trust Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Trust Preferred Guarantee Trustee,
at the Trust Preferred Guarantee Trustee's Corporate Trust
Office.
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Trust Preferred Securities):
Ultramar Diamond Shamrock
Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
(c) If given to any Holder of Trust Preferred Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.5 Benefit
This Trust Preferred Securities Guarantee is solely for the benefit
of the Holders of the Trust Preferred Securities and, subject to Section 3.1(a),
is not separately transferable from the Trust Preferred Securities.
21
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SECTION 9.6 Governing Law
THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
22
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THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
as Guarantor
By:
------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as
Trust Preferred Guarantee Trustee
By:
------------------------------------
Name:
Title:
23
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EXHIBIT 4.12
====================================
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
UDS Capital II
Dated as of __________, 1997
====================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation........................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 6
SECTION 2.2 Lists of Holders of Securities........................... 6
SECTION 2.3 Reports by the Trust Preferred Guarantee
Trustee.................................................. 6
SECTION 2.4 Periodic Reports to Trust Preferred
Guarantee Trustee........................................ 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent................................................ 7
SECTION 2.6 Events of Default; Waiver................................ 7
SECTION 2.7 Event of Default; Notice................................. 7
SECTION 2.8 Conflicting Interests.................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred
Guarantee Trustee........................................ 8
SECTION 3.2 Certain Rights of Trust Preferred Guarantee
Trustee.................................................. 10
SECTION 3.3. Not Responsible for Recitals or Issuance
of Trust Preferred Securities Guarantee.................. 13
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee;
Eligibility.............................................. 13
SECTION 4.2 Appointment, Removal and Resignation
of Trust Preferred Guarantee Trustee..................... 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................ 15
SECTION 5.2 Waiver of Notice and Demand.............................. 15
<PAGE>
Page
----
SECTION 5.3 Obligations Not Affected................................. 15
SECTION 5.4 Rights of Holders........................................ 16
SECTION 5.5 Guarantee of Payment..................................... 17
SECTION 5.6 Subrogation.............................................. 17
SECTION 5.7 Independent Obligations.................................. 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................... 17
SECTION 6.2 Ranking.................................................. 18
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................. 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.............................................. 19
SECTION 8.2 Indemnification.......................................... 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................... 20
SECTION 9.2 Amendments............................................... 20
SECTION 9.3 Consolidations and Mergers............................... 20
SECTION 9.4 Notices.................................................. 21
SECTION 9.5 Benefit.................................................. 21
SECTION 9.6 Governing Law............................................ 22
ii
<PAGE>
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
This TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Trust
Preferred Securities Guarantee"), dated as of __________ __, 1997 is executed
and delivered by Ultramar Diamond Shamrock Corporation, a Delaware corporation
(the "Guarantor"), and The Bank of New York, a national banking association, as
trustee (the "Trust Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Trust Preferred Securities
(as defined herein) of UDS Capital II, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of _________ __, 1997, among the trustees of the
Issuer named therein, Ultramar Diamond Shamrock Corporation, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof Trust Originated Preferred
Securities, having an aggregate liquidation amount of $_____, designated the __%
Trust Originated Preferred Securities (the "Trust Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Trust
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Trust Preferred Securities Guarantee, to
pay to the Holders of the Trust Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein and;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Trust Common Securities Guarantee"), with substantially
identical terms to this Trust Preferred Securities Guarantee for the benefit of
the holders of the Trust Common Securities (as defined herein), except that if
the Guarantor is in default on any of its obligations under the Trust Preferred
Securities Guarantee, the Partnership Guarantee (as defined herein), or any
Investment Guarantee (as defined herein), or any default has occurred and is
continuing with respect to an Affiliate Investment Instrument (as defined
herein), the rights of holders of the Trust Common Securities to receive
Guarantee Payments under the Trust Common Securities Guarantee are subordinated,
to the extent and in the manner set forth in the Trust Common Securities
Guarantee, to the rights of Holders of Trust Preferred Securities to receive
Guarantee Payments under this Trust Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Trust Preferred Securities, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the
<PAGE>
Guarantor executes and delivers this Trust Preferred Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Capitalized terms used in this Trust Preferred Securities
Guarantee but not otherwise defined herein shall have the
meanings assigned to them in the Declaration or the
Partnership Agreement, as the case may be.
(c) a term defined anywhere in this Trust Preferred
Securities Guarantee has the same meaning through-
out;
(d) all references to "the Trust Preferred Securities Guarantee"
or "this Trust Preferred Securities Guarantee" are to this
Trust Preferred Securities Guarantee as modified, supplemented
or amended from time to time;
(e) all references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Trust Preferred Securities Guarantee, unless otherwise
specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless
otherwise defined in this Trust Preferred Securities Guarantee
or unless the context otherwise requires; and
(g) a reference to the singular includes the plural
and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
2
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"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Corporate Trust Office" means the principal trust office of the
Trust Preferred Guarantee Trustee in the Borough of Manhattan, The City of New
York, which office at the date hereof is located at 101 Barclay Street, Floor 21
West, New York, New York 10286.
"Covered Person" means any Holder or beneficial owner of Trust
Preferred Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Trust Preferred Securities Guarantee.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Guarantor the principal purpose of which is to raise capital for the Guarantor
by issuing securities that are guaranteed by the Guarantor and the proceeds of
which are loaned to or invested in the Guarantor or one or more of its
affiliates.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Trust Preferred Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Trust Preferred Securities, to the extent the Issuer has funds legally
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price"), to the extent the Issuer has funds legally available therefor at such
time, with respect to any Trust Preferred Securities called for redemption by
the Issuer, and (iii) upon a voluntary or involuntary termination or liquidation
of the Issuer (other than in connection with the distribution of Partnership
Preferred Securities to the Holders in exchange for Trust Preferred Securities
as provided in the Declaration or the redemption of all of the Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Trust Preferred Securities to the
date of payment, to the extent the Issuer has funds legally available therefor,
and (b) the amount of assets of the Issuer, after satisfaction of all
liabilities, remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Trust Preferred Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Trust
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder"
3
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shall not apply to Trust Preferred Securities beneficially owned by the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Trust Preferred Guarantee Trustee,
any Affiliate of the Trust Preferred Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Trust Preferred Guarantee Trustee.
"Majority in liquidation amount of the Trust Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Trust Preferred Securities, voting separately as a class, of more than 50% of
the aggregate liquidation amount (including the amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all Trust
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, the President, a Vice President
or the Treasurer, and by an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Preferred
Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Partnership" means UDS Funding II, L.P.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of ____________ __, 1997, among
Ultramar Diamond Shamrock Corporation, a Delaware corporation, as general
partner, H. Pete Smith, as initial limited partner and such other persons who
become limited partners as provided therein.
4
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"Partnership Preferred Securities" means those securities
representing limited partnership interests in the Partnership.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, the chairman or vice-chairman of the board of directors, the
chairman or vice-chairman of the executive committee of the board of directors,
the president, any vice president (whether or not designated by a number or a
word or words added before or after the title "vice president"), the secretary,
any assistant secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust officer, or any
other officer of the Trust Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Rights Agreement" means the Rights Agreement dated June 25, 1992,
as amended, between the Guarantor and Registrar and Transfer Company, or any
successor to such Rights Agreement.
"Senior Indebtedness" means any indebtedness of the Guarantor for
money borrowed, except for any such indebtedness that is by its terms
subordinated to or pari passu with the debt instrument of the Guarantor
purchased by the Partnership (the "Company Debenture"), as the case may be.
"Successor Trust Preferred Guarantee Trustee" means a successor
Trust Preferred Guarantee Trustee possessing the qualifications to act as Trust
Preferred Guarantee Trustee under Section 4.1.
"Trust Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Preferred Guarantee Trustee" means The Bank of New York, a
New York banking corporation, until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Trust Preferred
5
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Securities Guarantee and thereafter means each such Successor Trust Preferred
Guarantee Trustee.
"Trust Securities" means the Trust Common Securities together with
the Trust Preferred Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Trust Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this Trust
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this Trust Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Trust Guarantee Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of Holders of Trust Preferred Securities. If the Trust Guarantee
Trustee is not the Registrar, the Guarantor shall furnish to the Trust Guarantee
Trustee semi-annually on or before June 15 and December 15 in each year, and at
such other times as the Trust Guarantee Trustee may request in writing, a list,
in such form and as of such date as the Trust Guarantee Trustee may require,
containing all the information in the possession or control of the Registrar,
the Guarantor or any of its Paying Agents other than the Trust Guarantee Trustee
as to the names and addresses of Holders of Trust Preferred Securities. If there
are unregistered securities outstanding, even if the Trust Guarantee Trustee is
the Registrar, the Guarantor shall furnish to the Trust Guarantee Trustee such a
list containing such information with respect to Holders of such unregistered
securities only.
(b) The Trust Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee
Within 60 days after December 15 of each year, commencing
___________ __, 1997, the Trust Preferred Guarantee Trustee shall provide to the
Holders of the Trust Preferred Securities
6
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such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture
Act. The Trust Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Trust Preferred Guarantee
Trustee
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Trust Preferred Securities Guarantee that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of the Holders of all of the Trust Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Trust Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Trust Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Trust Preferred Securities, notices of
all Events of Default actually known to a Responsible Officer of the Trust
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice, provided, that, except in the case of default in any
Guarantee Payment, the Trust Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Trust
Preferred Guarantee Trustee in good faith determines that the withholding of
such
7
<PAGE>
notice is in the interests of the Holders of the Trust Preferred Securities
Trust Preferred Securities.
(b) The Trust Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Trust Preferred Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Trust Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Trust Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Guarantee
Trustee
(a) This Trust Preferred Securities Guarantee shall be held by the
Trust Preferred Guarantee Trustee for the benefit of the Holders of the Trust
Preferred Securities, and the Trust Preferred Guarantee Trustee shall not
transfer this Trust Preferred Securities Guarantee to any Person except a Holder
of Trust Preferred Securities exercising his or her rights pursuant to Section
5.4(b) or to a Successor Trust Preferred Guarantee Trustee on acceptance by such
Successor Trust Preferred Guarantee Trustee of its appointment to act as
Successor Trust Preferred Guarantee Trustee. The right, title and interest of
the Trust Preferred Guarantee Trustee shall automatically vest in any Successor
Trust Preferred Guarantee Trustee, and such vesting and succession of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Trust Preferred
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Trust Preferred Guarantee Trustee has occurred and is continuing, the
Trust Preferred Guarantee Trustee shall enforce this Trust Preferred Securities
Guarantee for the benefit of the Holders of the Trust Preferred Securities.
(c) The Trust Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing or waiver of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Preferred Securities Guarantee, and no
implied covenants
8
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shall be read into this Trust Preferred Securities Guarantee against the Trust
Preferred Guarantee Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6) and is actually known to a
Responsible Officer of the Trust Preferred Guarantee Trustee, the Trust
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Trust Preferred Securities Guarantee, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Preferred Securities Guarantee shall
be construed to relieve the Trust Preferred Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Trust Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Trust Preferred Securities Guarantee, and the
Trust Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Trust Preferred Securities Guarantee, and no implied
covenants or obligations shall be read into this Trust Preferred
Securities Guarantee against the Trust Preferred Guarantee Trustee;
and
(B) in the absence of bad faith on the part of the Trust
Preferred Guarantee Trustee, the Trust Preferred Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trust Preferred Guarantee Trustee and
conforming to the requirements of this Trust Preferred Securities
Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Trust Preferred Guarantee Trustee, the Trust Preferred Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Trust
Preferred Securities Guarantee;
(ii) the Trust Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Trust Preferred Guarantee Trustee, unless it shall be proved that the
Trust Preferred Guar-
9
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antee Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Trust Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in liquidation
amount of the Trust Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Trust
Preferred Guarantee Trustee, or exercising any trust or power conferred
upon the Trust Preferred Guarantee Trustee under this Trust Preferred
Securities Guarantee; and
(iv) no provision of this Trust Preferred Securities Guarantee shall
require the Trust Preferred Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or powers, if
the Trust Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not assured to
it under the terms of this Trust Preferred Securities Guarantee or
indemnity, reasonably satisfactory to the Trust Preferred Guarantee
Trustee, against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Trust Preferred Guarantee
Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Trust Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Trust Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Trust Preferred
Securities Guarantee, the Trust Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering
or omitting any action hereunder, the Trust Preferred Guarantee Trustee
(unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon re-
10
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ceipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Trust Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Trust Preferred Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect
to legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel may
be counsel to the Guarantor or any of its Affiliates and may include any
of its employees. The Trust Preferred Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of
this Trust Preferred Securities Guarantee from any court of competent
jurisdiction.
(vi) The Trust Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Trust Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Trust Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Trust Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Preferred
Guarantee Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Trust
Preferred Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Trust Preferred Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Preferred
Securities Guarantee.
(vii) The Trust Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trust Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Trust Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any
11
<PAGE>
duties hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Trust Preferred Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Trust Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Trust Preferred
Securities, and the signature of the Trust Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the authority of
the Trust Preferred Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Trust Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the Trust
Preferred Guarantee Trustee or its agent taking such action.
(x) Whenever in the administration of this Trust Preferred
Securities Guarantee the Trust Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Trust Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Trust Preferred Securities, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in
conclusively relying on or acting in accordance with such instructions.
(xi) The Trust Preferred Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Trust
Preferred Securities Guarantee.
(b) No provision of this Trust Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Trust Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Trust Preferred Guarantee Trustee shall be unqualified
or incompetent in accordance with applicable law, to perform any such act or
acts or to exercise any such right, power, duty or obligation. No permissive
power or authority available to the Trust Preferred Guarantee Trustee shall be
construed to be a duty.
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SECTION 3.3. Not Responsible for Recitals or Issuance of Trust
Preferred Securities Guarantee
The recitals contained in this Trust Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Trust Preferred
Guarantee Trustee does not assume any responsibility for their correctness. The
Trust Preferred Guarantee Trustee makes no representation as to the validity or
sufficiency of this Trust Preferred Securities Guarantee.
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Trust Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Trust Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Trust Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section
4.2(c).
(c) If the Trust Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Trust Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
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SECTION 4.2 Appointment, Removal and Resignation of Trust
Preferred Guarantee Trustee
(a) Subject to Section 4.2(b), the Trust Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor except
during an Event of Default.
(b) The Trust Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Trust Preferred Guarantee Trustee and
delivered to the Guarantor.
(c) The Trust Preferred Guarantee Trustee shall hold office until a
Successor Trust Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Trust Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Trust Preferred Guarantee Trustee and delivered to
the Guarantor, which resignation shall not take effect until a Successor Trust
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Trust Preferred Guarantee
Trustee and delivered to the Guarantor and the resigning Trust Preferred
Guarantee Trustee.
(d) If no Successor Trust Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery of an instrument of removal or resignation, the Trust
Preferred Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Trust Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trust Preferred Guarantee Trustee.
(e) No Trust Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Trust Preferred Guarantee Trustee.
(f) Upon termination of this Trust Preferred Securities Guarantee or
removal or resignation of the Trust Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Trust Preferred Guarantee Trustee
all amounts due to the Trust Preferred Guarantee Trustee accumulated to the date
of such termination, removal or resignation.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), if, as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Trust Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Trust Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Trust Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Trust Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Trust Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Trust
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust Preferred
Guarantee Trustee in respect of this Trust Preferred Securities Guarantee or
exercising any trust or power conferred upon the Trust Preferred Guarantee
Trustee under this Trust Preferred Securities Guarantee.
(b) If the Trust Preferred Guarantee Trustee fails to enforce its
rights under the Trust Preferred Securities Guarantee after a Holder of Trust
Preferred Securities has made a written request, such Holder of Trust Preferred
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Trust Preferred Guarantee Trustee's rights under this Trust
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Trust Preferred Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Guarantor has failed to make a
guarantee payment, a Holder of Trust Preferred Securities may directly institute
a proceeding in such Holder's own name against the Guarantor for enforcement of
the Trust Preferred Securities Guarantee for such payment. The Guarantor waives
any right or remedy to require that any action be brought first against the
Issuer or any other person or entity before proceeding directly against the
Guarantor.
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SECTION 5.5 Guarantee of Payment
This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Trust Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Trust Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Trust Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Trust Preferred Securities Guarantee. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Trust
Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Trust Preferred Securities remain outstanding, if (a)
for any distribution period, full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid or declared and set apart for
payment, (b) an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred and is continuing,
or (c) the Guarantor is in default of its obligations under the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee, the Partnership
Guarantee or any Investment Guarantee, then, during such period (i) the
Guarantor 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 or comparable equity
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interest (except for (x) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, its capital stock and
conversions or exchanges of common stock of one class into common stock of
another class, (y) redemptions or purchases of any rights pursuant to the Rights
Agreement and the issuance of preferred stock pursuant to such rights and (z)
purchases or acquisitions by the Guarantor or its affiliates in connection with
transactions effected by or for the account of customers of the Guarantor or any
of its subsidiaries or in connection with the distribution or trading of such
capital stock or comparable equity interest) and (ii) the Guarantor shall not
make, or permit any Finance Subsidiary to make, any payments that would enable
any Finance Subsidiary to make, any payment of any dividends on, any
distribution with respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any preferred security or
comparable equity interest of any Finance Subsidiary.
SECTION 6.2 Ranking
(a) This Trust Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any other guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Guarantor with respect to Trust Preferred
Securities that is silent as to seniority will rank pari passu with this Trust
Preferred Securities Guarantee.
(b) The holders of obligations of the Guarantor that are senior to
the obligations under the Trust Preferred Securities Guarantee (including, but
not limited to, obligations constituting Senior Indebtedness) will be entitled
to the same rights upon payment default or dissolution, liquidation and
reorganization in respect of the Trust Preferred Securities Guarantee that inure
to the holders of "Senior Indebtedness" under Article [Eleven] of the Indenture
dated as of ________ __, 1997 between Ultramar Diamond Shamrock Corporation and
The Bank of New York as against the holders of the Company Debenture, and the
holders of the Trust Preferred Securities will be subject to all the terms and
conditions of such Article [Eleven] with respect to any claims or rights
hereunder with the same effect as though fully set forth herein.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Trust Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Trust Preferred Securities, (ii)
upon the distribution of the Partnership Preferred Securities to the Holders of
all of the Trust Preferred Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Trust Preferred Securities 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 must restore payment of any sums
paid under the Trust Preferred Securities or under this Trust Preferred
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Trust
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Trust Preferred Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Trust Preferred
Securities might properly be paid.
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SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Trust Preferred Securities Guarantee or the earlier resignation or removal of
the Trust Preferred Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Trust Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Trust Preferred Securities Guarantee may only be amended with
the prior approval of the Holders of at least a Majority in liquidation amount
of the Trust Preferred Securities (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined). The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Consolidations and Mergers
The Guarantor may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation;
provided, that in any such case, (i) either the Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to
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Section 5.1 hereof and the due and punctual performance and observance of all of
the covenants and conditions of this Trust Preferred Securities Guarantee to be
performed by the Guarantor by a separate guarantee satisfactory to the Trust
Preferred Guarantee Trustee, executed and delivered to the Trust Preferred
Guarantee Trustee by such corporation, and (ii) the Guarantor or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale, lease or conveyance, be in default in the
performance of any such covenant or condition.
SECTION 9.4 Notices
All notices provided for in this Trust Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Trust Preferred Guarantee Trustee, at the Trust
Preferred Guarantee Trustee's Corporate Trust Office.
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Trust Preferred Securities):
Ultramar Diamond Shamrock
Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
(c) If given to any Holder of Trust Preferred Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.5 Benefit
This Trust Preferred Securities Guarantee is solely for the benefit
of the Holders of the Trust Preferred Securities and, subject to Section 3.1(a),
is not separately transferable from the Trust Preferred Securities.
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SECTION 9.6 Governing Law
THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
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THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
as Guarantor
By:
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK, as
Trust Preferred Guarantee Trustee
By:
-----------------------------------
Name:
Title:
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EXHIBIT 4.13
====================================
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
UDS Funding I, L.P.
