As filed with the Securities and Exchange Commission on April 2, 1998
Amendment No. 1 to Registration No. 333-46775
Amendment No. 1 to Registration No. 333-46775-01
Amendment No. 1 to Registration No. 333-46775-02
Post-Effective Amendment No. 2 to Registration No. 333-28737
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 2
UNDER
THE SECURITIES ACT OF 1933
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<S> <C> <C>
ULTRAMAR DIAMOND SHAMROCK CORPORATION Delaware 13-3663331
UDS CAPITAL II Delaware 74-6454976
UDS FUNDING II, L.P. Delaware 74-2835442
(Exact name of registrant as specified in its charter) (State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization,
</TABLE>
6000 North Loop 1604 West
San Antonio, TX 78249-1112
(210) 592-2000
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Curtis V. Anastasio, Esq.
Vice President, General Counsel, and Secretary
Ultramar Diamond Shamrock Corporation
6000 North Loop 1604 West
San Antonio, TX 78249-1112
(210) 592-4072
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Vincent J. Pisano, Esq. Robert A. Profusek, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP Jones, Day, Reavis & Pogue
919 Third Avenue 599 Lexington Avenue
New York, New York 10022-3897 New York, New York 10022
(212) 735-3000 (212) 326-3939
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(b) 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.
SUBJECT TO COMPLETION DATED APRIL 2, 1998
PROSPECTUS
$1,000,000,000
ULTRAMAR DIAMOND SHAMROCK CORPORATION
Senior Debt Securities
Subordinated Debt Securities
Common Stock
Preferred Stock
--------------------------------------------
$1,000,000,000
UDS CAPITAL II
Trust Preferred Securities
Guaranteed to the extent set forth herein by Ultramar Diamond Shamrock
Corporation
--------------------------------------------
$1,000,000,000
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"),
(ii) shares of its common stock, par value $.01 per share , (together with the
associated rights (the "Rights") to purchase Common Stock), and (iii) shares of
its preferred stock, par value $.01 per share.
UDS Capital II, 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 its assets ("Trust Preferred
Securities"). The payment of distributions with respect to Trust Preferred
Securities out of moneys held by UDS Capital II, and payment on liquidation,
redemption, or otherwise with respect to such Trust Preferred Securities, will
be guaranteed by UDS to the extent described herein (each a "Trust Guarantee").
See "Description of the Trust Guarantees" below. UDS's obligations under the
Trust Guarantees will be subordinate and junior in right of payment to all other
liabilities of UDS and rank pari passu with the most senior preferred stock, if
any, issued from time to time by UDS. Subordinated Debt Securities and/or
Partnership Preferred Securities (as defined below) may be issued and sold by
UDS Funding II, L.P. from time to time in one or more series to UDS Capital II,
or a trustee of UDS Capital II, 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 UDS Capital II.
Partnership Preferred Securities purchased by UDS Capital II may be subsequently
distributed pro rata to holders of Trust Preferred Securities and Common
Securities in connection with the dissolution of UDS Capital II upon the
occurrence of certain events as may be described in an accompanying Prospectus
Supplement.
UDS Funding II, L.P., 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 UDS Funding II, L.P.
("Partnership Preferred Securities"). The payment of distributions (if, as, and
when declared) with respect to Partnership Preferred Securities of each of UDS
Funding II, L.P. out of moneys held by UDS Funding II, L.P., 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 UDS Funding II, L.P. 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 UDS
Funding II, L.P.
The Senior Debt Securities, the Subordinated Debt Securities, the Affiliate
Debentures, the Investment Guarantees, the Common Stock, the Preferred 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; (iii) in the case of Preferred
Stock, the specific title and stated value, number of shares, dividend,
liquidation, exchange, redemption, conversion, voting, and other rights, and the
initial public offering price, and (iv) in the case of Common Stock, the public
offering price, will be set forth in the accompanying Prospectus Supplement.
The Offered Securities will be issued only in registered form, including in
the form of Global Securities, unless otherwise set forth in the Prospectus
Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Offered Securities may be offered directly, through agents designated
from time to time, to or through underwriters or dealers, or through a
combination of such methods. See "Plan of Distribution." If any agents of UDS,
UDS Capital II and/or any UDS Funding II, L.P., or any underwriters are involved
in the sale of the Offered Securities, the names of such agents or underwriters
and any applicable commissions or discounts will be set forth in the Prospectus
Supplement with respect to such Offered Securities. The net proceeds to UDS from
such sale also will be set forth in the applicable Prospectus Supplement.