Dated as of June __, 1997
====================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions................................... 2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee..................................... 3
SECTION 2.2. Waiver of Notice and Demand................... 3
SECTION 2.3. Obligations Not Affected...................... 3
SECTION 2.4. Rights of Holders............................. 5
SECTION 2.5. Guarantee of Payment.......................... 5
SECTION 2.6. Subrogation................................... 5
SECTION 2.7. Independent Obligations....................... 6
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions.................... 6
SECTION 3.2. Ranking....................................... 7
ARTICLE IV
TERMINATION
SECTION 4.1. Termination................................... 7
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns........................ 8
SECTION 5.2. Amendments.................................... 8
SECTION 5.3. Consolidations and Mergers.................... 8
SECTION 5.4. Notices....................................... 9
SECTION 5.5. Benefit................................................... 9
SECTION 5.6. Governing Law................................. 9
i
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PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
This PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT (the
"Partnership Guarantee"), dated as of June __, 1997, is executed and delivered
by Ultramar Diamond Shamrock Corporation, a Delaware corporation (the
"Guarantor"), for the benefit of the holders from time to time of the
Partnership Preferred Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), dated as of the date hereof, of UDS
Funding I, L.P., a Delaware limited partnership (the "Issuer"), the Issuer may
issue a single series of limited partner interests in the Issuer (the
"Partnership Preferred Securities");
WHEREAS, pursuant to the Partnership Agreement, the proceeds
received by the Issuer from the issuance and sale of the Partnership Preferred
Securities will be invested by the Issuer in the Affiliate Investment
Instruments and Eligible Debt Securities (each as defined in the Partnership
Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Partnership Preferred Securities, desires hereby irrevocably
and unconditionally to agree, to the extent set forth herein, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby
acknowledges shall directly or indirectly provide at least some material benefit
to the Guarantor, the Guarantor executes and delivers this Partnership Guarantee
for the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions
As used in this Partnership Guarantee, the terms set forth below
shall, unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Guarantor the principal purpose of which is to raise capital for the Guarantor
by issuing securities that are guaranteed by the Guarantor and the proceeds of
which are loaned to or invested in the Guarantor or one or more of its
affiliates.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid distributions that have theretofore been declared on the Partnership
Preferred Securities out of funds legally available therefor at such time, (ii)
the redemption price, including all accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price"), payable out of funds legally
available therefor at such time, with respect to any Partnership Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination or liquidation of the Issuer, the lesser of (a) the
aggregate of the liquidation preference and all accumulated and unpaid
distributions on the Partnership Preferred Securities to the date of payment out
of funds legally available therefor and (b) the amount of assets of the Issuer
after satisfaction of all liabilities remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Partnership Preferred Securities; provided,
however, that in determining whether the holders of the requisite percentage of
Partnership Preferred
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Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not apply to Partnership Preferred Securities owned beneficially by the
Guarantor or any Affiliate of the Guarantor.
"Rights Agreement" means the Rights Agreement dated June 25, 1992,
as amended, between the Guarantor and Registrar and Transfer Company, or any
successor to such Rights Agreement.
"Senior Indebtedness" means any indebtedness of the Guarantor for
money borrowed, except for any such indebtedness that is by its terms
subordinated to or pari passu with the debt instrument of the Guarantor
purchased by the Partnership (the "Company Debenture"), as the case may be.
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due (without duplication of
amounts theretofore paid by the Issuer), regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 2.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Partnership
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Partnership Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
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(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Partnership
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Partnership
Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the
Partnership Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Partnership
Preferred Securities;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Partnership
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 2.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
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SECTION 2.4. Rights of Holders
The Guarantor expressly acknowledges that (i) this Partnership
Guarantee will be deposited with the General Partner to be held for the benefit
of the Holders; (ii) in the event of the appointment of a Special Representative
to, among other things, enforce this Partnership Guarantee, the Special
Representative may take possession of this Partnership Guarantee for such
purpose; (iii) if no Special Representative has been appointed, the General
Partner has the right to enforce this Partnership Guarantee on behalf of the
Holders; (iv) the Holders of not less than a majority in aggregate liquidation
preference of the Partnership Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of this Partnership Guarantee including the giving of directions to the
General Partner or the Special Representative, as the case may be; and (v) if
the General Partner or Special Representative fails to enforce this Partnership
Guarantee after a Holder has made a written request and as above provided, any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Partnership Guarantee, without first instituting a
legal proceeding against the Issuer or any other person or entity.
Notwithstanding the foregoing, if the Guarantor has failed to make a guarantee
payment, a Holder may directly institute a proceeding against Guarantor to
enforce such payment under this Partnership Guarantee.
SECTION 2.5. Guarantee of Payment
This Partnership Guarantee will not be discharged except by payment
of the Guarantee Payments in full to the extent not paid by the Issuer.
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Partnership Guarantee provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Partnership Guarantee, if, at the time of any
such payment, any amounts are due and unpaid under this Partnership Guarantee.
If any amount shall be paid to the
5
<PAGE>
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Partnership
Preferred Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Partnership Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (f), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions
So long as any Partnership Preferred Securities remain outstanding,
if (a) for any distribution period, full distributions on a cumulative basis on
any Partnership Preferred Securities have not been paid or declared and set
apart for payment (b) there shall have occurred an Event of Default under the
Partnership Agreement or (c) the Guarantor shall be in default with respect to
its payment obligations under this Partnership Guarantee, the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee or any Investment
Guarantee then, during such period (i) the Guarantor 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
or comparable equity interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock and conversions or exchanges of common stock of one class
into common stock of another class, (y) redemptions or purchases of any rights
pursuant to the Rights Agreement and the issuance of preferred stock pursuant to
such rights and (z) purchases or acquisitions by the Guarantor or its affiliates
in connection with transactions effected by or for the account of customers of
the Guarantor or any of its subsidiaries or in connection with the distribution
or trading of such capital stock or comparable equity interest) and (ii) the
Guarantor shall not make, or permit any Finance Subsidiary to make, any payments
that would
6
<PAGE>
enable any Finance Subsidiary to make, any payment of any dividends on, any
distribution with respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any preferred security or
comparable equity interest of any Finance Subsidiary.
SECTION 3.2. Ranking
(a) This Partnership Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued from time to time
by the Guarantor and with any other guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Guarantor with respect to Partnership Preferred
Securities that is silent as to seniority will rank pari passu with this
Partnership Guarantee.
(b) The holders of obligations of the Guarantor that are senior to
the obligations under the Partnership Guarantee (including, but not limited to,
obligations constituting Senior Indebtedness) will be entitled to the same
rights upon payment default or dissolution, liquidation and reorganization in
respect of the Partnership Guarantee that inure to the holders of "Senior
Indebtedness" under Article [Eleven] of the Indenture dated as of June __, 1997
between Ultramar Diamond Shamrock Corporation and The Bank of New York as
against holders of the Company Debenture, and the holders of the Partnership
Preferred Securities will be subject to all the terms and conditions of such
Article [Eleven] with respect to any claims or rights hereunder with the same
effect as though fully set forth herein.
ARTICLE IV
TERMINATION
SECTION 4.1. Termination
This Partnership Guarantee shall terminate and be of no further
force and effect, as to the Partnership Preferred Securities, upon full payment
of the Redemption Price of all Partnership Preferred Securities, and will
terminate complete-
7
<PAGE>
ly upon full payment of the amounts payable in accordance with the Partnership
Agreement upon liquidation of the Issuer. This Partnership Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must, in accordance with Delaware Revised Uniform Limited
Partnership Act, restore payment of any sums paid under any Partnership
Preferred Securities or this Partnership Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Partnership
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Partnership Preferred Securities then outstanding.
SECTION 5.2. Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Partnership Guarantee may only be amended with the prior approval of the Holders
of not less than a majority in aggregate liquidation preference of all the
outstanding Partnership Preferred Securities.
SECTION 5.3. Consolidations and Mergers
The Guarantor may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation;
provided, that in any such case, (i) either the Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to Section 5.1 hereof and the
due and punctual performance and observance of all of the covenants and
conditions of this Partnership Guarantee to be performed by the Guarantor by a
separate guarantee satisfactory to the Trust Preferred Guarantee Trustee (as
defined in the Trust Preferred Securities Guarantee Agreement dated as of June
__, 1997), executed and delivered to the Trust Preferred Guarantee
8
<PAGE>
Trustee by such corporation, and (ii) the Guarantor or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale, lease or conveyance, be in default in the
performance of any such covenant or condition.
SECTION 5.4. Notices
Any notice, request or other communication required or permitted to
be given hereunder to the Guarantor shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
addressed to the Guarantor, as follows (and if so given, shall be deemed given
when mailed):
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
Any notice, request or other communication required or permitted to
be given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.5. Benefit
This Partnership Guarantee is solely for the benefit of the Holders
and is not separately transferable from the Partnership Preferred Securities.
SECTION 5.6. Governing Law
THIS PARTNERSHIP GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
9
<PAGE>
THIS PARTNERSHIP GUARANTEE is executed as of the day and year first
above written.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By:
-----------------------
Name:
Title:
<PAGE>
EXHIBIT 4.14
====================================
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
UDS Funding II, L.P.
Dated as of _________ __, 1997
====================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions................................... 2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee..................................... 3
SECTION 2.2. Waiver of Notice and Demand................... 3
SECTION 2.3. Obligations Not Affected...................... 4
SECTION 2.4. Rights of Holders............................. 5
SECTION 2.5. Guarantee of Payment.......................... 5
SECTION 2.6. Subrogation................................... 6
SECTION 2.7. Independent Obligations....................... 6
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions.................... 6
SECTION 3.2. Ranking....................................... 7
ARTICLE IV
TERMINATION
SECTION 4.1. Termination................................... 8
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns........................ 8
SECTION 5.2. Amendments.................................... 8
SECTION 5.3. Consolidations and Mergers.................... 9
SECTION 5.4. Notices....................................... 9
SECTION 5.5. Benefit....................................... 10
SECTION 5.6. Governing Law................................. 10
i
<PAGE>
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
This PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT (the
"Partnership Guarantee"), dated as of _________ __, 1997, is executed and
delivered by Ultramar Diamond Shamrock Corporation, a Delaware corporation (the
"Guarantor"), for the benefit of the holders from time to time of the
Partnership Preferred Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), dated as of the date hereof, of UDS
Funding II, L.P., a Delaware limited partnership (the "Issuer"), the Issuer may
issue a single series of limited partner interests in the Issuer (the
"Partnership Preferred Securities");
WHEREAS, pursuant to the Partnership Agreement, the proceeds
received by the Issuer from the issuance and sale of the Partnership Preferred
Securities will be invested by the Issuer in the Affiliate Investment
Instruments and Eligible Debt Securities (each as defined in the Partnership
Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Partnership Preferred Securities, desires hereby irrevocably
and unconditionally to agree, to the extent set forth herein, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby
acknowledges shall directly or indirectly provide at least some material benefit
to the Guarantor, the Guarantor executes and delivers this Partnership Guarantee
for the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions
As used in this Partnership Guarantee, the terms set forth below
shall, unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Guarantor the principal purpose of which is to raise capital for the Guarantor
by issuing securities that are guaranteed by the Guarantor and the proceeds of
which are loaned to or invested in the Guarantor or one or more of its
affiliates.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid distributions that have theretofore been declared on the Partnership
Preferred Securities out of funds legally available therefor at such time, (ii)
the redemption price, including all accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price"), payable out of funds legally
available therefor at such time, with respect to any Partnership Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination or liquidation of the Issuer, the lesser of (a) the
aggregate of the liquidation preference and all accumulated and unpaid
distributions on the Partnership Preferred Securities to the date of payment out
of funds legally available therefor and (b) the amount of assets of the Issuer
after satisfaction of all liabilities remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Partnership Preferred Securities; provided,
however, that in determining whether the holders of the requisite percentage of
Partnership Preferred
2
<PAGE>
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not apply to Partnership Preferred Securities owned beneficially by the
Guarantor or any Affiliate of the Guarantor.
"Rights Agreement" means the Rights Agreement dated June 25, 1992,
as amended, between the Guarantor and Registrar and Transfer Company, or any
successor to such Rights Agreement.
"Senior Indebtedness" means any indebtedness of the Guarantor for
money borrowed, except for any such indebtedness that is by its terms
subordinated to or pari passu with the debt instrument of the Guarantor
purchased by the Partnership (the "Company Debenture"), as the case may be.
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due (without duplication of
amounts theretofore paid by the Issuer), regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 2.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Partnership
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Partnership Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
3
<PAGE>
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Partnership
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Partnership
Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the
Partnership Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Partnership
Preferred Securities;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Partnership
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 2.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.4. Rights of Holders
4
<PAGE>
The Guarantor expressly acknowledges that (i) this Partnership
Guarantee will be deposited with the General Partner to be held for the benefit
of the Holders; (ii) in the event of the appointment of a Special Representative
to, among other things, enforce this Partnership Guarantee, the Special
Representative may take possession of this Partnership Guarantee for such
purpose; (iii) if no Special Representative has been appointed, the General
Partner has the right to enforce this Partnership Guarantee on behalf of the
Holders; (iv) the Holders of not less than a majority in aggregate liquidation
preference of the Partnership Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of this Partnership Guarantee including the giving of directions to the
General Partner or the Special Representative, as the case may be; and (v) if
the General Partner or Special Representative fails to enforce this Partnership
Guarantee after a Holder has made a written request and as above provided, any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Partnership Guarantee, without first instituting a
legal proceeding against the Issuer or any other person or entity.
Notwithstanding the foregoing, if the Guarantor has failed to make a guarantee
payment, a Holder may directly institute a proceeding against Guarantor to
enforce such payment under this Partnership Guarantee.
SECTION 2.5. Guarantee of Payment
This Partnership Guarantee will not be discharged except by payment
of the Guarantee Payments in full to the extent not paid by the Issuer.
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Partnership Guarantee provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Partnership Guarantee, if, at the time of any
such payment, any amounts are due and unpaid under this Partnership Guarantee.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guaran-
5
<PAGE>
tor agrees to hold such amount in trust for the Holders and to pay over such
amount to the Holders.
SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Partnership
Preferred Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Partnership Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (f), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions
So long as any Partnership Preferred Securities remain outstanding,
if (a) for any distribution period, full distributions on a cumulative basis on
any Partnership Preferred Securities have not been paid or declared and set
apart for payment (b) there shall have occurred an Event of Default under the
Partnership Agreement or (c) the Guarantor shall be in default with respect to
its payment obligations under this Partnership Guarantee, the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee or any Investment
Guarantee then, during such period (i) the Guarantor 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
or comparable equity interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock and conversions or exchanges of common stock of one class
into common stock of another class, (y) redemptions or purchases of any rights
pursuant to the Rights Agreement and the issuance of preferred stock pursuant to
such rights and (z) purchases or acquisitions by the Guarantor or its affiliates
in connection with transactions effected by or for the account of customers of
the Guarantor or any of its subsidiaries or in connection with the distribution
or trading of such capital stock or comparable equity interest) and (ii) the
Guarantor shall not make, or permit any Finance Subsidiary to make, any payments
that would enable any Finance Subsidiary to make, any payment of any
6
<PAGE>
dividends on, any distribution with respect to, or any redemption, purchase or
other acquisition of, or any liquidation payment with respect to, any preferred
security or comparable equity interest of any Finance Subsidiary.
SECTION 3.2. Ranking
(a) This Partnership Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued from time to time
by the Guarantor and with any other guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Guarantor with respect to Partnership Preferred
Securities that is silent as to seniority will rank pari passu with this
Partnership Guarantee.
(b) The holders of obligations of the Guarantor that are senior to
the obligations under the Partnership Guarantee (including, but not limited to,
obligations constituting Senior Indebtedness) will be entitled to the same
rights upon payment default or dissolution, liquidation and reorganization in
respect of the Partnership Guarantee that inure to the holders of "Senior
Indebtedness" under Article [Eleven] of the Indenture dated as of ___________
__, 1997 between Ultramar Diamond Shamrock Corporation and The Bank of New York
as against holders of the Company Debenture, and the holders of the Partnership
Preferred Securities will be subject to all the terms and conditions of such
Article [Eleven] with respect to any claims or rights hereunder with the same
effect as though fully set forth herein.
ARTICLE IV
TERMINATION
SECTION 4.1. Termination
This Partnership Guarantee shall terminate and be of no further
force and effect, as to the Partnership Preferred Securities, upon full payment
of the Redemption Price of all Partnership Preferred Securities, and will
terminate completely upon full payment of the amounts payable in accordance with
7
<PAGE>
the Partnership Agreement upon liquidation of the Issuer. This Partnership
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must, in accordance with Delaware Revised Uniform
Limited Partnership Act, restore payment of any sums paid under any Partnership
Preferred Securities or this Partnership Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Partnership
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Partnership Preferred Securities then outstanding.
SECTION 5.2. Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Partnership Guarantee may only be amended with the prior approval of the Holders
of not less than a majority in aggregate liquidation preference of all the
outstanding Partnership Preferred Securities.
SECTION 5.3. Consolidations and Mergers
The Guarantor may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation;
provided, that in any such case, (i) either the Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to Section 5.1 hereof and the
due and punctual performance and observance of all of the covenants and
conditions of this Partnership Guarantee to be performed by the Guarantor by a
separate guarantee satisfactory to the Trust Preferred Guarantee Trustee (as
defined in the Trust Preferred Securities Guarantee Agreement dated as of
_______________, 1997), executed and delivered to the Trust Preferred Guarantee
Trustee by such corporation, and (ii) the
8
<PAGE>
Guarantor or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale, lease or
conveyance, be in default in the performance of any such covenant or condition.
SECTION 5.4. Notices
Any notice, request or other communication required or permitted to
be given hereunder to the Guarantor shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
addressed to the Guarantor, as follows (and if so given, shall be deemed given
when mailed):
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
Any notice, request or other communication required or permitted to
be given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.5. Benefit
This Partnership Guarantee is solely for the benefit of the Holders
and is not separately transferable from the Partnership Preferred Securities.