The date of this Prospectus is April _____, 1998.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE AND ANY FINAL PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PROSPECTUS AND
ANY ACCOMPANYING PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, any accompanying
Prospectus Supplement or the documents incorporated or deemed incorporated by
reference herein, and any information or representations not contained herein or
therein must not be relied upon as having been authorized by UDS 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 UDS since the respective dates of this Prospectus and the
Prospectus Supplement or that the information in this Prospectus or the
Prospectus Supplement is correct as of any time subsequent to the respective
dates of this Prospectus and the Prospectus Supplement.
AVAILABLE INFORMATION
Certain Filings and Other Information
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by UDS, UDS Funding II, L.P., and UDS Capital II 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, UDS
Funding II, L.P., UDS Capital II, 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 files
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 on
the Montreal Exchange (the "ME"). Material filed by UDS may be inspected at the
offices of the NYSE at 20 Broad Street, New York, New York 10005, and at the
offices of the ME at 800 Victoria Square, Montreal, Quebec, Canada H4Z 1A9.
No separate financial statements of UDS Capital II or UDS Funding II, L.P.
have been included herein. UDS does not consider that such financial statements
would be material to holders of the Trust Preferred Securities or the
Partnership Preferred Securities of those entities because (i) all of the voting
securities of UDS Capital II and the UDS Funding II, L.P. will be owned,
directly or indirectly, by UDS, a reporting company under the Exchange Act, (ii)
neither UDS Capital II nor UDS Funding II, L.P. has any independent operations
but exists for the sole purpose of issuing securities representing undivided
beneficial interests in the assets of UDS Capital II or UDS Funding II, L.P. and
investing the proceeds thereof (a) in the case of UDS Capital II, in Partnership
Preferred Securities issued by UDS Funding II, L.P. and (b) in the case of the
UDS Funding II, L.P., in Subordinated Debt Securities issued by UDS Affiliate
Debentures of eligible UDS controlled affiliates, and Eligible Debt Securities,
as hereafter defined, and (iii) UDS' obligations under the Trust Declaration of
UDS Capital II, the Limited Partnership Agreement of UDS Funding II, L.P., the
guarantees issued with respect to the Subordinated Debt Securities, the
Partnership Guarantees, and the Trust Guarantees, taken together, constitute a
full and unconditional guarantee of payments due on the Trust Preferred
Securities and Partnership Preferred Securities issued by those entities. See
"Description of the Subordinated Debt Securities," "Description of the Trust
Guarantees" and "Description of the Partnership Guarantees."
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,
UDS Capital II, UDS Funding II, L.P., or the management of any such entities ,
identify forward-looking statements. Such statements reflect the current views
of the management of the registrants with respect to future events and are
subject to certain risks, uncertainties, and assumptions relating to the
operations and results of operations of the registrants, including as a result
of competitive factors and pricing pressures, shifts in market demand and
general economic conditions, and other factors. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those described
herein as anticipated, believed, estimated, expected, or intended.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents which have been filed with the Commission by UDS
pursuant to the Exchange Act (File No. 1-11154) are hereby incorporated by
reference:
(i) Annual Report on Form 10-K filed by UDS for the year ended December 31,
1997; and
(ii) Current Report on Form 8-K dated March 3, 1998.
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, 6000 North Loop 1604 West, San Antonio, TX 78249-1112,
Attention: Secretary (telephone number: (210) 592-4072).