SECTION 5.6. Governing Law
THIS PARTNERSHIP GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
9
<PAGE>
THIS PARTNERSHIP GUARANTEE is executed as of the day and year first
above written.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.15
ULTRAMAR DIAMOND SHAMROCK CORPORATION
AND
The Bank of New York, Trustee
Indenture
Dated as of June __, 1997
Subordinated Debt Securities
<PAGE>
ULTRAMAR DIAMOND SHAMROCK CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of June __, 1997
Trust Indenture Act Section Indenture Section
ss.310(a)(1) ..........................................................608
(a)(2) ..........................................................608
(a)(3) ...............................................Not Applicable
(a)(4) ...............................................Not Applicable
(a)(5) ..........................................................608
ss.311(a) .............................................................609
(b) .............................................................605
ss.312(a) ........................................................605, 703
(b) ........................................................701, 702
(c) .............................................................702
ss.313(a)...........................................................703(a)
(b)(1) ..............................................Not Applicable
(b)(2) .......................................................703(b)
(c) ..........................................................703(c)
(d) ..........................................................703(c)
ss.314(a)(1)...........................................................704
(a)(2) ..........................................................704
(a)(3) ..........................................................704
(a)(4) .........................................................1005
(b) ..................................................Not Applicable
(c)(1) ..........................................................102
(c)(2) ..........................................................102
(c)(3) ...............................................Not Applicable
(d) ..................................................Not Applicable
(e) .............................................................102
ss.315(a)...........................................................601(a)
(b) .............................................................602
(c) ...........................................................601(b)
(d) ...........................................................601(c)
(d)(1) .............................................601(a)(1), (c)(1)
(d)(2) .....................................................601(c)(2)
(d)(3) .....................................................601(c)(3)
(e) ..............................................................514
ss.316(a)(1)(A)....................................................502, 512
(a)(1)(B) ........................................................513
(a)(2) ................................................Not Applicable
(b) ..............................................................508
(c) ...................................................Not Applicable
ss.317(a)(1)............................................................503
(a)(2) ...........................................................504
(b) .............................................................1003
ss.318(a)...............................................................108
- ------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
PARTIES................................................................1
RECITALS...............................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions............................................ 1
Act ........................................................... 2
Additional Amounts............................................. 2
Affiliate...................................................... 2
Authenticating Agent........................................... 2
Authorized Newspaper........................................... 2
Bearer Security................................................ 2
Board of Directors............................................. 2
Board Resolution............................................... 2
Business Day................................................... 2
Commission..................................................... 2
Company........................................................ 2
Company Request and Company Order.............................. 2
Controlled Subsidiary.......................................... 2
Corporate Trust Office......................................... 3
corporation.................................................... 3
coupon......................................................... 3
Defaulted Interest............................................. 3
Dollars or $................................................... 3
Event of Default............................................... 3
Holder......................................................... 3
Indenture...................................................... 3
interest....................................................... 3
Interest Payment Date.......................................... 3
Maturity....................................................... 3
Officers' Certificate.......................................... 3
Opinion of Counsel............................................. 3
Original Issue Discount Security............................... 3
Outstanding.................................................... 3
Paying Agent................................................... 4
Person......................................................... 4
Place of Payment............................................... 4
Predecessor Security........................................... 4
Redemption Date................................................ 5
Redemption Price............................................... 5
Registered Security............................................ 5
Regular Record Date............................................ 5
Responsible Officer............................................ 5
Security or Securities......................................... 5
Security Register and Security Registrar....................... 5
i
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Senior Indebtedness............................................ 5
Special Record Date............................................ 5
Stated Maturity................................................ 5
Subsidiary..................................................... 5
Trustee........................................................ 5
Trust Indenture Act............................................ 5
United States.................................................. 6
United States Alien............................................ 6
U.S. Depository or Depository.................................. 6
Vice President................................................. 6
Voting Stock................................................... 6
SECTION 102. Compliance Certificates and Opinions................... 6
SECTION 103. Form of Documents Delivered to Trustee................. 7
SECTION 104. Acts of Holders........................................ 7
SECTION 105. Notices etc. to Trustee and Company.................... 9
SECTION 106. Notice to Holders of Securities; Waiver................ 9
SECTION 107. Language of Notices, etc............................... 10
SECTION 108. Conflict with Trust Indenture Act...................... 10
SECTION 109. Effect of Headings and Table of Contents............... 10
SECTION 110. Successors and Assigns................................. 10
SECTION 111. Separability Clause.................................... 10
SECTION 112. Benefits of Indenture.................................. 10
SECTION 113. Governing Law.......................................... 10
SECTION 114. Legal Holidays......................................... 10
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally........................................ 11
SECTION 202. Form of Trustee's Certificate of Authentication........ 11
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ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series................... 11
SECTION 302. Denominations.......................................... 14
SECTION 303. Execution, Authentication, Delivery and Dating......... 14
SECTION 304. Temporary Securities................................... 15
SECTION 305. Registration, Transfer and Exchange.................... 15
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities....... 18
SECTION 307. Payment of Interest; Interest Rights Preserved......... 19
SECTION 308. Persons Deemed Owners.................................. 20
SECTION 309. Cancellation........................................... 20
SECTION 310. Computation of Interest................................ 20
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture................ 21
SECTION 402. Application of Trust Money............................. 22
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default...................................... 22
SECTION 502. Acceleration of Maturity; Rescission and Annulment..... 23
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee ......................................................... 24
SECTION 504. Trustee May File Proofs of Claim....................... 24
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities or Coupons .............................................. 25
SECTION 506. Application of Money Collected......................... 25
SECTION 507. Limitation on Suits.................................... 25
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest ............................................... 26
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SECTION 509. Restoration of Rights and Remedies..................... 26
SECTION 510. Rights and Remedies Cumulative......................... 26
SECTION 511. Delay or Omission Not Waiver........................... 27
SECTION 512. Control by Holders of Securities....................... 27
SECTION 513. Waiver of Past Defaults................................ 27
SECTION 514. Undertaking for Costs.................................. 27
SECTION 515. Waiver of Stay, Extension or Usury Laws................ 28
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.................... 28
SECTION 602. Notice of Defaults..................................... 29
SECTION 603. Certain Rights of Trustee.............................. 29
SECTION 604. Not Responsible for Recitals or Issuance of Securities. 30
SECTION 605. May Hold Securities.................................... 30
SECTION 606. Money Held in Trust.................................... 30
SECTION 607. Compensation and Reimbursement......................... 31
SECTION 608. Corporate Trustee Required; Eligibility................ 31
SECTION 609. Resignation and Removal; Appointment of Successor...... 31
SECTION 610. Acceptance of Appointment by Successor................. 32
SECTION 611. Merger, Conversion, Consolidation or Succession to
Business ............................................................ 33
SECTION 612. Appointment of Authenticating Agent.................... 34
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders ............................................................ 35
SECTION 702. Preservation of Information; Communications to
Holders. ........................................................... 35
SECTION 703. Reports by Trustee.................................... 36
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SECTION 704. Reports by Company.................................... 36
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company and Sales,
Leases and Conveyances Permitted Subject to Certain Conditions....... 37
SECTION 802. Rights and Duties of Successor Corporation............. 37
SECTION 803. Officers' Certificate and Opinion of Counsel........... 37
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders..... 38
SECTION 902. Supplemental Indentures with Consent of Holders........ 38
SECTION 903. Execution of Supplemental Indentures................... 39
SECTION 904. Effect of Supplemental Indentures...................... 39
SECTION 905. Conformity with Trust Indenture Act.................... 40
SECTION 906. Reference in Securities to Supplemental Indentures..... 40
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest... 40
SECTION 1002. Maintenance of Office or Agency....................... 40
SECTION 1003. Money for Securities Payments to be Held in Trust..... 41
SECTION 1004. Additional Amounts.................................... 42
SECTION 1005. Statement as to Compliance; Notice of Certain
Defaults............................................................. 43
SECTION 1006. Waiver of Certain Covenants........................... 43
ARTICLE ELEVEN
SUBORDINATION OF SECURITIES
SECTION 1101 Agreement to Subordinate............................... 43
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SECTION 1102 Distribution on Dissolution, Liquidation and
Reorganization; Subrogation of Securities ........................... 43
SECTION 1103 No Payment on Securities in Event of Default on
Senior Indebtedness ................................................. 45
SECTION 1104 Payments on Securities Permitted....................... 45
SECTION 1105 Authorization of Holders of Securities to Trustee to
Effect Subordination ................................................ 45
SECTION 1106 Notices to Trustee..................................... 45
SECTION 1107 Trustee as Holder of Senior Indebtedness............... 46
SECTION 1108 Modification of Terms of Senior Indebtedness........... 46
ARTICLE TWELVE
REDEMPTION OF SECURITIES
SECTION 1202. Election to Redeem; Notice to Trustee................. 46
SECTION 1203. Selection by Trustee of Securities to be Redeemed..... 47
SECTION 1204. Notice of Redemption.................................. 47
SECTION 1205. Deposit of Redemption Price........................... 48
SECTION 1206. Securities Payable on Redemption Date................. 48
SECTION 1207. Securities Redeemed in Part........................... 49
ARTICLE THIRTEEN
SINKING FUNDS
SECTION 1301. Applicability of Article.............................. 49
SECTION 1302. Satisfaction of Sinking Fund Payments with Securities. 49
SECTION 1303. Redemption of Securities for Sinking Fund............. 50
ARTICLE FOURTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1401. Applicability of Article.............................. 50
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called............. 50
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SECTION 1502. Call, Notice and Place of Meetings.................... 51
SECTION 1503. Persons Entitled to Vote at Meetings.................. 51
SECTION 1504. Quorum; Action........................................ 51
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings ............................................. 52
SECTION 1506. Counting Votes and Recording Action of Meetings....... 53
ARTICLE SIXTEEN
MISCELLANEOUS PROVISIONS
SECTION 1601 Securities in Foreign Currencies....................... 53
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INDENTURE, dated as of June __, 1997, between ULTRAMAR DIAMOND SHAMROCK
CORPORATION, a Delaware corporation (hereinafter called the "Company"), having
its principal office at 9830 Colonnade Boulevard, San Antonio, Texas 78230 and
THE BANK OF NEW YORK, a New York banking corporation, as Trustee (hereinafter
called the "Trustee") having its Corporate Trust Office at 101 Barclay Street,
Floor 21 West, New York, New York 10286.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its subordinated
debentures, notes or other evidences of subordinated indebtedness (hereinafter
called the "Securities"), unlimited as to principal amount, to bear such rates
of interest, to mature at such time or times, to be issued in one or more series
and to have such other provisions as shall be fixed as hereinafter provided.
The Company has duly authorized the execution and delivery of this
Indenture and all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the sum of one dollar
duly paid by the Company to the Trustee, the receipt of which is hereby
acknowledged, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, as follows:
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
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"Act" when used with respect to any Holder has the meaning specified in
Section 104.
"Additional Amounts" means any additional amounts which are required by a
Security or by or pursuant to a Board Resolution, under circumstances specified
therein, to be paid by the Company in respect of certain matters, including,
without limitation, taxes imposed on certain Holders, and which are owing to
such Holders.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 612 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Authorized Newspaper" means a newspaper, in an official language of the
country of publication or in the English language, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.
"Bearer Security" means any Security in the form established pursuant to
Section 201 which is payable to bearer.
"Board of Directors" means either the Board of Directors of the Company or
the Executive Committee thereof.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close,
except as may otherwise be provided in the form of Securities of any particular
series pursuant to the provisions of this Indenture.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor corporation shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by the Chairman of the Board,
the President, a Vice President or by the Treasurer, and by an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Controlled Subsidiary" means any corporation more than 80% of the
outstanding Voting Stock, except for qualifying shares, of which shall at the
time be owned directly or indirectly by the Company.
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"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be administered, which office
is located at 101 Barclay Street, Floor 21 West, New York, New York 10286.
"corporation" includes corporations, associations, companies and business
trusts.
"coupon" means any interest coupon appertaining to a Bearer Security.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollars" or "$" or any similar reference shall mean the currency of the
United States, except as may otherwise be provided in the form of Securities of
any particular series pursuant to the provisions of this Indenture.
"Event of Default" has the meaning specified in Section 501.
"Holder", when used with respect to any Security, means in the case of a
Registered Security, the Person in whose name the Security is registered in the
Security Register and in the case of a Bearer Security, the bearer thereof and,
when used with respect to any coupon, means the bearer thereof.
"Indenture" means this instrument as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof, and shall include each
Officers' Certificate delivered to the Trustee pursuant to Section 303.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity, and, when used with respect to a Security which provides for the
payment of Additional Amounts pursuant to Section 1004, includes such Additional
Amounts.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the applicable Securities.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security or an instalment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, request for redemption or
otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President, a Vice President or the Treasurer, and by 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 (except
as otherwise expressly provided in this Indenture) be an employee of or counsel
for the Company, or other counsel acceptable to the Trustee.
"Original Issue Discount Security" means a Security issued pursuant to
this Indenture which provides for declaration of an amount less than the
principal thereof to be due and payable upon acceleration pursuant to Section
502.
"Outstanding" when used with respect to Securities means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
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(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities and any coupons
thereto appertaining, provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made; and
(iii) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Securities for quorum purposes, the principal amount of
an Original Issue Discount Security that may be counted in making such
determination and that shall be deemed to be Outstanding for such purposes shall
be equal to the amount of the principal thereof that could be declared to be due
and payable pursuant to the terms of such Original Issue Discount Security at
the time the taking of such action by the Holders of such requisite principal
amount is evidenced to the Trustee as provided in Section 104(a), and, provided
further, that Securities owned beneficially by the Company or any other obligor
upon the Securities or any Affiliate of the Company or such other obligor, other
than Securities purchased in connection with the distribution or trading
thereof, shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment" when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified as provided
pursuant to Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
lost, destroyed, mutilated or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the lost, destroyed, mutilated or stolen Security or
the Security to which a mutilated, destroyed, lost or stolen coupon appertains.
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"Redemption Date" when used with respect to any Security to be redeemed
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to be redeemed
means the price at which it is to be redeemed as determined pursuant to the
provisions of this Indenture.
"Registered Security" means any Security established pursuant to Section
201 which is registered in the Security Register.
"Regular Record Date" for the interest payable on a Registered Security on
any Interest Payment Date means the date, if any, specified in such Security as
the "Regular Record Date".
"Responsible Officer" when used with respect to the Trustee means the
chairman or vice-chairman of the board of directors, the chairman or vice
chairman of the executive committee of the board of directors, the president,
any vice president (whether or not designated by a number or a word or words
added before or after the title "vice president"), the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any trust officer or assistant trust officer, or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Security" or "Securities" means any Security or Securities, as the case
may be, authenticated and delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Indebtedness" means any payment in respect of indebtedness of the
Company for money borrowed, except for any such indebtedness that is by its
terms subordinated to or pari passu with the Securities.
"Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of any series means a date fixed by the Trustee pursuant
to Section 307.
"Stated Maturity" when used with respect to any Security or any instalment
of principal thereof or interest thereon means the date specified in such
Security or a coupon representing such instalment of interest as the fixed date
on which the principal of such Security or such instalment of principal or
interest is due and payable.
"Subsidiary" means any corporation of which at the time of determination
the Company and/or one or more Subsidiaries owns or controls directly or
indirectly more than 50% of the shares of Voting Stock. "Wholly-owned", when
used with reference to a Subsidiary, means a Subsidiary of which all of the
outstanding capital stock (except for qualifying shares) is owned by the Company
or by one or more wholly-owned Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such with respect
to one or more series of Securities pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean each Person who is then a
Trustee hereunder, and if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean the
Trustee with respect to the Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
and any reference herein to the Trust Indenture Act or a particular provision
thereof shall mean such Act or provision, as the case may be,
5
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as amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.
"United States" means the United States of America (including the States
and the District of Columbia), its territories and possessions and other areas
subject to its jurisdiction.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
nonresident alien fiduciary of a foreign estate or trust.
"U.S. Depository" or "Depository" means, with respect to the Securities of
any series issuable or issued in whole or in part in the form of one or more
global Securities, the Person designated as U.S. Depository by the Company
pursuant to Section 301, which must be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and, if so provided pursuant to
Section 301 with respect to the Securities of any series, any successor to such
Person. If at any time there is more than one such Person, "U.S. Depository"
shall mean, with respect to any series of Securities, the qualifying entity
which has been appointed with respect to the Securities of that series.
"Vice President" when used with respect to the Company shall mean any Vice
President of the Company whether or not designated by a number or a word or
words added before or after the title "Vice President".
"Voting Stock" means stock of the class or classes having general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such corporation provided that, for the
purposes hereof, stock, which carries only the right to vote conditionally on
the happening of an event shall not be considered voting stock whether or not
such event shall have happened.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or
covenant has been complied with; and
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(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an
agent duly appointed in writing. If, but only if, Securities of a series
are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders of Securities of such series
may, alternatively, be embodied in and evidenced by the record of Holders
of Securities of such series voting in favor thereof, either in person or
by proxies duly appointed in writing, at any meeting of Holders of
Securities of such series duly called and held in accordance with the
provisions of Article Fifteen, or a combination of such instruments and
any such record. Except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments or
record or both are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments and any
such record (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders signing such
instrument or instruments and so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such
agent, or of the holding by any Person of a Security, shall be sufficient
for any purpose of this Indenture and (subject to Section 601) conclusive
in favor of the Trustee and the Company and any agent of the Trustee or
the Company, if made in the manner provided in this Section. The record of
any meeting of Holders of Securities shall be proved in the manner
provided in Section 1506.
Without limiting the generality of this Section 104, unless
otherwise established in or pursuant to a Board Resolution or set forth or
determined in an Officers' Certificate, or established in one or more
indentures supplemental hereto, pursuant to Section 301, a Holder,
including a U.S. Depository that is a Holder of a global Security, may
make, give or take, by a proxy, or proxies, duly appointed in writing, any
request, demand, authorization, direction, notice, consent, waiver or
other action provided in this Indenture to be made, given or taken by
Holders, and a U.S. Depository that is a Holder of a
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global Security may provide its proxy or proxies to the beneficial owners
of interests in any such global Security through such U.S. Depository's
standing instructions and customary practices.
The Company shall fix a record date for the purpose of determining
the Persons who are beneficial owners of interest in any permanent global
Security held by a U.S. Depository entitled under the procedures of such
U.S. Depository to make, give or take, by a proxy or proxies duly
appointed in writing, any request, demand, authorization, direction,
notice, consent, waiver or other action provided in this Indenture to be
made, given or taken by Holders. If such a record date is fixed, the
Holders on such record date or their duly appointed proxy or proxies, and
only such Persons shall be entitled to make, give or take such request,
demand, authorization, direction, notice, consent, waiver or other action,
whether or not such Holders remain Holders after such record date. No such
request, demand, authorization, direction, notice, consent, waiver or
other action shall be valid or effective if made, given or taken more than
90 days after such record date.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient and in accordance with such reasonable rules as
the Trustee may determine; and the Trustee may in any instance require
further proof with respect to any of the matters referred to in this
Section.
(c) The ownership of Registered Securities and the principal amount
and serial numbers of Registered Securities held by any Person, and the
date of holding the same, shall be proved by the Security Register.
(d) The principal amount and serial numbers of Bearer Securities
held by any Person, and the date of holding the same, may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary
reasonably acceptable to the Company, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing
that at the date therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities therein described;
or such facts may be proved by the certificate or affidavit of the Person
holding such Bearer Securities, if such certificate or affidavit is deemed
by the Trustee to be satisfactory. The Trustee and the Company may assume
that such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the
same Bearer Security is produced, or (2) such Bearer Security is produced
to the Trustee by some other Person, or (3) such Bearer Security is
surrendered in exchange for a Registered Security, or (4) such Bearer
Security is no longer Outstanding. The principal amount and serial numbers
of Bearer Securities held by the Person so executing such instrument or
writing and the date of holding the same may also be proved in any other
manner which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of any Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by Board Resolution,
fix in advance a record date for the determination of Holders of
Registered Securities entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or
other Act may be given before or after such record date, but only the
Holders of Registered Securities of record at the close of business on
such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such
record date; provided that no such authorization, agreement or consent by
the Holders of Registered Securities on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of
this Indenture not later than six months after the record date.
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(f) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done or suffered to be done by the
Trustee, any Security Registrar, any Paying Agent or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
SECTION 105. Notices etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to the attention of its Treasurer at the address of its
principal office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein or in the form of Securities
of any particular series pursuant to the provisions of this Indenture, where
this Indenture provides for notice to Holders of Securities of any event,
(1) such notice shall be sufficiently given to Holders of Registered
Securities if in writing and mailed, first-class postage prepaid, to each
Holder of a Registered Security affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
Notice; and
(2) such notice shall be sufficiently given to Holders of Bearer
Securities, if any, if published in an Authorized Newspaper in The City of
New York and, if the Securities of such series are then listed on any
stock exchange outside the United States, in an Authorized Newspaper in
such city as the Company shall advise the Trustee that such stock exchange
so requires, on a Business Day at least twice, the first such publication
to be not earlier than the earliest date and not later than the latest
date prescribed for the giving of such notice.