ULTRAMAR DIAMOND SHAMROCK CORPORATION
UDS was the surviving corporation in the merger of two leading North
American independent refining and marketing companies, Ultramar Corporation and
Diamond Shamrock, Inc., 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. On September 25, 1997,
UDS completed the acquisition of Total Petroleum (North America) Ltd. ("Total"),
a Denver, Colorado based petroleum refining and marketing company
In the Southwest United States, UDS owns and operates a 150,000 barrel per
day (bpd) refinery, near Amarillo, Texas, a 90,000 bpd refinery near San
Antonio, Texas and a 100,000 bpd refinery near Los Angeles, California. With the
acquisition of Total, UDS acquired three additional refineries, a 68,000 bpd
refinery in Ardmore, Oklahoma, a 51,000 bpd refinery in Alma, Michigan and a
28,000 bpd refinery in Denver, Colorado. UDS markets petroleum products and a
broad range of convenience store merchandise in the Southwest under the Diamond
Shamrock, Beacon, Ultramar, and Total brand names through a network of
approximately 6,000 outlets across 22 central and southwest states. The
Southwest operations also include the storing and marketing of natural gas
liquids, and the manufacture and marketing of anhydrous ammonia and polymergrade
propylene at its facilities at Mont Belvieu, near Houston, Texas.
In the Northeast, the Company owns and operates a 160,000 bpd refinery in
St. Romuald, Quebec Canada and markets petroleum products through approximately
1,300 retail outlets and 84 cardlocks. In addition, the Northeast operations
include one of the largest retail home heating oil businesses in the
northeastern region of North America, selling heating oil to approximately
300,000 households.
In January, 1998, UDS announced that it had entered into a memorandum of
understanding regarding the formation of a refining and marketing joint venture
with Petro-Canada, one of Canada's largest integrated oil and gas companies. UDS
will contribute substantially all of its Northeastern assets to the venture,
including the Alma, Michigan refinery and 187 company operated Michigan retail
sites acquired from Total. The joint venture will operate refineries with a
total throughput capacity of 500,000 bpd and market gasoline through
approximately 3,500 retail outlets. It will operate UDS's home heating oil
marketing businesses in the northeastern United States and Canada. Control of
the joint venture will be shared. Petro-Canada will own 51% and UDS 49% of the
voting units in the partnership. Major decisions will require approval of both
partners. Profits from the venture will be shared 64% by Petro-Canada and 36% by
UDS, based upon the relative values of assets each partner expects to contribute
to the joint venture. Formation of the joint venture is subject to completion of
due diligence, definitive documentation, regulatory review, and the approval of
both the UDS and Petro-Canada Boards of Directors. Until completion of
regulatory review, approval of definitive agreements and closing, all UDS and
Petro-Canada operations will continue to be run separately.
The Company's principal executive offices are located at 6000 North Loop
1604 West, San Antonio, TX 78249-1112 and its telephone number is (210)
592-2000.
UDS CAPITAL II
UDS Capital II is a statutory business trust formed under Delaware law
pursuant to (i) a separate declaration of trust (the "Declaration") executed by
the Company, as sponsor for such trust (the "Sponsor") and the UDS Capital
Trustees (as defined herein) for such trust and (ii) the filing of a certificate
of trust with the Delaware Secretary of State on June 5, 1997. The Declaration
of UDS Capital II, as amended, will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), prior to the
issuance by it of Trust Securities, as herein defined. UDS Capital II exists for
the exclusive purposes of (i) issuing the Trust Preferred Securities and common
securities representing undivided beneficial interests in its assets (the
"Common Securities" and, together with the Trust Preferred Securities, the
"Trust Securities"), (ii) investing the gross proceeds of the Trust Securities
in 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 UDS. 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. UDS
will acquire, directly or indirectly, Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of UDS Capital II. UDS
Capital II's business and affairs will be conducted by the trustees (the "UDS
Capital Trustees") appointed by UDS, 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 UDS Capital II.
The duties and obligations of the UDS Capital Trustees shall be governed by the
Declaration. A majority of the UDS Capital Trustees (the "Regular Trustees") of
UDS Capital II will be persons who are employees or officers of or affiliated
with UDS. One UDS Capital Trustee of UDS Capital II 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, 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 UDS Capital II 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 UDS Capital II
and the offering of Trust Securities, the payment of which will be guaranteed by
the Company. The office of the Delaware Trustee for UDS Capital II 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 UDS Capital II shall
be c/o Ultramar Diamond Shamrock Corporation, 6000 North Loop 1604 West, San
Antonio, Texas 78249-1112 and its telephone number is (210) 592-2000.
UDS FUNDING II, L.P.
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, UDS is the sole general partner of UDS Funding
II, L.P. (in such capacity the "General Partner"). It is anticipated that UDS
Funding II, L.P. will issue its limited partnership interests to UDS Capital II
simultaneous with UDS Capital II's issuance of Trust Preferred Securities, that
it will use the proceeds of such limited partnership interest to purchase
Subordinated Debt Securities, Affiliate Debentures, and Eligible Debt
Securities, as herein defined, and that UDS will contribute capital in an amount
sufficient to establish its initial capital account at an amount equal to at
least 15% of the total capital of UDS Funding II, L.P.
UDS Funding II, L.P. 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 UDS Funding II, L.P. on the Subordinated Debt Securities,
the Affiliate Debentures and the Eligible Debt Securities exceed distributions
payable with respect to the Partnership Preferred Securities, UDS Funding II,
L.P. 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 UDS Funding II, L.P. invests fail to make any payments in
respect of such securities (or, if applicable, guarantees), UDS Funding II, L.P.
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 UDS Funding II, L.P. and to maintain direct
ownership of 100% of the General Partner's interest in UDS Funding II, L.P.,
which interest will at all times represent at least 1% of the total capital of
UDS Funding II, L.P., (ii) to cause UDS Funding II, L.P. 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 UDS Funding II, L.P. 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 UDS Funding II, L.P. 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 UDS Funding II, L.P.) and be responsible for all debts and
obligations of UDS Funding II, L.P. (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 UDS Funding II, L.P. (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 such limited partner).
The location of the principal executive offices of UDS Funding II, L.P. is
c/o Ultramar Diamond Shamrock Corporation, 6000 North Loop 1604 West, San
Antonio, Texas 78249-1112 and its telephone number is (210) 592-2000.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends for the Company for each of the following
periods:
Year Ended December 31,
-----------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Ratio of earnings
to fixed charges and
preferred stock
dividends................ 2.7 1.2 1.8 2.8 2.5
For the purpose of this computation, 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 has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
USE OF PROCEEDS
UDS Capital II will use all proceeds received from the sale of the Trust
Preferred Securities to purchase Partnership Preferred Securities from UDS
Funding II, L.P. UDS Funding II, L.P. will use all proceeds received from the
sale of the Partnership Preferred Securities to purchase Subordinated Debt
Securities, 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, Common Stock, and Preferred 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 purposes. Funds not required immediately for
such purposes may be invested in marketable securities and short-term
investments.
DESCRIPTION OF SENIOR DEBT SECURITIES
The Senior Debt Securities will be unsecured obligations of UDS issued in
one or more series under an indenture (the "Senior Indenture") entered into
between UDS 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 UDS. The Senior Indenture does not limit the amount of
Debt which may be issued by UDS under the Senior Indenture or otherwise. The
Senior Indenture does, however, limit the ability of UDS'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 UDS
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 UDS 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 UDS for such purpose. At the option of UDS, payment of interest to
registered holders of Senior Debt Securities may be made by check mailed to the
address of the person entitled thereto as it appears on the register for Senior
Debt Securities.
The Senior Debt Securities shall be issued in fully registered form unless
the Prospectus Supplement provides otherwise. (Section 301) Subject to the
limitations provided in the Senior Indenture, Senior Debt Securities may be
presented for registration of transfer or exchange at such office of the Trustee
or at such other location or locations as may be established pursuant to the
Senior Indenture without any service charge, although UDS 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 UDS if such Senior Debt Securities are offered and sold
directly by UDS. Owners of beneficial interests in a Global Security that are
not Participants or persons that may hold through Participants but desire to
sell or otherwise transfer ownership of such beneficial interests by book-entry
on the records of the Depositary may do so only through Participants and persons
that may hold through Participants. Because the Depositary can only act on
behalf of Participants and persons that may hold through Participants, the
ability of an owner of a beneficial interest in a Global Security to pledge such
beneficial interests to persons or entities that do not participate in the
book-entry and transfer system of the Depositary, or otherwise take actions in
respect of such beneficial interests, may be limited. The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limitations on the ownership of beneficial
interests in a Global Security and such laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Senior Debt
Securities represented by such Global Security for all purposes under the Senior
Indenture. Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to have any of the individual Senior Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of any such
Senior Debt Securities of such series in definitive form and will not be
considered the owners or holders thereof under the Senior Indenture.