In any case where notice to Holders of Registered Securities is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of Registered
Securities or the sufficiency of any notice to Holders of Bearer Securities
given as provided herein. In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither
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failure to give notice by publication to Holders of Bearer Securities as
provided above, nor any defect in any notice so published, shall affect the
sufficiency of any notice mailed to Holders of Registered Securities as provided
above.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be equivalent of such notice. Waivers
of notice by Holders of Securities shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. Language of Notices, etc.
Any request, demand, authorization, direction, notice, consent, election
or waiver required or permitted under this Indenture shall be in the English
language, except that, if the Company so elects, any published notice may be in
an official language of the country of publication.
SECTION 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provisions shall
control.
SECTION 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 111. Separability Clause.
In case any provision in this Indenture or in the Securities or coupons
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities or coupons, express or
implied, shall give to any Person, other than the parties hereto, any Security
Registrar, any Paying Agent and their successors hereunder and the Holders of
Securities or coupons, any benefit or any legal or equitable right, remedy or
SECTION 113. Governing Law.
This Indenture and the Securities and coupons shall be governed by and
controlled in accordance with the laws of the State of New York.
SECTION 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture
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or the Securities or coupons other than a provision in the Securities which
specifically states that such provision shall apply in lieu of this Section)
payment of interest or any Additional Amounts or principal (and premium, if any)
need not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, and no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, of each series and the Bearer
Securities, if any, of each series, related coupons, if any, and temporary
global Securities, if any, shall be in the form established by or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, shall have
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto and
may have such letters, numbers or other marks of identification and such legends
or endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, the Securities of each series shall be issuable in
registered form without coupons. If so provided as contemplated by Section 301,
the Securities of a series also shall be issuable in bearer form, with or
without interest coupons attached.
The definitive Securities and coupons shall be printed, lithographed or
engraved or produced by any combination of these methods on a steel engraved
border or steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as conclusively evidenced
by their execution of such Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By
-------------------------------------
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
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The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto:
(1) the title of the Securities and the series in which such
Securities shall be included;
(2) any limit upon the aggregate principal amount of the Securities
of such title or the Securities of such series which may be authenticated
and delivered under this Indenture (except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Section 304, 305, 306,
906 or 1107);
(3) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or
both; any restrictions applicable to the offer, sale or delivery of Bearer
Securities and the terms upon which Bearer Securities of the series may be
exchanged for Registered Securities of the series and vice versa; and
whether any Securities of the series are to be issuable initially in
global form and, if so, (i) whether beneficial owners of interests in any
such global Security may exchange such interests for Securities of such
series and of like tenor of any authorized form and denomination and the
circumstances under which any such exchanges may occur, if other than in
the manner specified in Section 305 and (ii) the name of the depository or
the U.S. Depository, as the case may be, with respect to any global
Security;
(4) the date as of which any Bearer Securities of the series and any
temporary global Security representing Outstanding Securities of the
series shall be dated if other than the date of original issuance of the
first Security of the series to be issued;
(5) if Securities of the series are to be issuable as Bearer
Securities, whether interest in respect of any portion of a temporary
Bearer Security in global form (representing all of the Outstanding Bearer
Securities of the series) payable in respect of an Interest Payment Date
prior to the exchange of such temporary Bearer Security for definitive
Securities of the series shall be paid to any clearing organization with
respect to the portion of such temporary Bearer Security held for its
account and, in such event, the terms and conditions (including any
certification requirements) upon which any such interest payment received
by a clearing organization will be credited to the Persons entitled to
interest payable on such Interest Payment Date;
(6) the date or dates on which the principal of such Securities is
payable;
(7) the rate or rates at which such Securities shall bear interest,
if any, or any method by which such rate or rates shall be determined, the
date or dates from which such interest shall accrue, the Interest Payment
Dates on which such interest shall be payable and the Regular Record Date
for the interest payable on Registered Securities on any Interest Payment
Date, whether and under what circumstances Additional Amounts on such
securities shall be payable in respect of specified taxes, assessments or
other governmental charges withheld or deducted and, if so, whether the
Company has the option to redeem the affected Securities rather than pay
such Additional Amounts, and the basis upon which interest shall be
calculated if other than that of a 360 day year of twelve 90-day months;
(8) the place or places, if any, in addition to or other than the
Borough of Manhattan, The City of New York, where the principal of (and
premium, if any) and interest on or Additional Amounts, if any, payable in
respect of such Securities shall be payable;
(9) the period or periods within which, the price or prices at which
and the terms and conditions upon which such Securities may be redeemed,
in whole or in part, at the option of the Company;
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(10) the obligation, if any, of the Company to redeem or purchase
such Securities pursuant to any sinking fund or analogous provisions or at
the option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which such
Securities shall be redeemed or purchased, in whole or in part, pursuant
to such obligation, and any provisions for the remarketing of such
Securities;
(11) the denominations in which Registered Securities of the series,
if any, shall be issuable if other than denominations of $1,000 and any
integral multiple thereof, and the denominations in which Bearer
Securities of the series, if any, shall be issuable if other than the
denomination of $5,000;
(12) if other than the principal amount thereof, the portion of the
principal amount of such Securities which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
502;
(13) if other than such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public or
private debts, the coin or currency, including composite currencies, in
which payment of the principal of (and premium, if any) and interest, if
any, on, and Additional Amounts in respect of such Securities shall be
payable;
(14) if the principal of (and premium, if any) or interest, if any,
on, and Additional Amounts in respect of, such Securities are to be
payable, at the election of the Company or a Holder thereof, in a coin or
currency, including composite currencies, other than that in which the
Securities are stated to be payable, the period or periods within which,
and the terms and conditions upon which, such election may be made;
(15) if the amount of payments of principal of (and premium, if any)
or interest, if any, on, and Additional Amounts in respect of, such
Securities may be determined with reference to an index, formula or other
method or based on a coin or currency other than that in which the
Securities are stated to be payable, the manner in which such amounts
shall be determined;
(16) the right, if any, of the Company to defer payments of interest
by extending the interest payment periods and specify the duration of such
extension, the Interest Payment Dates on which such interest shall be
payable and whether and under what circumstances additional interest on
amounts deferred shall be payable;
(17) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, then
the form and terms of such certificates, documents or conditions; and
(18) any other terms of such Securities (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and the coupons appertaining to Bearer
Securities of such series, if any, shall be substantially identical except as to
denomination and the rate or rates of interest, if any, and Stated Maturity, the
date from which interest, if any, shall accrue and except as may otherwise be
provided in or pursuant to such Board Resolution and set forth in such Officers'
Certificate or in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time, and unless otherwise provided, a
series may be reopened for issuances of additional Securities of such series.
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If any of the terms of the Securities of any series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
SECTION 302. Denominations.
Unless other denominations and amounts may from time to time be fixed by
or pursuant to a Board Resolution, the Registered Securities of each series, if
any, shall be issuable in registered form without coupons in denominations of
$25,000 and any integral multiple thereof and the Bearer Securities of each
series, if any, shall be issuable in the denomination of $5,000, or in such
other denominations and amounts as may from time to time be fixed by or pursuant
to a Board Resolution.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, President, Vice President serving as Chief Financial Officer or
its Treasurer under its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile. Coupons shall bear the
facsimile signature of the Treasurer or any Assistant Treasurer of the Company.
Securities and coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series, together with any
coupons appertaining thereto, executed by the Company to the Trustee for
authentication, together with the Board Resolution and Officers' Certificate or
supplemental indenture with respect to such Securities referred to in Section
301 and a Company Order for the authentication and delivery of such Securities,
and the Trustee in accordance with the Company Order and subject to the
provisions hereof shall authenticate and deliver such Securities. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(a) the form and terms of such Securities and coupons, if any, have
been established in conformity with the provisions of this Indenture;
(b) that all conditions precedent to the authentication and delivery
of such Securities, together with the coupons, if any, appertaining
thereto, have been complied with and that such Securities and coupons,
when authenticated and delivered by the Trustee and issued by the Company
in the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting the enforcement of creditors'
rights and to general equity principles,
(c) that all laws and requirements in respect of the execution and
delivery by the Company of such Securities and coupons, if any, have been
complied with; and
(d) as to such other matters as the Trustee may reasonably request.
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The Trustee shall not be required to authenticate such Securities if the
issue of such Securities pursuant to this Indenture will affect the Trustee's
own rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee or if
the Trustee being advised by counsel determines that such action may not
lawfully be taken.
Each Registered Security shall be dated the date of its authentication.
Each Bearer Security and any temporary Bearer Security in global form shall be
dated as of the date specified as contemplated by Section 301.
No Security or coupon appertaining thereto shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Security a certificate of authentication substantially in
the form provided for in Section 202 or 615 executed by or on behalf of the
Trustee by the manual signature of one of its authorized signers, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Except as permitted by Section 306 or 307, the Trustee shall not
authenticate and deliver any Bearer Security unless all appurtenant coupons for
interest then matured have been detached and cancelled.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute and deliver to the Trustee, and upon Company Order the
Trustee shall authenticate and deliver, in the manner provided in Section 303,
temporary Securities of such series which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form, or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities. In
the case of Bearer Securities of any series, such temporary Securities may be in
global form, representing all of the Outstanding Bearer Securities of such
series.
Except in the case of temporary Securities in global form, which shall be
exchanged in accordance with the provisions thereof, if temporary Securities of
any series are issued, the Company will cause definitive Securities of that
series to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series containing identical terms
and provisions upon surrender of the temporary Securities of such series at an
office or agency of the Company maintained for such purpose pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series (accompanied by any unmatured coupons
appertaining thereto) the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations of the same series containing
identical terms and provisions; provided, however, that no definitive Bearer
Security, except as provided pursuant to Section 301, shall be delivered in
exchange for a temporary Registered Security; and provided, further, that a
definitive Bearer Security shall be delivered in exchange for a temporary Bearer
Security only in compliance with the conditions set forth therein. Unless
otherwise specified as contemplated by Section 301 with respect to a temporary
global Security, until so exchanged the temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
SECTION 305. Registration, Transfer and Exchange.
With respect to the Registered Securities of each series, if any, the
Company shall cause to be kept at an office or agency of the Company maintained
pursuant to Section 1002, a register (herein sometimes referred to as the
"Security Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Registered
Securities of each series and of transfers of the Registered Securities of each
series. Such office or agency shall be the "Security Registrar" for the
Registered Securities,
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if any, of each series of Securities. In the event that the Trustee shall not be
the Security Registrar, it shall have the right to examine the Security Register
at all reasonable times.
Upon surrender for registration of transfer of any Registered Security of
any series at any office or agency of the Company maintained for that series
pursuant to Section 1002, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series, of any
authorized denominations, of a like aggregate principal amount bearing a number
not contemporaneously outstanding and containing identical terms and provisions.
At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series containing
identical terms and provisions, in any authorized denominations, and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
any such office or agency. Whenever any Registered Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Registered Securities which the holder making the exchange is
entitled to receive.
At the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series containing identical
terms and provisions, of any authorized denominations and aggregate principal
amount, upon surrender of the Bearer Securities to be exchanged at any such
office or agency, with all unmatured coupons and all matured coupons in default
thereto appertaining. If the Holder of a Bearer Security is unable to produce
any such unmatured coupon or coupons or matured coupon or coupons in default,
such exchange may be effected if the Bearer Securities are accompanied by
payment in funds acceptable to the Company and the Trustee in an amount equal to
the face amount of such missing coupon or coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
is furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to any Paying Agent any such missing coupon in respect of which
such a payment shall have been made, such Holder shall be entitled to receive
the amount of such payment; provided, however, that, except as otherwise
provided in Section 1002, interest represented by coupons shall be payable only
upon presentation and surrender of those coupons at an office or agency located
outside the United States. Notwithstanding the foregoing, in case a Bearer
Security of any series is surrendered at any such office or agency in exchange
for a Registered Security of the same series and like tenor after the close of
business at such office or agency on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at such
office or agency on the related date for payment of Defaulted Interest, such
Bearer Security shall be surrendered without the coupon relating to such
Interest Payment Date or proposed date of payment, as the case may be (or, if
such coupon is so surrendered with such Bearer Security, such coupon shall be
returned to the person so surrendering the Bearer Security), and interest or
Defaulted Interest, as the case may be, will not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the Holder of such coupon when due in accordance with the
provisions of this Indenture.
If expressly provided with respect to the Securities of any series, at the
option of the Holder, Registered Securities of such series may be exchanged for
Bearer Securities upon such terms and conditions as may be provided with respect
to such series.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any global Security shall be exchangeable only if
(i) the Securities Depository is at any time unwilling or unable to continue as
Securities Depository and a successor depository is not appointed by the Company
within 60 days, (ii) the Company executes and delivers to the Trustee a Company
Order to the effect that such global Security
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shall be so exchangeable, or (iii) an Event of Default has occurred and is
continuing with respect to the Securities. If the beneficial owners of interests
in a global Security are entitled to exchange such interests for Securities of
such series and of like tenor and principal amount of any authorized form and
denomination, as specified as contemplated by Section 301, then without
unnecessary delay but in any event not later than the earliest date on which
such interests may be so exchanged, the Company shall deliver to the Trustee
definitive Securities of that series in aggregate principal amount equal to the
principal amount of such global Security, executed by the Company. On or after
the earliest date on which such interests may be so exchanged, such global
Securities shall be surrendered from time to time by the U.S. Depository or such
other depository as shall be specified in the Company Order with respect
thereto, and in accordance with instructions given to the Trustee and the U.S.
Depository or such depository, as the case may be (which instructions shall be
in writing but need not comply with Section 102 or be accompanied by an Opinion
of Counsel), as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be exchanged, in whole
or in part, for definitive Securities of the same series without charge. The
Trustee shall authenticate and make available for delivery, in exchange for each
portion of such surrendered global Security, a like aggregate principal amount
of definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such global Security to be exchanged which (unless
the Securities of the series are not issuable both as Bearer Securities and as
Registered Securities, in which case the definitive Securities exchanged for the
global Security shall be issuable only in the form in which the Securities are
issuable, as specified as contemplated by Section 301) shall be in the form of
Bearer Securities or Registered Securities, or any combination thereof, as shall
be specified by the beneficial owner thereof; provided, however, that no such
exchanges may occur during a period beginning at the opening of business 15 days
before any selection of Securities of that series to be redeemed and ending on
the relevant Redemption Date; and provided, further, that (unless otherwise
specified as contemplated by Section 301) no Bearer Security delivered in
exchange for a portion of a global Security shall be mailed or otherwise
delivered to any location in the United States. Promptly following any such
exchange in part, such global Security shall be returned by the Trustee to such
depository or the U.S. Depository, as the case may be, or such other depository
or U.S. Depository referred to above in accordance with the instructions of the
Company referred to above. If a Registered Security is issued in exchange for
any portion of a global Security after the close of business at the office or
agency where such exchange occurs on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of interest or
Defaulted Interest, as the case may be, interest will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of such Registered Security, but will be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
Person to whom interest in respect of such portion of such global Security is
payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer, or for exchange or redemption shall (if so required by the Company or
the Security Registrar for such series of Security presented) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and such Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange, or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906 or 1206 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of
or exchange any Securities of any series during a period beginning at the
opening of business 15 days before the day of the mailing of a notice
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of redemption of Securities of that series selected for redemption under Section
1103 and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not to be redeemed, or (iii) to exchange
any Bearer Security so selected for redemption except that such a Bearer
Security may be exchanged for a Registered Security of that series, provided
that such Registered Security shall be immediately surrendered for redemption
with written instruction for payment consistent with the provisions of this
Indenture.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series containing identical terms and of like principal amount and
bearing a number not contemporaneously outstanding, with coupons corresponding
to the coupons, if any, appertaining to the surrendered Securities.
If there be delivered to the Company and to the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security or coupon,
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security or coupon has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security or in exchange for the Security to which a destroyed, lost or stolen
coupon appertains (with all appurtenant coupons not destroyed, lost or stolen),
a new Security of the same series containing identical terms and of like
principal amount and bearing a number not contemporaneously outstanding, with
coupons corresponding to the coupons, if any, appertaining to such destroyed,
lost or stolen Security or to the Security to which such destroyed, lost or
stolen coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security or coupon
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security or coupon; provided,
however, that payment of principal of (and premium, if any) and any interest on
Bearer Securities shall, except as otherwise provided in Section 1002, be
payable only at an office or agency located outside the United States and,
unless otherwise specified as contemplated by Section 301, any interest on
Bearer Securities shall be payable only upon presentation and surrender of the
coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee and its counsel) connected therewith.
Every new Security of any series, with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen Security, or
in exchange for a Security to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Security and its
coupons, if any, or the destroyed, lost or stolen coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that
series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or coupons.
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SECTION 307. Payment of Interest; Interest Rights Preserved
Interest on any Registered Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall, if so provided in
such Security, be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest. In case a Bearer Security of any series is
surrendered in exchange for a Registered Security of such series after the close
of business (at an office of agency in a Place of Payment for such series) on
any Regular Record Date and before the opening of business (at such office or
agency) on the next succeeding Interest Payment Date, such Bearer Security shall
be surrendered without the coupon relating to such Interest Payment Date and
interest will not be payable on such Interest Payment Date in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the Holder of such coupon when due in accordance with the
provisions of this Indenture.
Any interest on any Registered Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest Payment Date
for such Registered Security (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder, and such Defaulted Interest may be paid by
the Company, at its election in each case, as provided in Clause (1) or (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities affected (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each such Registered Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of such
Registered Securities at his address as it appears in the Security
Register not less than 10 days prior to such Special Record Date. The
Trustee may in the name and at the expense of the Company, cause a similar
notice to be published at least once in a newspaper, customarily published
in the English language on each Business Day and of general circulation in
the Borough of Manhattan, The City of New York, but such publication shall
not be a condition precedent to the establishment of such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names such
Registered Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2). In case a
Bearer Security of any series is surrendered at the office or agency in a
Place of Payment for such series in exchange for a Registered Security of
such series after the close of business at such office or agency on any
Special Record Date and before the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest,
such Bearer Security shall be surrendered without the coupon relating to
such proposed date of payment and Defaulted Interest will not be payable
on such proposed date of payment in respect of the Registered Security
issued in exchange for such Bearer Security, but will be payable only to
the Holder of such coupon when due in accordance with the provisions of
this Indenture.
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(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such payment shall be deemed practicable by the Trustee.
At the option of the Company, interest on Registered Securities of any
series that bear interest may be paid by mailing a check to the address of the
person entitled thereto as such address shall appear in the Security Register.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as the
owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any), and (subject to Sections 305 and 307)
interest on and Additional Amounts with respect to, such Registered Security and
for all other purposes whatsoever, whether or not such Registered Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Security or coupon for the purpose of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether or
not such Security or coupon be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 309. Cancellation.