Payments of principal of (and premium, if any) and interest, if any, on
individual Senior Debt Securities represented by a Global Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Senior Debt Securities. None of UDS, 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.
UDS 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. UDS 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 UDS 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 UDS within 90 days, UDS 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,
UDS 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, UDS 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
UDS, 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
UDS will not permit any Subsidiary of UDS 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
UDS or a Wholly owned Subsidiary of UDS, but only so long as held or owned by
UDS or a Wholly owned Subsidiary of UDS; (vii) Debt Incurred or Preferred Stock
issued by a Person prior to the time (A) such Person became a Subsidiary of UDS,
(B) such Person merges into or consolidates with a Subsidiary of UDS or (c)
another Subsidiary of UDS merges into or consolidates with such Person (in a
transaction in which such Person becomes a Subsidiary of UDS), 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 UDS 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 UDS 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 UDS 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
UDS shall not Incur any Lien on property or assets of UDS 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 UDS 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 UDS 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 UDS 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 UDS in favor of the United
States of America or any state thereof, or any instrumentality of either, or
Canada or any province thereof, or any instrumentality of either, to secure
certain payments pursuant to any contract or statute; (viii) Liens granted to
any bank or other institution on cash, marketable securities or other current
assets to secure obligations under any interest rate swap or similar agreement
or foreign currency swap, exchange or similar agreement for the purpose of
providing a hedge to protect against fluctuations in interest rates and currency
exchange rates, respectively, and not for the purpose of speculation, provided
that such agreements are entered into in, or are incidental to, the ordinary
course of business, between UDS and such institution; (ix) Liens granted to any
bank or other institution on the payments to be made by such institution to UDS
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 UDS 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 UDS to one or more Wholly owned
Subsidiaries of UDS (but only if such Debt is held by such Wholly owned
Subsidiaries). (Section 1007)
Limitation on Sale and Leaseback Transactions
UDS shall not enter into any Sale and Leaseback Transaction (except for a
period not exceeding three years) unless: (1) UDS 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) UDS 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 UDS'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 UDS 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, UDS 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 UDS 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
UDS may not (i) (A) consolidate with or merge into any other Person, (B)
permit any other Person to consolidate with or merge into UDS or (c) permit any
other Person to consolidate with or merge into any Significant Subsidiary of UDS
(except in a transaction in which such Significant Subsidiary ceases to be a
Subsidiary of UDS); or (ii) directly or indirectly, transfer, convey, sell,
lease, or otherwise dispose of all or substantially all of its properties and
assets as an entirety, unless: (a) immediately after giving effect to such
transaction and treating any Debt Incurred by UDS or a Subsidiary as a result of
such transaction as having been Incurred by UDS 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 UDS does not survive or in which UDS transfers, conveys,
sells, leases or otherwise disposes of all or substantially all its properties
and assets as an entirety, the successor entity to UDS 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 UDS'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 UDS would become subject to a Lien which
would require UDS 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, UDS or the successor entity to UDS will have secured the Senior
Debt Securities of each such series as required by such covenant; and (d) UDS
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 UDS 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 UDS 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 UDS 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 UDS or any Significant Subsidiary of UDS. Any
additional Events of Default applicable to a particular series of Senior Debt
Securities are described in the Prospectus Supplement relating to such series.
(Sections 301 and 501)
The Senior Indenture provides that (i) if an Event of Default described in
clause (a), (b), (c), (d), (e), (f) or (g) above (in the case of clause (e), if
the Event of Default is with respect to less than all series of Senior Debt
Securities then Outstanding) shall have occurred and be continuing with respect
to Senior Debt Securities of any series, then either the Trustee or the Holders
of not less than 25% in aggregate principal amount of the Senior Debt Securities
of each series then Outstanding (each such series acting as a separate class)
may declare the principal (or, in the case of Discount Securities, the portion
thereof specified in the terms thereof) of all Outstanding Senior Debt
Securities of such series and the interest accrued thereon, if any, to be due
and payable immediately; (ii) if an Event of Default described in clause (e)
above with respect to all series of Senior Debt Securities then Outstanding
shall have occurred and be continuing, then either the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Senior Debt Securities of
each series then Outstanding (treated as one class) may declare the principal
(or, in the case of Discount Securities, the portion thereof specified in the
terms thereof) of all Senior Debt Securities of such series then Outstanding and
the interest accrued thereon, if any, to be due and payable immediately; and
(iii) if an Event of Default described in clause (h) above shall have occurred
and be continuing, the principal (or, in the case of Discount Securities, the
portion thereof specified in the terms thereof) of all Senior Debt Securities
then Outstanding and the interest accrued thereon, if any, shall become
immediately due and payable; provided, however, that upon certain conditions
such declarations or accelerations, as the case may be, may be annulled and past
defaults (except for defaults in the payment of principal of, any premium on, or
any interest on the Senior Debt Securities of such series, or in the payment of
any sinking fund, purchase or other analogous obligation, applicable to the
Senior Debt Securities of such series, and in compliance with certain covenants)
may be waived by the Holders of a majority in aggregate principal amount of the
Senior Debt Securities of any series having the benefit of this covenant then
Outstanding. (Sections 502 and 513)
Under the Senior Indenture, the Trustee must give to the Holders of each
series of Senior Debt Securities notice of all uncured defaults known to it with
respect to such series within 90 days after such a default occurs, unless such
default shall have been cured or waived; provided that in the case of a default
described in clause (e) above, no such notice shall be given until at least 90
days after such default occurs; and provided further that, except in the case of
default in the payment of principal of and any premium or any interest on any of
the Senior Debt Securities, or default in the payment of any sinking or purchase
fund installment or analogous obligations, the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interests of the Holders of the Senior Debt Securities of
such series. For the purpose of this paragraph, the term "default" includes the
events specified above without notice or grace periods. (Section 602)
No Holder of any Senior Debt Securities of any series may institute any action
under the Senior Indenture unless (a) such Holder shall have given the Trustee
written notice of a continuing Event of Default with respect to such series; (b)
the Holders of not less than 25% in aggregate principal amount of the Senior
Debt Securities of such series then Outstanding shall have requested the Trustee
to institute proceedings in respect of such Event of Default; (c) such Holder or
Holders shall have offered the Trustee such reasonable indemnity as the Trustee
may require; (d) the Trustee shall have failed to institute an action for 60
days thereafter; and (e) no inconsistent direction shall have been given to the
Trustee during such 60-day period by the Holders of a majority in aggregate
principal amount of Senior Debt Securities of such series. (Section 507)
However, such limitations do not apply to a suit instituted by the Holder of
Senior Debt Securities of any series entitled to the benefit of this covenant
for enforcement of payment of the principal of (and premium, if any) or interest
on Senior Debt Securities of such series on or after the respective Stated
Maturities expressed in the Senior Debt Securities of such series (or in the
case of redemption or repayment, on the Redemption Date or Repayment Date, as
the case may be). (Section 508)
The Holders of a majority in aggregate principal amount of the Senior Debt
Securities of any series affected and then Outstanding will have the right,
subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to such series of
Senior Debt Securities. (Section 512) The Senior Indenture provides that, in
case an Event of Default shall occur and be continuing, the Trustee, in
exercising its rights and powers under the Senior Indenture, will be required to
use the degree of care of a prudent person in the conduct of his or her own
affairs. The Senior Indenture further provides that the Trustee shall not be
required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under the Senior Indenture if
it has reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(Section 601)
UDS 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 UDS 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, UDS is not in
default in the performance and observance of the terms of the Senior Indenture
or, if UDS 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
UDS 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) UDS 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)
UDS may (A) be discharged from any and all obligations in respect of the
Outstanding Senior Debt Securities of any series (except for certain obligations
to issue temporary Senior Debt Securities of each series and exchange them for
definitive Senior Debt Securities of such series, register the transfer or
exchange of Senior Debt Securities of each series, replace mutilated, destroyed,
lost and stolen Senior Debt Securities of each series and maintain paying
agencies) or (B) omit to comply with certain restrictive covenants applicable to
Senior Debt Securities of any series that are described in the Senior Indenture