All Securities and coupons surrendered for payment, redemption,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee, and any such Securities and coupons and Securities and coupons
surrendered directly to the Trustee for any such purpose shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities and coupons held by the Trustee shall be destroyed by it unless by a
Company Order the Company directs their return to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360 day year of twelve 30-day months.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
Upon the direction of the Company by a Company Order this Indenture shall
cease to be of further effect (except as to any surviving rights of registration
of transfer or exchange of Securities herein expressly provided for and any
right to receive Additional Amounts, as provided in Section 1004), and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered and
all coupons appertaining thereto (other than (i) coupons
appertaining to Bearer Securities surrendered for exchange for
Registered Securities and maturing after such exchange, whose
surrender is not required or has been waived as provided in Section
305, (ii) Securities and coupons which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
306, (iii) coupons appertaining to Securities called for redemption
and maturing after the relevant Redemption Date, whose surrender has
been waived as provided in Section 1106, and (iv) Securities and
coupons for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation;
or
(B) all such Securities and, in the case of (i) or (ii) below,
any such coupons appertaining thereto not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) if redeemable at the option of the Company, are to
be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of
the Company, and the Company, in the case of (i), (ii) or
(iii) above, has deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on
such Securities and coupons not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any)
and interest, and any Additional Amounts with respect thereto,
to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
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In the event there are Securities of two or more series hereunder, the
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of this Indenture only if requested to do so with respect to
Securities of all series as to which it is Trustee and if the other conditions
thereto are met. In the event there are two or more Trustees hereunder, then the
effectiveness of any such instrument shall be conditioned upon receipt of such
instrument from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities, the coupons
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and any interest and Additional Amounts for whose payment such money has
been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon or any Additional
Amounts payable in respect of any Security of that series when such
interest or Additional Amounts becomes due and payable, and continuance of
such default for a period of 30 days; provided, however, that a valid
extension of an interest payment period by the Company in accordance with
the terms of the Securities of such series shall not constitute a default
in the payment of interest for this purpose; or
(2) default in the payment of the principal of (and premium, if any,
on) any Security of that series when it becomes due and payable at
Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has been expressly included
in this Indenture solely for the benefit of series of Securities other
than that series), and continuance of such default or breach for a period
of 60 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 10% in principal amount of the Outstanding Securities
of that series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
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(5) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company or
for any substantial part of its property, or ordering the winding-up or
liquidation of its affairs, and such decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or
(6) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any substantial
part of its property, or shall make any general assignment for the benefit
of creditors, or shall fail generally to pay its debts as they become due
or shall take any corporate action in furtherance of any of the foregoing;
or
(7) any other Event of Default provided with respect to Securities
of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal of all the
Securities of that series, or such lesser amount as may be provided for in the
Securities of that series, to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal or such lesser amount shall become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue installments of interest on and any Additional
Amounts payable in respect of all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities
of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or
rates borne by or provided for in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest and Additional
Amounts at the rate or rates borne by or provided for in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
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(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which has become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any instalment of interest on
or any Additional Amounts payable in respect of any Security when such
interest or Additional Amounts shall have become due and payable and such
default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at its Maturity.
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities and coupons, the whole amount then due and payable on
such Securities and coupons for principal (and premium, if any) and interest and
Additional Amounts, if any, with interest upon the overdue principal (and
premium, if any) and, to the extent that payment of such interest shall be
legally enforceable, upon overdue installments of interest or any Additional
Amounts, at the rate or rates borne by or provided for in such Securities, and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series and any
related coupons by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of that series, of
principal (and premium, if any) and interest and any Additional Amounts
owing and unpaid in respect of the Securities and to file such other
papers or documents as
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may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents or counsel) and of
the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each Holder of
Securities and coupons to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities and coupons, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due the Trustee under
Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities
or Coupons.
All rights of action and claims under this Indenture or any of the
Securities or coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery or judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities and
coupons in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (and premium,
if any), interest or any Additional Amounts, upon presentation of the Securities
or coupons, or both, as the case may be, and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and its agents
and counsel under Section 607;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities and coupons for principal (and premium, if any) and interest
and any Additional Amounts payable in respect of which or for the benefit
of which such money has been collected, ratably, without preference or
priority of any kind, according to the aggregate amounts due and payable
on such Securities and coupons for principal (and premium, if any),
interest and Additional Amounts, respectively;
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
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SECTION 507. Limitation on Suits.
No Holder of any Security of any series or any related coupons shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other such
Holders or Holders of any other series, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security or coupon shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Sections 305 and 307) interest on and any Additional Amounts in respect of such
Security or payment of such coupon on the respective Stated Maturity or
Maturities expressed in such Security or coupon (or, in the case of redemption,
on the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or coupon has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, the Trustee and the Holders of Securities and coupons shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities or coupons in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities or coupons is intended to be exclusive
of any other
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right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion of employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security or
coupon to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the Holders of Securities or coupons may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders of Securities or coupons, as the case may be.
SECTION 512. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right 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 the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) such direction is not unduly prejudicial to the rights of other
Holders of Securities of such series.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series and any related coupons waive any past default
hereunder with respect to such series and its consequences, except a default
(1) in the payment of the principal of (and premium, if any) or
interest on or Additional Amounts payable in respect of any Security of
such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security or
coupon by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit, other than the Trustee, of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
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including reasonable attorneys' fees, against any party litigant in such suit,
including the Trustee, having due regard to the merits and good faith of the
claims or defenses made by such party litigant, but the provisions of this
Section shall not apply to any suit instituted by the Company, the Trustee or by
any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities of any series, or to any suit
instituted by any Holder of any Security or coupon for the enforcement of the
payment of the principal of (and premium, if any) or interest on or any
Additional Amounts in respect of any Security or the payment of any coupon on or
after the respective Stated Maturities expressed in such Security (or, in the
case of redemption, on or after the Redemption Date) or interest on any overdue
principal of any Security.
SECTION 515. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties, and only
such duties, as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates or
opinions which by any provisions hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in principal amount of
the Outstanding Securities of any series, relating to the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to the
Securities of such series; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with respect
to the Securities of any series, the Trustee shall transmit by mail to all
Holders of Securities of such series entitled to receive reports pursuant to
Section 703(c), notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived, provided, however, that, except in
the case of a default in the payment of the principal of (and premium, if any)
or interest on, or any Additional Amounts with respect to, any Security of such
series or in the payment of any sinking fund instalment with respect to
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Holders of Securities and coupons of such series; and provided, further, that in
the case of any default of the character specified in Section 501(4) with
respect to Securities of such series, no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default with respect to Securities of
such series.
SECTION 603. Certain Rights of Trustee.
Except as otherwise provided in Section 601:
(a) the Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, or other paper or document
reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order (other
than delivery of any Security to the Trustee for authentication and
delivery pursuant to Section 303 which shall be sufficiently evidenced as
provided therein) and any resolution of the Board of Directors shall be
sufficiently evidenced by a Board Resolution;
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(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, conclusively rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities of any series or any related
coupons pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Company, and the Trustee or any Authenticating Agent assumes
no responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities or
coupons. The Trustee or any Authenticating Agent shall not be accountable for
the use or application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and coupons and, subject
to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise deal with
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
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SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursements or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee and its agents for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending themselves against any claim
or liability in connection with the exercise or performance of any of
their powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Securities of any series
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (or premium, if any) or
interest on Securities.
SECTION 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that is a corporation (or
other person permitted to so act by the Commission permitted by the Trust
Indenture Act to act as trustee under an indenture qualified under the Trust
Indenture Act and that has a combined capital and surplus (computed in
accordance with Section 310(a)(2) of the Trust Indenture Act) of at least
$50,000,000. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section or Section 310(a)(5) of the Trust Indenture
Act, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
SECTION 609. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until
the acceptance of appointment by the successor Trustee under Section 610.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required
by Section 610 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.
(d) If at any time:
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(1) the Trustee shall fail to comply with the obligations
imposed upon it under Section 310(b) of the Trust Indenture Act with
respect to Securities of any series after written request therefor
by the Company or by any Holder of a Security who has been a bona
fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 608
and shall fail to resign after written request therefor by the
Company or by any such Holder of a Security, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation ,conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities or the Securities of such series, or (ii)
subject to Section 315(e) of the Trust Indenture Act, any Holder of a Security
who has been a bona fide Holder of a Security of any series for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect to
all Securities of such series and the appointment of a successor Trustee or
Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any
cause, with respect to the Securities of one or more series, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the Securities of any
particular series) and shall comply with the applicable requirements of
Section 610. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of
such series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment in accordance with the applicable requirements of Section
610, become the successor Trustee with respect to the Securities of such
series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders of
Securities and accepted appointment in the manner required by Section 610,
any Holder of a Security who has been a bona fide Holder of a Security of
such series for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the Securities
of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of
any series by mailing written notice of such event by first-class mail,
postage prepaid, to the Holders of Registered Securities, if any, of such
series as their names and addresses appear in the Security Register and,
if Securities of such series are issued as Bearer Securities, by
publishing notice of such event once in an Authorized Newspaper in each
Place of Payment located outside the United States. Each notice shall
include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
SECTION 610. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the
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Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of
the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to
the Securities of one or more series shall execute and deliver an
indenture supplemental hereto wherein each successor Trustee shall accept
such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series as to which
the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust, that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee
and that no Trustee shall be responsible for any notice given to, or
received by, or any act or failure to act on the part of any other Trustee
hereunder, and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein, such retiring Trustee shall with
respect to the Securities of that or those series to which the appointment
of such successor Trustee relates have no further responsibility for the
exercise of rights and powers or for the performance of the duties and
obligations vested in the Trustee under this Indenture other than as
hereinafter expressly set forth, and each such successor Trustee without
any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to
such successor Trustee, to the extent contemplated by such supplemental
indenture, the property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) or (b) of this Section, as the case
may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 611. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified
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and eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 612. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
or exchange, registration of transfer or partial redemption thereof or pursuant
to Section 306, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall (i) mail written notice
of such appointment by first-class mail, postage prepaid, to all Holders of
Registered Securities, if any, of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the
Security Register, and (ii) if Securities of the series are issued as Bearer
Securities, publish notice of such appointment at least once in an Authorized
Newspaper in the place where such successor Authenticating Agent has its
principal office if such office is located outside the United States. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
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The provisions of Sections 308, 604 and 605 shall be applicable to each
Authenticating Agent.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form.
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By
-----------------------------------------
As Authenticating Agent
By
-----------------------------------------
Authorized Signatory
If all of the Securities of any series may not be originally issued at one
time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment where the
Company wishes to have Securities of such series authenticated upon original
issuance, the Trustee, if so requested in writing (which writing need not comply
with Section 102) by the Company, shall appoint in accordance with this Section
612 an Authenticating Agent having an office in a Place of Payment designated by
the Company with respect to such series of Securities.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than fifteen days after the Regular
Record Date for interest for each series of Securities, a list, in such
form as the Trustee may reasonably require, of the names and addresses of
the Holders of Registered Securities of such series as of such Regular
Record Date, or if there is no Regular Record Date for interest for such
series of Securities, semi-annually, upon such dates as are set forth in
the Board Resolution or indenture supplemental hereto authorizing such
series, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished,
provided, however, that, so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
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Every Holder of Securities or coupons, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company, the Trustee,
any Paying Agent or any Security Registrar shall be held accountable by reason
of the disclosure of any information as to the names and addresses of the
Holders of Securities in accordance with Section 312 of the Trust Indenture Act,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 312(b) of the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the
first May 15 following the first issuance of Securities pursuant to
Section 301, if required by Section 313(a) of the Trust Indenture Act, the
Trustee shall transmit, pursuant to Section 313(c) of the Trust Indenture
Act, a brief report dated as of such May 15 with respect to any of the
events specified in said Section 313(a) which may have occurred since the
later of the immediately preceding May 15 and the date of this Indenture.
(b) The Trustee shall transmit the reports required by Section
313(b) of the Trust Indenture Act at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted in the
manner and to the Persons required by Sections 313(c) and 313(d) of the
Trust Indenture Act. The Company will notify the Trustee when any series
of Securities are listed on any securities exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to
file information, documents or reports pursuant to either of said
sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934 in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in
such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Company with the conditions and covenants of this Indenture as may
be required from time to time by such rules and regulations; and
(3) transmit within 30 days after the filing thereof with the
Trustee, in the manner and to the extent provided in Section 703(c) with
respect to reports pursuant to Section 703(a), such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission.
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ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company and Sales, Leases and
Conveyances Permitted Subject to Certain Conditions.
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation,
provided that in any such case, (i) either the Company shall be the continuing
corporation, or the successor corporation shall be a corporation organized and
existing under the laws of the United States of America or a State thereof and
such successor corporation shall expressly assume the due and punctual payment
of the principal of (and premium, if any), any interest on, and any Additional
Amounts payable pursuant to Section 1004 with respect to, all the Securities,
according to their tenor, and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be performed by the
Company by supplemental indenture satisfactory to the Trustee, executed and
delivered to the Trustee by such corporation, and (ii) the Company or such
successor corporation, as the case may be, shall not, immediately after such
merger or consolidation, or such sale, lease or conveyance, be in default in the
performance of any such covenant or condition.
SECTION 802. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, lease or conveyance and
upon any such assumption by the successor corporation, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part, and the
predecessor corporation, except in the event of a lease, shall be relieved of
any further obligation under this Indenture and the Securities and coupons. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of the Company, any or all of the Securities and
coupons issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
corporation, instead of the Company, and subject to all the terms, conditions
and limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities and coupons which previously shall have been signed
and delivered by the officers of the Company to the Trustee for authentication,
and any Securities or coupons which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the
Securities and coupons so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Securities and coupons theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Securities and coupons had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale, lease or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities and coupons thereafter to be issued as may be appropriate.
SECTION 803. Officers' Certificate and Opinion of Counsel.
The Trustee, subject to the provisions of Sections 601 and 603, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, lease or conveyance, and any
such assumption, complies with the provisions of this Article.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities or coupons, the Company,
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the
Company, and the assumption by any such successor of the covenants of the
Company herein and in the Securities contained; or
(2) to add to the covenants of the Company, for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal (or
premium, if any) on Registered Securities or of principal (or premium, if
any) or any interest on Bearer Securities, to permit Registered Securities
to be exchanged for Bearer Securities or to permit the issuance of
Securities in uncertificated form, provided any such action shall not
adversely affect the interests of the Holders of Securities of any series
or any related coupons in any material respect; or
(4) to establish the form of terms of Securities of any series as
permitted by Sections 201 and 301; or
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 610 (b); or
(6) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture which shall not adversely affect the
interest of the Holders of Securities of any series or any related coupons
in any material respect; or
(7) to add to, delete from or revise the conditions, limitations and
restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of Securities, as herein set forth; or
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than 66-2/3% in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of
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the Holders of Securities of such series under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
instalment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any Additional Amounts payable
in respect thereof, or any premium payable upon the redemption thereof, or
change the obligation of the Company to pay Additional Amounts pursuant to
Section 1004 (except as contemplated by Section 801(i) and permitted by
Section 901(1)), or reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to Section 502, or change
any Place of Payment where, or the coin or currency in which, any Security
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1404 for quorum or
voting, or
(3) modify any of the provisions of this Section, or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders of Securities under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
and of any coupons appertaining thereto shall be bound thereby.
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SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest.
The Company covenants and agrees for the benefit of the Holders of each
series of Securities that it will duly and punctually pay the principal of (and
premium, if any), interest on and any Additional Amounts payable in respect of
the Securities of that series in accordance with the terms of such series of
Securities, any coupons appertaining thereto and this Indenture. Any interest
due on and any Additional Amounts payable in respect of Bearer Securities on or
before Maturity, other than Additional Amounts, if any, payable as provided in
Section 1004 in respect of principal of (or premium, if any, on) such a
Security, shall be payable only upon presentation and surrender of the several
coupons for such interest installments as are evidenced thereby as they
severally mature.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series (but not Bearer
Securities, except as otherwise provided below, unless such Place of Payment is
located outside the United States) may be presented or surrendered for payment,
where Securities of that series may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be served. If Securities of
a series are issuable as Bearer Securities, the Company will maintain, subject
to any laws or regulations applicable thereto, an office or agency in a Place of
Payment for such series which is located outside the United States where
Securities of such series and the related coupons may be presented and
surrendered for payment (including payment of any Additional Amounts payable on
Securities of such series pursuant to Section 1004); provided, however, that if
the Securities of such series are listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company will maintain a Paying Agent in London, Luxembourg
or any other required city located outside the United States, as the case may
be, so long as the Securities of such series are listed on such exchange. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, except that Bearer Securities of that series and the related coupons
may be presented and surrendered for payment (including payment of any
Additional Amounts payable on Bearer Securities of that series pursuant to
Section 1004) at the place specified for the purpose pursuant to Section 301,
and the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
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Except as otherwise provided in the form of Bearer Security of any
particular series pursuant to the provisions of this Indenture, no payment of
principal, premium or interest on Bearer Securities shall be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank located
in the United States; provided, however, payment of principal of and any premium
and interest in U.S. dollars (including Additional Amounts payable in respect
thereof) on any Bearer Security may be made at the Corporate Trust Office of the
Trustee in the Borough of Manhattan, The City of New York if (but only if)
payment of the full amount of such principal, premium, interest or Additional
Amounts at all offices outside the United States maintained for the purpose by
the Company in accordance with this Indenture is illegal or effectively
precluded by exchange controls or other similar restrictions.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency. Unless otherwise set forth in a Board Resolution or indenture
supplemental hereto with respect to a series of Securities, the Company hereby
designates as the Place of Payment for each series of Securities the Borough of
Manhattan, The City of New York, and initially appoints the Trustee at its
Corporate Trust Office as the Company's office or agency for each of such
purposes in such City.
SECTION 1003. Money for Securities Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any), or interest on, any of the Securities of
that series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
action or failure so to act
Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will, on or prior to each due date of the principal of (and
premium, if any), or interest on, any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Securities of that series in trust
for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal (and premium, if any) or interest on the Securities
of that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
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The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or of any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Except as otherwise provided in the form of Securities of any particular
series pursuant to the provisions of this Indenture, any money deposited with
the Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of (and premium, if any) or interest on any Security of
any series and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security or any coupon appertaining
thereto shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in an Authorized Newspaper in
each Place of Payment or to be mailed to Holders of Registered Securities, or
both, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication
or mailing, any unclaimed balance of such money then remaining will be repaid to
the Company.
SECTION 1004. Additional Amounts.
If the Securities of a series provide for the payment of Additional
Amounts, the Company will pay to the Holder of any Security of any series or any
coupon appertaining thereto Additional Amounts as provided therein. Whenever in
this Indenture there is mentioned, in any context, the payment of the principal
of (or premium, if any) or interest on, or in respect of, any Security of any
series or any related coupon or the net proceeds received on the sale or
exchange of any Security of any series, such mention shall be deemed to include
mention of the payment of Additional Amounts provided for in this Section to the
extent that, in such context, Additional Amounts are, were or would be payable
in respect thereof pursuant to the provisions of this Section and express
mention of the payment of Additional Amounts (if applicable) in any provisions
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
If the Securities of a series provide for the payment of Additional
Amounts, at least 10 days prior to the first Interest Payment Date with respect
to that series of Securities (or if the Securities of that series will not bear
interest prior to Maturity, the first day on which a payment of principal (and
premium, if any) is made), and at least 10 days prior to each date of payment of
principal (and premium, if any) or interest if there has been any change with
respect to the matters set forth in the below-mentioned Officers' Certificate,
the Company will furnish the Trustee and the Company's principal Paying Agent or
Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal (and premium, if any) or interest on the Securities of that
series shall be made to Holders of Securities of that series or the related
coupons who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described in the Securities of
that Series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities or coupons and the Company will
pay to the Trustee or such Paying Agent the Additional Amounts required by this
Section. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section.
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SECTION 1005. Statement as to Compliance; Notice of Certain Defaults.
(a) The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year, a written statement, which need not comply
with Section 102, signed by the Chairman of the Board, the President or a
Vice President and by the Treasurer, an Assistant Treasurer, the
Controller or an Assistant Controller of the Company, stating, as to each
signer thereof, that
(1) a review of the activities of the Company during such year
and of performance under this Indenture has been made under his
supervision, and
(2) to the best of his knowledge, based on such review, (a)
the Company has fulfilled all of its obligations under this
Indenture throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default
known to him and the nature and status thereof, and (b) no event has
occurred and is continuing which is, or after notice or lapse of
time or both would become, an Event of Default, or, if such an event
has occurred and is continuing, specifying each such event known to
him and the nature and status thereof.
(b) The Company will deliver to the Trustee within five days after
the occurrence thereof, written notice of any event which after notice or
lapse of time or both would become an Event of Default pursuant to Clause
(4) of Section 501.
SECTION 1006. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004 to 1005, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE ELEVEN
SUBORDINATION OF SECURITIES
SECTION 1101 Agreement to Subordinate.
The Company, for itself, its successors and assigns, covenants and agrees,
and each Holder of Securities, by his acceptance thereof, likewise covenants and
agrees, that the payment of the principal of (and premium, if any), interest on
and any Additional Amounts payable in respect of each and all of the Securities
is hereby expressly subordinated, to the extent and in the manner hereinafter
set forth, in right of payment to the prior payment in full of all Senior
Indebtedness.
SECTION 1102 Distribution on Dissolution, Liquidation and Reorganization;
Subrogation of Securities.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or otherwise (subject to the power of a court of competent
jurisdiction to make other equitable
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provision reflecting the rights conferred in this Indenture upon the Senior
Indebtedness and the holders thereof with respect to the Securities and the
Holders thereof by a lawful plan or reorganization under applicable bankruptcy
law),
(1) the holders of all Senior Indebtedness shall be entitled to
receive payment in full of the principal thereof, premium, if any,
interest or additional amounts required in respect of certain taxes, and
any interest thereon, due thereon before the Holders of the Securities are
entitled to receive any payment upon the principal, premium, interest or
Additional Amounts of or on the Securities or interest on overdue amounts
thereof; and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the
Holders of the Securities or the Trustee would be entitled except for the
provisions of this Article Eleven shall be paid by the liquidating trustee
or agent or other person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid
on account of the principal of, premium, if any, interest or additional
amounts required in respect of certain taxes, and any interest thereon, on
the Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness is paid in full,
such payment or distribution shall be paid over to the holders of such
Senior Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably
as aforesaid, for application to the payment of all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid
in full, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders of the
Securities shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to Senior Indebtedness until the principal,
premium, interest or Additional Amounts, and any interest thereon, of or on the
Securities shall be paid in full and no such payments or distributions to the
Holders of the Securities of cash, property or securities otherwise
distributable to the Senior Indebtedness shall, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment by the Company to or on account of the
Securities. It is understood that the provisions of this Article Eleven are and
are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Senior
Indebtedness, on the other hand. Nothing contained in this Article Eleven or
elsewhere in this Indenture or in the Securities is intended to or shall impair,
as between the Company, its creditors other than the holders of Senior
Indebtedness, and the Holders of the Securities, the obligation of the Company,
which is unconditional and absolute, to pay to the Holders of the Securities the
principal, premium, interest or Additional Amounts, and any interest thereon, of
or on the Securities as and when the same shall become due and payable in
accordance with their terms, or to affect the relative rights of the Holders of
the Securities and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or in the Securities prevent the Trustee
or the Holder of any Security from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, under this Article Eleven of the holders of Senior Indebtedness in respect
of cash, property or securities of the Company received upon the exercise of any
such remedy. Upon any payment or
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distribution of assets of the Company referred to in this Article Eleven, the
Trustee shall be entitled to conclusively rely upon a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon, and all other facts pertinent thereto or to this Article
Eleven.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness. The Trustee shall not be liable to any such
holder if it shall pay over or distribute to or on behalf of Holders of
Securities or the Company moneys or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article Eleven. The rights and
claims of the Trustee under Section 607 shall not be subject to the provisions
of this Article Eleven.
If the Trustee or any Holder of Securities does not file a proper claim or
proof of debt in the form required in any proceeding referred to above prior to
30 days before the expiration of the time to file such claim in such proceeding,
then the holder of any Senior Indebtedness is hereby authorized, and has the
right, to file an appropriate claim or claims for or on behalf of such Holder of
Securities.
SECTION 1103 No Payment on Securities in Event of Default on Senior
Indebtedness.
No payment by the Company on account of principal, premium, interest or
Additional Amounts, and any interest thereon, of or on the Securities shall be
made unless full payment of amounts then due for principal, premium, if any,
sinking funds, and interest or Additional Amounts on Senior Indebtedness has
been made or duly provided for in money or money's worth.
SECTION 1104 Payments on Securities Permitted.
Nothing contained in this Indenture or in any of the Securities shall (a)
affect the obligation of the Company to make, or prevent the Company from
making, at any time except as provided in Sections 1102 and 1103, payments of
principal, premium, interest or Additional Amounts, and any interest thereon, of
or on the Securities or (b) prevent the application by the Trustee of any moneys
deposited with it hereunder to the payment of or on account of the principal,
premium, interest or Additional Amounts, and any interest thereon, of or on the
Securities unless the Trustee shall have received at its Corporate Trust Office
written notice of any event prohibiting the making of such payment more than two
Business Days prior to the date fixed for such payment or prior to the execution
of an instrument to satisfy and discharge this Indenture based upon the deposit
of funds under Section 401(1)(B).
SECTION 1105 Authorization of Holders of Securities to Trustee to Effect
Subordination.
Each Holder of Securities by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination as provided in this Article Eleven and appoints
the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1106 Notices to Trustee.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee located at the Corporate Trust Office of the Trustee of any fact
known to the Company which would prevent the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provisions of this Indenture, neither the Trustee nor any
Paying Agent (other than the Company) shall be charged with knowledge of the
existence of any Senior Indebtedness or of any event which would prohibit the
making of any payment of moneys to or by the Trustee or such Paying Agent,
unless and until the Trustee or such Paying Agent shall have received (in the
case of the Trustee, at its Corporate Trust Office) written notice thereof from
the Company or from the holder of any Senior Indebtedness or from the trustee
for any
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such holder, together with proof satisfactory to the Trustee of such holding of
Senior Indebtedness or of the authority of such trustee; provided, however, that
if at least two Business Days prior to the date upon which by the terms hereof
any such moneys may become payable for any purpose (including, without
limitation, the payment of the principal, premium, interest or Additional
Amounts, of or on any Security, or any interest thereon) or the date on which
the Trustee shall execute an instrument acknowledging satisfaction and discharge
of this Indenture, the Trustee shall not have received with respect to such
moneys or the moneys deposited with it as a condition to such satisfaction and
discharge the notice provided for in this Section 1106, then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such moneys and to apply the same to the purpose for which
they were received, and shall not be affected by any notice to the contrary,
which may be received by it on or after such two Business Days prior to such
date. The Trustee shall be entitled to conclusively rely on the delivery to it
of a written notice by a person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such a
notice has been given by a holder of Senior Indebtedness or a trustee on behalf
of any such holder. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Eleven, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Eleven and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 1107 Trustee as Holder of Senior Indebtedness.
The Trustee shall be entitled to all the rights set forth in this Article
Eleven in respect of any Senior Indebtedness at any time held by it to the same
extent as any other holder of Senior Indebtedness and nothing in Section 613 or
elsewhere in this Indenture shall be construed to deprive the Trustee of any of
its rights as such holder.
SECTION 1108 Modification of Terms of Senior Indebtedness.
Any renewal or extension of the time of payment of any Senior Indebtedness
or the exercise by the holders of Senior Indebtedness of any of their rights
under any instrument creating or evidencing Senior Indebtedness, including
without limitation the waiver of default thereunder, may be made or done all
without notice to or assent from Holders of the Securities or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal or
other change of, or waiver, consent or other action in respect of, any liability
or obligation under or in respect of, or of any of the terms, covenants or
conditions of any indenture or other instrument under which any Senior
Indebtedness is outstanding or of such Senior Indebtedness, whether or not such
release is in accordance with the provisions of any applicable document, shall
in any way alter or affect any of the provisions of this Article Eleven or of
the Securities relating to the subordination thereof.
ARTICLE TWELVE
REDEMPTION OF SECURITIES
SECTION 1201. Applicability of Article.
Redemption of Securities of any series at the option of the Company as
permitted or required by the terms of such Securities shall be made in
accordance with the terms of such Securities and this Article.
SECTION 1202. Election to Redeem; Notice to Trustee.
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The election of the Company to redeem any Securities shall be evidenced by
a Company Order. In case of any redemption at the election of the Company of
less than all of the Securities of any series with the same issue date, interest
rate and Stated Maturity, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed.
SECTION 1203. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series with the same issue date,
interest rate and Stated Maturity are to be redeemed, the particular Securities
to be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities of such series not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions of the principal amount of Registered Securities of such series;
provided, however, that no such partial redemption shall reduce the portion of
the principal amount of a Registered Security of such series not redeemed to
less than the minimum denomination for a Security of that series established
pursuant to Section 302.
The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) in writing of the Securities selected for redemption and,
in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal of such Securities which has been or is to be redeemed.
SECTION 1204. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section 106,
not less than 30 nor more than 60 days prior to the Redemption Date, unless a
shorter period is specified in the Securities to be redeemed, to the Holders of
Securities to be redeemed. Failure to give notice by mailing in the manner
herein provided to the Holder of any Registered Securities designated for
redemption as a whole or in part, or any defect in the notice to any such
Holder, shall not affect the validity of the proceedings for the redemption of
any other Securities or portion thereof.
Any notice that is mailed to the Holder of any Registered Securities in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Securities to be redeemed,
(4) in case any Registered Security is to be redeemed in part only,
the notice which relates to such Security shall state that on and after
the Redemption Date, upon surrender of such Security, the Holder of such
Security will receive, without charge, a new Registered Security or
Registered Securities of authorized denominations for the principal amount
thereof remaining unredeemed,
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(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed, and, if applicable,
that interest thereon shall cease to accrue on and after said date,
(6) the place or places where such Securities, together in the case
of Bearer Securities with all coupons appertaining thereto, if any,
maturing after the Redemption Date, are to be surrendered for payment of
the Redemption Price, and
(7) that the redemption is for a sinking fund, if such is the case.
A notice of redemption published as contemplated by Section 106 need not
identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1205. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on and any Additional
Amounts with respect thereto, all the Securities or portions thereof which are
to be redeemed on that date.
SECTION 1206. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest and the coupons for such
interest appertaining to any Bearer Securities so to be redeemed, except to the
extent provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest (and
any Additional Amounts) to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only upon presentation and
surrender of coupons for such interest (at an office or agency located outside
the United States except as otherwise provided in Section 1002), and provided,
further, that installments of interest on Registered Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Security may
be paid after deducting from the Redemption Price an amount equal to the face
amount of all such missing coupons, or the surrender of such missing coupon or
coupons may be waived by the Company and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall surrender
to the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made from the Redemption Price, such Holder shall be
entitled to receive the amount so deducted; provided, however, that interest
(and any Additional Amounts) represented by coupons shall be payable only upon
presentation and surrender of those coupons at an office or agency located
outside of the United States except as otherwise provided in Section 1002.
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If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1207. Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part shall be
surrendered at any office or agency of the Company maintained for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Registered Security or Securities of the same series, containing identical
terms and provisions, of any authorized denomination as requested by such Holder
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered. If a Security in global
form is so surrendered, the Company shall execute, and the Trustee shall
authenticate and deliver to the U.S. Depository or other depository for such
Security in global form as shall be specified in the Company Order with respect
thereto to the Trustee, without service charge, a new Security in global form in
a denomination equal to and in exchange for the unredeemed portion of the
principal of the Security in global form so surrendered.
ARTICLE THIRTEEN
SINKING FUNDS
SECTION 1301. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series, except as otherwise permitted or
required by any form of Security of such series issued pursuant to this
Indenture.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of such series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1302. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
SECTION 1302. Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series to be made pursuant to the
terms of such Securities as provided for by the terms of such series (1) deliver
Outstanding Securities of such series (other than any of such Securities
previously called for redemption or any of such Securities in respect of which
cash shall have been released to the Company), together in the case of any
Bearer Securities of such series with all unmatured coupons appertaining
thereto, and (2) apply as a credit Securities of such series which have been
redeemed either at the election of the Company pursuant to the terms of such
series of Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities, provided that such
series of Securities have not been previously so credited. Such Securities shall
be received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
If as a result of the delivery or credit of Securities of any series in lieu of
cash payments pursuant to this Section 1302, the principal amount of Securities
of such series to be redeemed in order to exhaust the aforesaid cash payment
shall be less than
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$100,000, the Trustee need not call Securities of such series for redemption,
except upon Company Request, and such cash payment shall be held by the Trustee
or a Paying Agent and applied to the next succeeding sinking fund payment,
provided, however, that the Trustee or such Paying Agent shall at the request of
the Company from time to time pay over and deliver to the Company any cash
payment so being held by the Trustee or such Paying Agent upon delivery by the
Company to the Trustee of Securities of that series purchased by the Company
having an unpaid principal amount equal to the cash payment requested to be
released to the Company.
SECTION 1303. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting of
Securities of that series pursuant to Section 1302, and the optional amount, if
any, to be added in cash to the next ensuing mandatory sinking fund payment, and
will also deliver to the Trustee any Securities to be so credited and not
theretofore delivered. If such Officers' Certificate shall specify an optional
amount to be added in cash to the next ensuing mandatory sinking fund payment,
the Company shall thereupon be obligated to pay the amount therein specified.
Not less than 30 days before each such sinking fund payment date the Trustee
shall select the Securities to be redeemed upon such sinking fund payment date
in the manner specified in Section 1203 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 1204. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1206 and 1207.
ARTICLE FOURTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1401. Applicability of Article.
Securities of any series which are repayable at the option of the Holders
thereof before their Stated Maturity shall be repaid in accordance with the
terms of the Securities of such series. The repayment of any principal amount of
Securities pursuant to such option of the Holder to require repayment of
Securities before their Stated Maturity, for purposes of Section 309, shall not
operate as a payment, redemption or satisfaction of the indebtedness represented
by such Securities unless and until the Company, at its option, shall deliver or
surrender the same to the Trustee with a directive that such Securities be
cancelled. Notwithstanding anything to the contrary contained in this Article
Thirteen, in connection with any repayment of Securities, the Company may
arrange for the purchase of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Holders of such Securities on or before the close of business on the
repayment date an amount not less than the repayment price payable by the
Company on repayment of such Securities, and the obligation of the Company to
pay the repayment price of such Securities shall be satisfied and discharged to
the extent such payment is so paid by such purchasers.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called.
If Securities of a series are issuable as Bearer Securities, a
meeting of Holders of Securities of such series may be called at any time and
from time to time pursuant to this Article to make, give or take any
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request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
SECTION 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be
held at such time and at such place in the Borough of Manhattan, The City
of New York, or in London as the Trustee shall determine. Notice of every
meeting of Holders of Securities of any series, setting forth the time and
the place of such meeting and in general terms the action proposed to be
taken at such meeting, shall be given, in the manner provided in Section
106, not less than 21 nor more than 180 days prior to the date fixed for
the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding
Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose
specified in Section 1501, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee
shall not have the first publication of the notice of such meeting within
21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Company or the
Holders of Securities of such series in the amount above specified, as the
case may be, may determine the time and the place in the Borough of
Manhattan, The City of New York, or in London for such meeting and may
call such meeting for such purposes by giving notice thereof as provided
in subsection (a) of this Section.
SECTION 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
SECTION 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series; provided, however, that if any action is
to be taken at such meeting with respect to a consent or waiver which this
Indenture expressly provides may be given by the Holders of not less than
66-2/3% in principal amount of the Outstanding Securities of a series, the
Persons entitled to vote 66-2/3% in principal amount of the Outstanding
Securities of such series shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities of such series, be
dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 1502(a), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
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Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Securities of that series;
provided, however, that, except as limited by the proviso to Section 902, any
resolution with respect to any consent or waiver which this Indenture expressly
provides may be given by the Holders of not less than 66-2/3% in principal
amount of the Outstanding Securities of a series may be adopted at a meeting or
an adjourned meeting duly convened and at which a quorum is present as aforesaid
only by the affirmative vote of the Holders of 66-2/3% in principal amount of
the Outstanding Securities of that series; and provided, further, that, except
as limited by the proviso to Section 902, any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action which this Indenture expressly provides may be made, given or taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related coupons,
whether or not present or represented at the meeting.
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities of such series in regard to proof of
the holding of Securities of such series and of the appointment of proxies
and in regard to the appointment and duties of inspectors of votes, the
submission and examination or proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the
meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be
proved in the manner specified in Section 104 and the appointment of any
proxy shall be proved in the manner specified in Section 104 or by having
the signature of the person executing the proxy witnessed or guaranteed by
any trust company, bank or banker authorized by Section 104 to certify to
the holding of Bearer Securities. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 104 or
other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
1502(b), in which case the Company or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled
to vote a majority in principal amount of the Outstanding Securities of
such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of
Securities of such series held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1402 at which a quorum is present may be adjourned
from time to time by Persons entitled to vote a
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majority in principal amount of the Outstanding Securities of such series
represented at the meeting; and the meeting may be held as so adjourned
without further notice.
SECTION 1506. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE SIXTEEN
MISCELLANEOUS PROVISIONS
SECTION 1601 Securities in Foreign Currencies.
Whenever this Indenture provides for (i) any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same currency, or (ii)
any distribution to Holders of Securities, in the absence of any provision to
the contrary in the form of Security of any particular series, any amount in
respect of any Security denominated in a currency other than United States
dollars shall be treated for any such action or distribution as that amount of
United States dollars that could be obtained for such amount on such reasonable
basis of exchange and as of the record date with respect to Registered
Securities of such series (if any) for such action, determination of rights or
distribution (or, if there shall be no applicable record date, such other date
reasonably proximate to the date of such action, determination of rights or
distribution) as the Company may specify in a written notice to the Trustee or,
in the absence of such written notice, as the Trustee may determine.
* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture, dated
as of June __, 1997 to be duly executed, and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first above written
ULTRAMAR DIAMOND SHAMROCK
CORPORATION
[CORPORATE SEAL] By
---------------------------
Name:
Title:
Attest:
- -----------------------
Secretary
THE BANK OF NEW YORK,
as Trustee
[CORPORATE SEAL] By
----------------------------
Name:
Title:
Attest:
- -----------------------
Assistant Secretary
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EXHIBIT 4.16
ULTRAMAR DIAMOND SHAMROCK CORPORATION
__% Subordinated Debenture Due 20__
No. R-1 $_____________
ULTRAMAR DIAMOND SHAMROCK CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to UDS FUNDING __,
L.P., or registered assigns, the principal sum of _______________
_________________________________________________________________ ($___________)
on ___________ __, 20__ and to pay interest on said principal sum from _________
__, 199_ or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on March 31, June
30, September 30 and December 31 of each year, commencing _______ __, 199_, at
the rate of __% per annum plus Additional Interest, if any, until the principal
hereof shall have become due and payable, and on any overdue principal. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on this Security is not a Business Day, then a payment of
the interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date the
payment was originally payable. A "Business Day" shall mean any day other than a
day on which banking institutions in The City of New York are authorized or
required by law to close. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in the Indenture) is registered at the close
of business on the Regular Record Date for such interest installment, which
shall be the close of business on the Business Day next preceding such Interest
Payment Date. Any such interest installment not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special
<PAGE>
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
The Company shall have the right at any time during the term of this
Security, from time to time, to extend the interest payment period of such
Security for a period not exceeding six consecutive quarters from the date of
issue or the most recent date that interest has been paid or been duly provided
for (an "Extension Period"). During any Extension Period, interest will compound
quarterly and the Company shall have the right to make partial payments of
interest on any Interest Payment Date. At the end of any Extension Period the
Company shall pay all interest then accrued and unpaid (together with Additional
Interest thereon to the extent that payment of such interest is permitted by
applicable law). "Additional Interest" means interest that shall accrue on any
interest on the Securities that is in arrears for more than one quarter or not
paid during an Extension Period, which in either case shall accrue at 8% per
annum compounded quarterly. Prior to the termination of any such Extension
Period, the Company may further extend the interest payment period, provided
that such Extension Period together with all such previous and further
extensions thereof shall not exceed six consecutive quarters or extend beyond
the Maturity of this Security. Upon the termination of any Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
then due, the Company may select a new Extension Period, subject to the
foregoing requirements. No interest shall be due and payable during an Extension
Period except at the end thereof and no default under this security or Event of
Default shall be deemed to occur solely as a result of an Extension Period. The
Company shall give the Holder of this Security and the Trustee notice of its
selection of an Extension Period at least one Business Day prior to the earlier
of (i) the Interest Payment Date or (ii) the date UDS Capital __ is required to
give notice to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Trust Preferred Securities of the record date
or the date such distributions are payable, but in any event not less than one
Business Day prior to such record date.