(including those described under "Limitation on Subsidiary Debt," "Limitations
on Liens," and "Limitation on Sale and Leaseback Transactions" and any
additional covenants provided for the benefit of a particular series of Senior
Debt Securities) and the events described in clauses (c) through (g) under
"Events of Default" and any other Events of Default for which this provision is
specified to be applicable shall not constitute Events of Default with respect
to the Senior Debt Securities of such series, in either case (A) or (B) upon
irrevocable deposit with the Trustee, in trust, of (i) money in the currency in
which the Senior Debt Securities of a particular series are denominated in an
amount, or (ii) the equivalent in securities of the government which issued the
currency in which the Senior Debt Securities of such series are denominated or
government agencies backed by the full faith and credit of such government, or
(iii) a combination of (i) and (ii), which through the payment of interest
thereon and principal thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount
sufficient in the opinion of a nationally recognized firm of independent public
accountants to pay the principal of and premium, if any, and each installment of
interest, if any, on the applicable Outstanding Senior Debt Securities of such
series. The obligations with respect to the Senior Debt Securities of such
series under the Senior Indenture, other than with respect to the covenants
described in clause (B) and the Events of Default with respect to the Senior
Debt Securities of such series under the Senior Indenture, other than the Events
of Default described in clause (B), shall remain in full force and effect. Such
trust may only be established if, among other things, (i) UDS 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 UDS and the Trustee with the
consent of the Holders of a majority in aggregate principal amount of the Senior
Debt Securities of each series affected by such modification then Outstanding,
but no such modification may be made without the consent of the Holder of each
Outstanding Senior Debt Security affected thereby which would (a) change the
Maturity of the principal of, or the Stated Maturity of any premium on or any
installment of interest on any Senior Debt Security, or reduce the principal
amount thereof or the interest or any premium thereon, or change the method of
computing the amount of principal thereof or interest thereon on any date or
change any place of payment where, or the currency (or units based on or related
to currencies) in which, any Senior Debt Security or any premium or interest
thereon is payable, or change the currency (or units based on or related to
currencies) in which any Senior Debt Security is denominated, or impair the
right to institute suit for the enforcement of any such payment on or after the
Maturity or Stated Maturity, as the case may be, thereof (or, in the case of
redemption or repayment, on or after the Redemption Date or the Repayment Date,
as the case may be); (b) reduce the percentage in principal amount of the
Outstanding Senior Debt Securities of any series, the consent of whose Holders
is required for any such modification, or the consent of whose Holders is
required for any waiver of compliance with certain provisions of the Senior
Indenture or certain defaults thereunder and their consequences provided for in
the Senior Indenture; or (c) modify any of the provisions of certain sections of
the Senior Indenture, including the provisions summarized in this paragraph,
except to increase any such percentage or to provide that certain other
provisions of the Senior Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Senior Debt Security affected thereby.
(Section 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities of any series under the Senior Indenture may waive
compliance by UDS 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 Second Amendment and Restatement of
Credit Agreement dated as of December 30, 1993 among Ultramar, Incorporated, the
banks named therein and Barclays Bank PLC, as agent, and the Second Amended and
Restated Credit Agreement dated as of December 30, 1993 among Canadian Ultramar
Company, UDS, the banks named therein and Canadian Imperial Bank of Commerce, as
agent.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person which is required to
be classified and accounted for as a capital lease or a liability on the face of
a balance sheet of such Person in accordance with GAAP. The stated maturity of
such obligation shall be the date of the last payment of rent or on any other
amount due under such lease or other Debt arrangements prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Consolidated Current Assets" of any Person means all assets of such Person
which would, in accordance with GAAP, be classified as current assets of a
company conducting a business the same as or similar to that of such Person,
after deducting reserves against current assets in each case in which a reserve
is proper in accordance with GAAP.
"Consolidated Stockholders' Equity" of any Person means the consolidated
stockholders' equity of such Person and its consolidated subsidiaries, as
determined on a consolidated basis in accordance with GAAP, excluding amounts
attributable to Redeemable Stock of such Person.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with acquisition of
property, assets or businesses (even though the rights and remedies of the
seller in the event of a default are limited to repossession or sale of the
property, assets or business), (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business), (v) every Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Redeemable Stock of
such Person at the time of determination, (vii) every payment obligation of such
Person under interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements at the time of determination, (viii) every
obligation to pay rent or other similar amounts of such Person with respect to
any Sale and Leaseback Transaction to which such Person is a party and (ix)
every obligation of the type referred to in clauses (i) through (viii) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise and such obligations secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien or property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligation.