Payment of the principal of and interest on this Security will be made at
the office or agency of the Company maintained for that purpose in New York, New
York, in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made (i)
by check mailed to the address of the
2
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Person entitled thereto as such address shall appear in the Security Register or
(ii) by wire transfer in immediately available funds at such place and to such
account as may be designated by the Person entitled thereto as specified in the
Security Register.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture of each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
3
<PAGE>
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, Ultramar Diamond Shamrock Corporation has caused this
instrument to be duly executed under its corporate seal.
Dated: __________ __, 199_
ULTRAMAR DIAMOND SHAMROCK
CORPORATION
By:
---------------------------------
Name:
Title:
4
<PAGE>
Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Company, designated as its __% Subordinated Debentures Due 20__ (herein called
the "Securities"), limited in aggregate principal amount to $__________ issued
under an Indenture, dated as of _______ __, 199_ (herein called the
"Indenture"), between the Company and The Bank of New York, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Trustee, the Company and the Holders of
the Securities, and of the terms upon which the securities are, and are to be,
authenticated and delivered.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
At any time on or after _________ __, 20__, the Company shall have the
right to redeem the Securities, in whole or in part, from time to time, at a
Redemption Price equal to 100% of the principal amount of Securities to be
redeemed plus accrued but unpaid interest, including any Additional Interest, if
any, to the Redemption Date.
If, at any time, a Partnership Tax Event or a Partnership Investment
Company Event (each a "Partnership Special Event") shall occur and be
continuing, the Company may, within 90 days following the occurrence of such
Partnership Special Event, elect to redeem the Securities in whole (but not in
part), upon not less than 30 or more than 60 days notice at the Redemption
Price, provided that, if at the time there is available to the Company or the
Partnership the opportunity to eliminate, within such 90-day period, the
Partnership Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable such
measure that in the sole judgment of the Company has or will cause no adverse
effect on the Partnership, the Trust or the Company, and will involve no
material cost, the Company will pursue such measure in lieu of redemption.
"Partnership Investment Company Event" means that Ultramar Diamond
Shamrock Corporation, in its capacity as general partner of UDS Funding __, L.P.
(the "Partnership"), shall have requested and received an opinion of independent
legal counsel experienced in such matters to the effect that as a result of the
occurrence on or after _________ __, 199_ of a change in law or regulation or a
change in interpretation or application of law or
5
<PAGE>
regulation by any legislative body, court, governmental agency or regulatory
authority, the Partnership is or will be considered an "investment company"
which is required to be registered under the Investment Company Act of 1940.
"Partnership Tax Event" means that Ultramar Diamond Shamrock Corporation
in its capacity as general partner of the Partnership, shall have requested and
received an opinion of independent tax counsel experienced in such matters to
the effect that there has been a Tax Action which affects any of the events
described in (i) through (iii) below and that there is more than an
insubstantial risk that (i) the Partnership is, or will be subject to United
States federal income tax with respect to income accrued or received on the
Affiliate Investment Instruments or the Eligible Debt Securities (each as
defined in the Limited Partnership Agreement), (ii) the Partnership is, or will
be subject to more than a de minimis amount of other taxes, duties or other
governmental charges or (iii) interest payable by one or more of the obligors
with respect to the Affiliate Investment Instruments (as defined in the Amended
and Restated Agreement of Limited Partnership of UDS Funding __, L.P.) to the
Partnership is not, or will not be, deductible by the Company for United States
federal income tax purposes.
"Tax Action" means (a) an amendment to, change in or announced proposed
change in the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) a judicial
decision interpreting, applying or clarifying such laws or regulations, (c) an
administrative pronouncement or action that represents an official position
(including a clarification of an official position) of the governmental
authority or regulatory body making such administrative pronouncement or taking
such action, or (d) a threatened challenge asserted in connection with an audit
of the Company or any of its subsidiaries, the Partnership, or the Trust, or a
threatened challenge asserted in writing against any other taxpayer that has
raised capital through the issuance of securities that substantially similar to
the Securities, the Partnership Preferred Securities, or the Trust Preferred
Securities, which amendment or change is adopted or which decision,
pronouncement or proposed change is announced or which action, clarification or
challenge occurs on or after the date of the prospectus related to the issuance
of the Trust Preferred Securities.
"Limited Partnership Agreement" means the amended and restated agreement
of Limited Partnership, dated as of _______ __, 199_, of the Partnership as
amended, modified or otherwise supplemented from time to time. If the Securities
are only partially redeemed by the Company, the Securities will be
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<PAGE>
redeemed pro rata, by lot or in such other manner as the Trustee shall deem
appropriate and fair in its discretion and that may provide for the selection of
a portion or portions (equal to twenty-five U.S. dollars ($25) or any integral
multiple thereof) of the principal amount of any Security.
In the event of redemption of this Security in part only, a new Security
or Securities for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to the Securities shall occur and be
continuing, the principal of the Securities may be declared due and payable in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions for satisfaction and discharge at any
time of the entire indebtedness of this Security upon compliance by the Company
with certain conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of Holders of not less than 662/3% in principal amount of the
Outstanding Securities, to modify the Indenture in a manner affecting the rights
of the Holders of the Securities; provided that no such modification may,
without the consent of the Holder of each Outstanding Security, (i) extend the
fixed maturity of the Securities, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, or (ii) reduce the percentage of
principal amount of the Securities, the Holders of which are required to consent
to any such modification of the Indenture. The Indenture also contains
provisions permitting Holders of specified percentages in principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this
Security at the
7
<PAGE>
times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any of their respective agents may treat the Person
in whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security shall be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THEREOF.
8
<PAGE>
EXHIBIT 4.17
- --------------------------------------------------------------------------------
AFFILIATE DEBENTURE GUARANTEE AGREEMENT
Ultramar Diamond Shamrock Corporation, as Guarantor
[________________________________________ ], as Issuer
Dated as of ________ __, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation........................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 5
SECTION 2.2 Lists of Holders of Securities........................... 5
SECTION 2.3 Reports by the Investment Guarantee
Trustee............................................... 5
SECTION 2.4 Periodic Reports to Investment Guarantee
Trustee.................................................. 6
SECTION 2.5 Evidence of Compliance with Conditions
Precedent............................................. 6
SECTION 2.6 Events of Default; Waiver................................ 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF INVESTMENT GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Investment
Guarantee Trustee..................................... 7
SECTION 3.2 Certain Rights of Investment Guarantee
Trustee............................................... 9
SECTION 3.3 Not Responsible for Recitals or Issuance
of Investment Guarantee............................... 11
ARTICLE IV
INVESTMENT GUARANTEE TRUSTEE
SECTION 4.1 Investment Guarantee Trustee;
Eligibility........................................... 12
SECTION 4.2 Appointment, Removal and Resignation of
Investment Guarantee Trustee.......................... 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................ 13
SECTION 5.2 Waiver of Notice and Demand.............................. 13
SECTION 5.3 Obligations Not Affected................................. 14
SECTION 5.4 Rights of Holders........................................ 15
SECTION 5.5 Guarantee of Payment..................................... 15
SECTION 5.6 Subrogation.............................................. 15
SECTION 5.7 Independent Obligations.................................. 16
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Page
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ARTICLE VI
SUBORDINATION
SECTION 6.1 Ranking.................................................. 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................. 16
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.............................................. 17
SECTION 8.2 Indemnification.......................................... 17
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................... 17
SECTION 9.2 Amendments............................................... 18
SECTION 9.3 Consolidations and Mergers............................... 18
SECTION 9.4 Notices.................................................. 18
SECTION 9.5 Benefit.................................................. 19
SECTION 9.6 Governing Law............................................ 19
ii
<PAGE>
AFFILIATE DEBENTURE GUARANTEE AGREEMENT (this "Investment Guarantee"),
dated as of _________ __, 1997, is executed and delivered by Ultramar Diamond
Shamrock Corporation, a Delaware corporation (the "Guarantor"), and The Bank of
New York, as trustee (the "Investment Guarantee Trustee"), for the benefit of
the Holder (as defined herein) of the Affiliate Debenture (as defined herein) of
[____________________________], a [Delaware] corporation (the "Issuer").
WHEREAS, pursuant to an Indenture (the "Affiliate Indenture"), dated as of
__________ __, 1997, between the Issuer and The Bank of New York, as indenture
trustee (in such capacity, the "Indenture Trustee"), the Issuer is issuing to
the Holder on the date hereof its __% Debenture Due [____] (the "Affiliate
Debenture");
WHEREAS, as incentive for the Holder to purchase the Affiliate Debenture,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Investment Guarantee, to make Guarantee Payments (as defined
herein) to the Holder of the Affiliate Debenture on the terms and conditions set
forth herein; and
NOW, THEREFORE, in consideration of the purchase by the Holder of the
Affiliate Debenture, which purchase the Guarantor hereby acknowledges shall
benefit the Guarantor, the Guarantor executes and delivers this Investment
Guarantee for the benefit of the Holder.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Investment Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this Investment Guarantee but not defined
in the Preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) Capitalized terms used in this Investment Guarantee but not
otherwise defined herein shall have the meanings assigned to them in
the Affiliate Indenture.
(c) a term defined anywhere in this Investment Guarantee has the same
meaning throughout;
(d) all references to "the Investment Guarantee" or "this Investment
Guarantee" are to this Investment
<PAGE>
Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Investment Guarantee to Articles and Sections
are to Articles and Sections of this Investment Guarantee, unless
otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Investment Guarantee, unless otherwise defined in this
Investment Guarantee or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Company Debenture" means the series of debt securities issued on ________
__, 1997 under the Company Indenture.
"Company Indenture" means the Indenture between Ultramar Diamond Shamrock
Corporation and The Bank of New York, dated as of __________ __, 1997.
"Corporate Trust Office" means the office of the Investment Guarantee
Trustee at which the corporate trust business of the Investment Guarantee
Trustee shall, at any particular time, be principally administered, which office
at the date of execution of this Agreement is located at 101 Barclay Street,
Floor 21 West, New York, New York 10286, Attention: Corporate Trust Services
Division.
"Covered Person" means the Holder or any beneficial owner of the Affiliate
Debenture.
"Declaration" means the Amended and Restated Declaration of Trust by and
among the Guarantor and certain Trustees, dated as of __________ __, 1997.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Investment Guarantee.
2
<PAGE>
"Guarantee Payments" means, without duplication, with respect to the
Affiliate Debenture, to the extent not paid or made by the Issuer, the due and
punctual payment of the principal of, premium, if any, and interest on the
Affiliate Debenture, when and as the same shall become due and payable, whether
at maturity or upon declaration of acceleration or otherwise, according to the
terms of the Affiliate Debenture and of the Affiliate Indenture.
"Holder" shall mean any holder, as registered on the books and records of
the Issuer of the Affiliate Debenture. The initial Holder of the Affiliate
Debenture is the Partnership.
"Holder of Partnership Preferred Securities" shall have the meaning
specified in the Partnership Agreement.
"Indemnified Person" means the Investment Guarantee Trustee, any Affiliate
of the Investment Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Investment Guarantee Trustee.
"Investment Guarantee Trustee" means The Bank of New York, until a
Successor Investment Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Investment Guarantee and thereafter
means each such Successor Investment Guarantee Trustee.
"Majority in aggregate principal amount of the Affiliate Debenture" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of the
Affiliate Debenture, voting separately as a class, of more than 50% of the
outstanding aggregate principal amount of the Affiliate Debenture plus accrued
and unpaid interest to the date upon which the voting percentages are
determined.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two authorized officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Investment Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's
3
<PAGE>
opinion, is necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition of covenant has been complied with.
"Partnership" means UDS Funding __, L.P.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of __________ __, 1997, among
Ultramar Diamond Shamrock Corporation, a Delaware corporation, as general
partner, H. Pete Smith, as initial limited partner and such other persons who
become limited partners as provided therein.
"Partnership Preferred Securities" means those securities representing
limited partnership interests in the Partnership.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Property Trustee" shall have the meaning specified in the Declaration.
"Responsible Officer" means, with respect to the Investment Guarantee
Trustee, any officer within the Corporate Trust Office of the Investment
Guarantee Trustee, including any vice president, any assistant vice president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Investment Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the Company
Indenture.
"Successor Investment Guarantee Trustee" means a Successor Investment
Guarantee Trustee possessing the qualifications to act as Investment Guarantee
Trustee under Section 4.1.
4
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"Trust" means UDS Capital __, a Delaware business trust.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Preferred Securities" shall have the meaning specified in the
Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Investment Guarantee is subject to the provisions of the Trust
Indenture Act that are required to be part of this Investment Guarantee and
shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Investment Guarantee
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control;
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Investment Guarantee Trustee (unless
the Investment Guarantee Trustee is otherwise the Security Registrar of the
Affiliate Debenture) with a list, in such form as the Investment Guarantee
Trustee may reasonably require, of the names and addresses of the Holder(s) of
the Affiliate Debenture ("List of Holders") as of such date, (i) within one (1)
Business Day after June 15 and December 15 of each year, and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Investment Guarantee Trustee provided, that the Guarantor shall not
be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Investment
Guarantee Trustee by the Guarantor. The Investment Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Investment Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
5
<PAGE>
SECTION 2.3 Reports by the Investment Guarantee Trustee
Within 60 days after December 15 of each year, commencing December 15,
1997 the Investment Guarantee Trustee shall provide to the Holders of the
Affiliate Debenture such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Investment Guarantee Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Investment Guarantee Trustee
The Guarantor shall provide to the Investment Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Investment Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Investment Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in aggregate principal amount of the Affiliate
Debenture may, by vote, on behalf of the Holders of the Affiliate Debenture,
waive any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Investment Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Investment Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Affiliate Debenture, notices of all Events of
Default actually known to a Responsible Officer of the Investment Guarantee
6
<PAGE>
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, except in the case of default of any Guaranty Payment, the
Investment Guarantee Trustee shall be protected in withholding such notice if
and so long as a Responsible Officer of the Investment Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Affiliate Debenture.
(b) The Investment Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Investment Guarantee Trustee shall have
received written notice, or a Responsible Officer of the Investment Guarantee
Trustee charged with the administration of the Affiliate Debenture shall have
obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Affiliate Debenture shall be deemed to be specifically described in
this Investment Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF INVESTMENT GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Investment Guarantee Trustee
(a) This Investment Guarantee shall be held by the Investment Guarantee
Trustee for the benefit of the Holders of the Affiliate Debenture, and the
Investment Guarantee Trustee shall not transfer this Investment Guarantee to any
Person except a Holder of the Affiliate Debenture exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Investment Guarantee Trustee on
acceptance by such Successor Investment Guarantee Trustee of its appointment to
act as Successor Investment Guarantee Trustee. The right, title and interest of
the Investment Guarantee Trustee shall automatically vest in any Successor
Investment Guarantee Trustee, and such vesting and succession of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Investment Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the
Investment Guarantee Trustee has occurred and is continuing, the Investment
Guarantee Trustee shall enforce this Investment Guarantee for the benefit of the
Holders of the Affiliate Debenture.
(c) The Investment Guarantee Trustee, before the occurrence of any Event
of Default and after the curing or waiver
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of all Events of Default that may have occurred, shall undertake to perform only
such duties as are specifically set forth in this Investment Guarantee, and no
implied covenants shall be read into this Investment Guarantee against the
Investment Guarantee Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6) and is actually known to a
Responsible Officer of the Investment Guarantee Trustee, the Investment
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Investment Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Investment Guarantee shall be construed to
relieve the Investment Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Investment Guarantee
Trustee shall be determined solely by the express provisions of this
Investment Guarantee, and the Investment Guarantee Trustee shall not
be liable except for the performance of such duties and obligations
as are specifically set forth in this Investment Guarantee, and no
implied covenants or obligations shall be read into this Investment
Guarantee against the Investment Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Investment
Guarantee Trustee, the Investment Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Investment Guarantee Trustee and conforming to the
requirements of this Investment Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Investment Guarantee
Trustee, the Investment Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Investment Guarantee;
(ii) the Investment Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Investment Guarantee Trustee, unless it shall be proved that the
Investment Guarantee
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Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Investment Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in aggregate
principal amount of the Affiliate Debenture relating to the time, method
and place of conducting any proceeding for any remedy available to the
Investment Guarantee Trustee, or exercising any trust or power conferred
upon the Investment Guarantee Trustee under this Investment Guarantee; and
(iv) no provision of this Investment Guarantee shall require the
Investment Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Investment
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under
the terms of this Investment Guarantee or indemnity, reasonably
satisfactory to the Investment Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Investment Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Investment Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Investment Guarantee shall be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Investment Guarantee,
the Investment Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Investment Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
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(iv) The Investment Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Investment Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Investment Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Investment
Guarantee from any court of competent jurisdiction.
(vi) The Investment Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Investment
Guarantee at the request or direction of any Holder, unless such Holder
shall have provided to the Investment Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Investment Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses and
the expenses of the Investment Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances as may be
requested by the Investment Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Investment Guarantee Trustee, upon the occurrence of an Event of Default,
of its obligation to exercise the rights and powers vested in it by this
Investment Guarantee.
(vii) The Investment Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Investment Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Investment Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the
Investment Guarantee Trustee shall not be responsible for any
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misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Investment Guarantee Trustee or its
agents hereunder shall bind the holders of the Affiliate Debenture, and
the signature of the Investment Guarantee Trustee or its agents alone
shall be sufficient and effective to perform any such action. No third
party shall be required to inquire as to the authority of the Investment
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Investment Guarantee, both of which shall be
conclusively evidenced by the Investment Guarantee Trustee or its agent
taking such action.
(x) Whenever in the administration of this Investment Guarantee the
Investment Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Investment Guarantee Trustee (i) may request
instructions from the Holders of a Majority in aggregate principal amount
of the Affiliate Debenture, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received,
and (iii) shall be fully protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Investment Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Investment Guarantee.
(b) No provision of this Investment Guarantee shall be deemed to impose
any duty or obligation on the Investment Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Investment
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Investment Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Investment
Guarantee
The recitals contained in this Investment Guarantee shall be taken as the
statements of the Guarantor, and the Investment Guarantee Trustee does not
assume any responsibility for their correctness. The Investment Guarantee
Trustee makes no
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representation as to the validity or sufficiency of this Investment Guarantee.
ARTICLE IV
INVESTMENT GUARANTEE TRUSTEE
SECTION 4.1 Investment Guarantee Trustee; Eligibility
(a) There shall at all times be an Investment Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Investment Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Investment Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Investment Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Investment Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Investment Guarantee
Trustee
(a) Subject to Section 4.2(b), the Investment Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during a
default or an Event of Default.
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(b) The Investment Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Investment Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Investment Guarantee Trustee and delivered to the Guarantor.
(c) The Investment Guarantee Trustee shall hold office until a Successor
Investment Guarantee Trustee shall have been appointed or until its removal or
resignation. The Investment Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Investment Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Investment Guarantee Trustee
has been appointed and has accepted such appointment by instrument in writing
executed by such Successor Investment Guarantee Trustee and delivered to the
Guarantor and the resigning Investment Guarantee Trustee.
(d) If no Successor Investment Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 30 days after
delivery of an instrument of removal or resignation, the Investment Guarantee
Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Investment Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Investment Guarantee Trustee.
(e) No Investment Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Investment Guarantee Trustee.
(f) Upon termination of this Investment Guarantee or removal or
resignation of the Investment Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Investment Guarantee Trustee all amounts due to
the Investment Guarantee Trustee accrued to the date of such termination,
removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
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SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Investment
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor under
this Investment Guarantee shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Affiliate Debenture to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the interest, principal or premium, if any, or any other sums payable
under the terms of the Affiliate Debenture or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Affiliate Debenture (other than an extension of time for payment of
interest during an Extension Period, as defined in the Affiliate Debenture,
permitted by the Affiliate Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Affiliate Debenture, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Affiliate
Debenture;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
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(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in aggregate principal amount of the
Affiliate Debenture have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Investment Guarantee
Trustee in respect of this Investment Guarantee or exercising any trust or power
conferred upon the Investment Guarantee Trustee under this Investment Guarantee.
(b) If the Investment Guarantee Trustee fails to enforce its rights under
the Investment Guarantee after a Holder of the Affiliate Debenture has made a
written request, such Holder of the Affiliate Debenture may institute a legal
proceeding directly against the Guarantor to enforce the Investment Guarantee
Trustee's rights under this Investment Guarantee, without first instituting a
legal proceeding against the Issuer, the Investment Guarantee Trustee or any
other Person. Notwithstanding the foregoing, if the Guarantor has failed to make
a Guarantee Payment, a Holder of the Affiliate Debenture may directly institute
a proceeding in such Holder's own name against the Guarantor for enforcement of
the Investment Guarantee for such payment. The Guarantor waives any right or
remedy to require that any action be brought first against the Issuer or any
other person or entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Investment Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Affiliate Debenture against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Investment Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of
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payment under this Investment Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Investment Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Affiliate Debenture, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Investment Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
SUBORDINATION
SECTION 6.1 Ranking
This Investment Guarantee will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any other guarantee now or hereafter entered into by the Guarantor in respect of
any preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock. The holders of obligations of the
Guarantor that are senior to the obligations under the Investment Guarantee
(including, but not limited to, obligations constituting Senior Indebtedness)
shall be entitled to the same rights in payment default or dissolution,
liquidation and reorganization in respect of this Investment Guarantee that
inure to the holders of Senior Indebtedness as against the holders of the
Company Debenture specified in Sections [1102, 1103 and 1105] of the Company
Indenture.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Investment Guarantee shall terminate upon the repayment in full
(whether at maturity, upon redemption or otherwise) of all of the principal of,
premium, if any, and interest on (including all accrued and unpaid interest
thereon) and any other amounts payable in respect of the Affiliate Debenture.
Notwithstanding the foregoing, this Investment Guarantee will continue to be
effective or will be reinstated, as
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the case may be, if at any time any Holder of the Affiliate Debenture must
restore payment of any sums paid under the Affiliate Debenture or under this
Investment Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Investment Guarantee
and in a manner that such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Investment Guarantee or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which principal, premium, interest or other payments to Holders of the Affiliate
Debenture might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any and all loss, liability, damage,
claim or expense incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. The obligation to indemnify as set forth in this Section 8.2
shall survive the termination of this Investment Guarantee.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Investment Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Partnership
Preferred Securities then outstanding. The Company may not assign its rights or
delegate its obligations hereunder without the prior approval of the Holders of
at least a majority of the aggregated stated liquidation preference of the
Partnership Preferred Securities then outstanding, except that the Company may
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into any other corporation, provided that in any
such case either the Company shall be the continuing corporation, or the
successor corporation shall expressly assume the obligations of the Guarantor
hereunder.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the rights
of Holders of Partnership Preferred Securities (in which case no consent will be
required), this Investment Guarantee may be amended only with the prior approval
of the Holders of not less than a majority in liquidation preference of the
outstanding Partnership Preferred Securities, provided that so long as the
Property Trustee of the Trust is the Holder of the Partnership Preferred
Securities, such amendment will not be effective without the prior written
approval of a majority in liquidation amount of the outstanding Trust Preferred
Securities.
SECTION 9.3 Consolidations and Mergers
The Guarantor may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation;
provided, that in any such case, (i) either the Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to Section 5.1 hereof and the
due and punctual performance and observance of all of the covenants and
conditions of this Investment Guarantee to be performed by the Guarantor by a
separate guarantee satisfactory to the Investment Guarantee Trustee (as defined
in this Investment Guarantee dated as of __________ __, 1997), executed and
delivered to the Investment Guarantee Trustee by such corporation, and (ii) the
Guarantor or
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such successor corporation, as the case may be, shall not, immediately after
such merger or consolidation, or such sale, lease or conveyance, be in default
in the performance of any such covenant or condition.
SECTION 9.4 Notices
All notices provided for in this Investment Guarantee shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail, as follows:
(a) If given to the Investment Guarantee Trustee, at the Investment
Guarantee Trustee's Corporate Trust Office, Attention: [____________], Telecopy:
(212) [________] (or such other address as the Investment Guarantee Trustee may
give notice of to the Holders of the Affiliate Debenture); and
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Affiliate Debenture):
Ultramar Diamond Shamrock
Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Attention: Treasurer
(c) If given to any Holder of Affiliate Debenture, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.5 Benefit
This Investment Guarantee is solely for the benefit of the Holders of the
Affiliate Debenture and, subject to Section 3.1(a), is not separately
transferable from the Affiliate Debenture.
SECTION 9.6 Governing Law
THIS INVESTMENT GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
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STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
This Investment Guarantee is executed as of the day and year first above
written.
ULTRAMAR DIAMOND SHAMROCK
CORPORATION, as Guarantor
By:
-----------------------------
Name:
Title:
THE BANK OF NEW YORK, as
Investment Guarantee Trustee
By:
-----------------------------
Name:
Title:
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Exhibit 5.2
[Skadden, Arps, Slate, Meagher & Flom LLP Letterhead]
June 17, 1997
UDS Capital I
UDS Funding I, L.P.
Ultramar Diamond Shamrock Corporation
9830 Colonnade Boulevard
San Antonio, Texas 78230
Re: Ultramar Diamond Shamrock Corporation;
UDS Capital I;
UDS Funding I, L.P.;
Registration Statement on Form S-3
(Registration No. 333-28737)
Ladies and Gentlemen:
We have acted as special Delaware counsel to UDS Capital I, a statutory
business trust created under the Business Trust Act of the State of Delaware
(Del. Code Ann., tit. 12, ss.ss. 3801 et seq.) (the "Trust"), and UDS Funding I,
L.P., a limited partnership formed under the Revised Uniform Limited Partnership
Act of the State of Delaware (6 Del. C. ss. 17-101, et seq.) (the
"Partnership"), in connection with the preparation of a Registration Statement
on Form S-3 filed by Ultramar Diamond Shamrock Corporation, a corporation
organized under the laws of the State of Delaware (the "Company"), the Trust and
the Partnership relating to the registration under the Securities Act of 1933,
as amended (the "Act"), of, among other securities, Trust Preferred Securities
(the "Trust Preferred Securities") of the Trust and Partnership Preferred
Securities (the "Partnership Preferred Securities") of the Partnership.
The Trust Preferred Securities are to be issued pursuant to an Amended and
Restated Declaration of Trust of the Trust (the "Declaration") among the
Company, as sponsor of the Trust, The Bank of New York (Delaware), as Delaware
trustee (the "Delaware Trustee"), The Bank of
<PAGE>
UDS Capital I
UDS Funding I, L.P.
Ultramar Diamond Shamrock Corporation
June 17, 1997
Page 2
New York, as property trustee (the "Property Trustee"), and H. Pete Smith and
Steve Blank, as regular trustees (the "Regular Trustees"). The Partnership
Preferred Securities are to be issued pursuant to an Amended and Restated
Agreement of Limited Partnership (the "Limited Partnership Agreement") between
the Company, as the general partner (in such capacity, the "General Partner"),
and H. Pete Smith, an individual, as the initial limited partner.
This opinion is being delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act. Capitalized terms used but not
otherwise defined herein have the meanings ascribed to them in the Registration
Statement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement on Form S-3 (Registration No. 333-28737) filed by the Company, the
Trust and the Partnership with the Securities and Exchange Commission (the
"Commission") on June 6, 1997 under the Act, and Amendment No. 1 thereto filed
with the Commission on June 17, 1997 (such Registration Statement, as so
amended, being hereinafter referred to as the "Registration Statement"); (ii)
the Certificate of Trust of the Trust filed with the Secretary of State of the
State of Delaware on June 5, 1997; (iii) the form of the Declaration (including
the designation of the terms of the Trust Preferred Securities annexed thereto),
in the form filed as an exhibit to the Registration Statement; (iv) the form of
the Trust Preferred Securities and specimen certificates thereof; (v) the form
of the Purchase Agreement (the "Purchase Agreement") proposed to be entered into
among the Company, the Partnership, the Trust and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers Inc., Morgan Stanley
& Co. Incorporated, PaineWebber Incorporated,
2
<PAGE>
UDS Capital I
UDS Funding I, L.P.
Ultramar Diamond Shamrock Corporation
June 17, 1997
Page 3
Prudential Securities Incorporated and Smith Barney Inc., as representatives
(the "Representatives") of the Underwriters to be named in Schedule A thereto
(collectively, the "Underwriters") relating to, among other things, the sale of
the Trust Preferred Securities; (vi) the Certificate of Limited Partnership of
the Partnership filed with the Secretary of State of the State of Delaware on
June 5, 1997; (vii) the form of the Limited Partnership Agreement (including the
designation of the terms of the Partnership Preferred Securities annexed
thereto), in the form filed as an exhibit to the Registration Statement; and
(viii) the form of the Partnership Preferred Securities and specimen
certificates thereof. We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such other documents, certificates
and records as we have deemed necessary or appropriate as a basis for the
opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed, or to be executed, by parties other than the Partnership and
the Trust, we have assumed that such parties had, or will have, the power,
corporate or other, to enter into and perform all obligations thereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and that
such documents constitute valid and binding obligations of such parties. In
addition, we have assumed that the Declaration, the Preferred Securities, the
Limited Partnership Agreement and the Partnership Preferred Securities when
executed will be in substantially the forms reviewed by us. With
3
<PAGE>
UDS Capital I
UDS Funding I, L.P.
Ultramar Diamond Shamrock Corporation
June 17, 1997
Page 4
respect to the opinion set forth in paragraph (2) below, we have assumed that,
except for the exercise of rights and powers expressly permitted by the Limited
Partnership Agreement, the holders of Partnership Preferred Securities will not
participate in the control of the business of the Partnership. As to any facts
material to the opinions expressed herein which were not independently
established or verified, we have relied upon oral or written statements and
representations of officers, partners, trustees and other representatives of the
Company, the Partnership, the Trust and others.
Members of our firm are admitted to the bar in the State of Delaware and
we do not express any opinion as to the laws of any other jurisdiction.
Based on and subject to the foregoing and to the other qualifications and
limitations set forth herein, we are of the opinion that when (i) the
Registration Statement becomes effective; (ii) the Declaration, the Purchase
Agreement and the Limited Partnership Agreement have been duly executed and
delivered by the parties thereto; (iii) the terms of the Trust Preferred
Securities have been duly established in accordance with the Declaration and the
Trust Preferred Securities have been duly executed and authenticated in
accordance with the Declaration and delivered to and paid for by the
Underwriters as contemplated by the Purchase Agreement; and (iv) the terms of
the Partnership Preferred Securities have been duly established in accordance
with the Limited Partnership Agreement and the Partnership Preferred Securities
have been duly executed in accordance with the terms of the Limited Partnership
Agreement and delivered to and paid for by the Trust as contemplated by the
Purchase Agreement:
1. The Trust Preferred Securities will have been duly authorized for
issuance and will be validly is-
4
<PAGE>
UDS Capital I
UDS Funding I, L.P.
Ultramar Diamond Shamrock Corporation
June 17, 1997
Page 5
sued, fully paid and nonassessable, representing undivided beneficial ownership
interests in the assets of the Trust; and the holders of the Trust Preferred
Securities will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware. We bring to your attention,
however, that the holders of the Trust Preferred Securities may be obligated,
pursuant to the Declaration, to (i) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from transfers of
the Trust Preferred Securities and (ii) provide security and indemnity in
connection with the requests of or directions to the Property Trustee to
exercise its rights and powers under the Declaration.
2. The Partnership Preferred Securities will have been authorized for
issuance and will represent valid partnership interests in the Partnership, and
the holders of Partnership Preferred Securities, as limited partners of the
Partnership, will not be liable to third parties for the obligations of the
Partnership. We bring to your attention, however, that the holders of
Partnership Preferred Securities may be obligated, pursuant to the Limited
Partnership Agreement, to (i) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of Partnership
Preferred Securities and the issuance of replacement Partnership Preferred
Securities, and (ii) provide security and indemnity in connection with requests
of or directions to the Special Representative (as defined in the Limited
Partnership Agreement) to exercise its rights and powers under the Limited
Partnership Agreement.
We hereby consent to the use of our name under the heading "Legal Matters"
in the prospectus which forms a part of the Registration Statement. We also
hereby consent to the filing of this opinion with the Commission
5
<PAGE>
UDS Capital I
UDS Funding I, L.P.
Ultramar Diamond Shamrock Corporation
June 17, 1997
Page 6
as an exhibit to the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder. This opinion is expressed as of the date
hereof unless otherwise expressly stated and we disclaim any undertaking to
advise you of any subsequent changes in the facts stated or assumed herein or of
any subsequent changes in applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom LLP
6
<PAGE>
EXHIBIT 8.1
[SKADDEN, ARPS, SLATE, MEAGHER & FLOM LETTERHEAD]
June 17, 1997
Ultramar Diamond Shamrock Corporation
UDS Capital I
UDS Funding I
9830 Colonnade Boulevard
San Antonio, Texas 78230
Re: Registration Statement on Form S-3
REGISTRATION NO. 333-28737
Ladies and Gentlemen:
We have acted as special tax counsel to UDS Capital I, a statutory
business trust organized under the Business Trust Act of the State of
Delaware (Chapter 38, Title 12 of the Delaware Code, 12 Del. C. Sec. 3801, et
seq.)(the "Trust"), and UDS Funding I, L.P., a limited partnership formed
under the Delaware Revised Uniform Limited Partnership Act (Chapter 17, Title
6 of the Delaware Code, 6 Del. C. Sec. 17-101, et seq.)(the "Partnership"),
in connection with the preparation of an amendment to Registration Statement
No. 333-28737 on Form S-3 of Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the "Company"), the Trust, and the Partnership, filed
by the Company, the Trust, and the Partnership with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), on June 17, 1997 (the "Registration
Statement"), relating to the registration by the Trust of 6,000,000 shares of
Trust Originated Preferred Securities (liquidation amount $25 per trust
originated preferred security)(the "Preferred Securities"), representing
undivided beneficial interests in the assets of the Trust and certain other
securities.
We hereby confirm that, although the discussion set forth in the
above captioned registration statement under the heading "CERTAIN FEDERAL
INCOME TAX CONSIDERATIONS" does not purport to discuss all possible United
States federal income tax consequences of the purchase, ownership, and
disposition of the Preferred Securities, in our opinion such discussion
constitutes,
<PAGE>
Ultramar Diamond Shamrock Corporation
UDS Capital I
UDS Funding I
June 17, 1997
Page 2
in all material respects, a fair and accurate summary of the United States
federal income tax consequences of the purchase, ownership, and disposition of
the Preferred Securities, based upon current law. There can be no assurances
that any of the opinions expressed herein will be accepted by the Internal
Revenue Service, or if challenged, by a court.
This opinion is furnished to you solely for your benefit in
connection with the filing of the Registration Statement and, except as set
forth below, is not to be used, circulated, quoted or otherwise referred to
for any purpose without our prior written consent. We hereby consent to the
filing of this opinion with the Commission as Exhibit 8.1 to the Registration
Statement. We also consent to the use of our name under the heading "Legal
Matters" in the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations
of the Commission promulgated thereunder. This opinion is expressed as of the
date hereof unless otherwise expressely stated and we disclaim any
undertaking to advise you of any subsequent changes of the facts stated or
assumed herein or any subsequent changes in applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-28737) and
Post-Effective Amendment No. 2 to the Registration Statement (Form S-3 No.
33-82662) and related Prospectus and Prospectus Supplement of Ultramar
Diamond Shamrock Corporation for the registration of up to $900,000,000
Senior Debt Securities of Ultramar Diamond Shamrock Corporation, up to
$850,000,000 Senior Debt Securities and Common Stock of Ultramar Diamond
Shamrock Corporation, up to $850,000,000 Trust Preferred Securities of UDS
Capital I and UDS Capital II, up to $850,000,000 of Partnership Preferred
Securities of UDS Funding I, L.P. and UDS Funding II, L.P. and $150,000,000
Trust Preferred Securities of UDS Capital I 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
San Antonio, Texas
June 16, 1997
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to Registration Statement (No.
333-28737) on Form S-3 and Post-Effective Amendment No. 2 to Registration
Statement (No. 33-82662) on Form S-3 to be filed on or about June 16, 1997 of
our report dated February 7, 1997 with respect to the consolidated financial
statements 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.
PRICE WATERHOUSE LLP
San Antonio, Texas
June 16, 1997
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and all references to our firm) included in or made a part of
this Registration Statement.
ARTHUR ANDERSEN LLP
San Antonio, Texas
June 12, 1997
<PAGE>
Exhibit 25.2
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
================================================================================
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)
----------------------
Subordinated Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
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 2 Rector Street, New York,
State of 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.)
-2-
<PAGE>
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.
-3-
<PAGE>
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 13th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
---------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
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 of-
fices 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 subsid-
iaries, 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 )
-
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25.3
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
================================================================================
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)
----------------------
UDS CAPITAL I
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(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)
----------------------
Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE>
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 2 Rector Street, New York,
State of 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.)
-2-
<PAGE>
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.
-3-
<PAGE>
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 13th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
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 of-
fices 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 subsid-
iaries, 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 )
-
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25.4
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
================================================================================
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)
----------------------
UDS CAPITAL II
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(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)
----------------------
Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE>
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 2 Rector Street, New York,
State of 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.)
-2-
<PAGE>
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.
-3-
<PAGE>
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 13th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
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 of-
fices 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 subsid-
iaries, 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 )
-
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25.5
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
================================================================================
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)
----------------------
Guarantee of Trust Preferred Securities of
UDS Capital I
(Title of the indenture securities)
================================================================================
<PAGE>
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 2 Rector Street, New York,
State of 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.)
-2-
<PAGE>
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.
-3-
<PAGE>
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 13th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
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 of-
fices 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 subsid-
iaries, 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 )
-
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25.6
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
================================================================================
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)
----------------------
Guarantee of Trust Preferred Securities of
UDS Capital II
(Title of the indenture securities)
================================================================================
<PAGE>
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 2 Rector Street, New York,
State of 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.)
-2-
<PAGE>
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.
-3-
<PAGE>
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 13th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
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 of-
fices 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 subsid-
iaries, 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 )
-
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25.7
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
================================================================================
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)
----------------------
Guarantee pertaining to the Affiliate Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
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 2 Rector Street, New York,
State of 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.)
-2-
<PAGE>
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.
-3-
<PAGE>
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 13th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
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 of-
fices 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 subsid-
iaries, 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 )
-
- --------------------------------------------------------------------------------