"Discount Security" means (i) any security (including any Senior Debt
Security) which provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration of the Maturity thereof;
and (ii) any other security (including any Senior Debt Security) deemed a
Discount Security for United States Federal income tax purposes.
"GAAP" means generally accepted accounting principles in the United States,
consistently applied, that are in effect from time to time.
"Holder" means a Person in whose name a Senior Debt Security is registered
in the Security Register.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Debt or other obligation
or the recording, as required pursuant to GAAP or otherwise, of any such Debt or
other obligation on the balance sheet of such Person (and "Incurrence",
"Incurred", "Incurrable" and "Incurring" shall have meanings correlative to the
foregoing); provided, however, that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Debt shall not be
deemed an Incurrence of such Debt.
"Interest Payment Date," when used with respect to any series of Senior
Debt Securities, means the Stated Maturity of any installment of interest on
those Senior Debt Securities.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, deposit agreement, security
interest, lien, charge, easement (other than any title defect or easement not
materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Net Available Proceeds" from any Asset Disposition by any Person means cash or
readily marketable cash equivalents received (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiror of
Debt or other obligations relating to such properties or assets or received in
any other noncash form) therefrom by such Person, net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred and
all federal, state, provincial, foreign and local taxes required to be accrued
as a liability as a consequence of such Asset Disposition, (ii) all payments
made by such Person or its Subsidiaries on any Debt which is secured by such
assets in accordance with the terms of any Lien upon or with respect to such
assets or which must by the terms of such Lien or in order to obtain a necessary
consent to such Asset Disposition or by applicable law be repaid out of the
proceeds from such Asset Disposition, and (iii) all distributions and other
payments made to minority interest holders in Subsidiaries of such Person or
joint ventures as a result of such Asset Disposition.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and the Chief Financial Officer,
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
UDS, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for UDS, and who shall be reasonably acceptable to the
Trustee.
"pari passu," when used with respect to the ranking of any Debt of any
Person in relation to other Debt of such Person, means that each such Debt (a)
either (i) is not subordinated in right of payment to any other Debt of such
Person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other and is so subordinate to the same extent and (b) is not
subordinate in right of payment to the other or to any Debt of such Person as to
which the other is not so subordinate.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Redeemable Stock" of any Person means any equity security of such Person
that by its terms or otherwise is required to be redeemed prior to the Stated
Maturity of the Senior Debt Securities of such series or is redeemable at the
option of the holder thereof at any time prior to the Stated Maturity of the
Senior Debt Securities of such series.
"Redemption Date," when used with respect to any Senior Debt Security to be
redeemed, means the date fixed for such redemption by or pursuant to the Senior
Indenture.
"Regular Record Date" for the interest payable on any Senior Debt Security
on any Interest Payment Date means the date specified in such Senior Debt
Security as the Regular Record Date.
"Repayment Date," when used with respect to any Senior Debt Security to be
repaid, means the date fixed for such repayment pursuant to such Senior Debt
Security.
"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than one year after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other similar amount due under such arrangement
prior to the first date on which such arrangement may be terminated by the
lessee without payment of a penalty.
"Significant Subsidiary" of any Person means a Subsidiary of such Person
that is a "significant subsidiary" as defined in Regulation S-X, as promulgated
by the Commission.
"Stated Maturity," when used with respect to any Senior Debt Security or
any installment of principal thereof or interest thereon, means the date
specified in such Senior Debt Security as the fixed date on which the principal
of such Senior Debt Security or such installment of principal or interest is due
and payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more other Subsidiaries thereof or (ii) any other Person (other than
a corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Wholly owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly owned Subsidiaries of such Person or by such
Person and one or more Wholly owned Subsidiaries of such Person.
Concerning the Trustee
The Bank of New York is the Trustee under the Senior Indenture.
Governing Law
The Senior Debt Securities of each series and the Senior Indenture shall be
governed by and construed in accordance with the laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Subordinated Debt Securities may be issued from time to time in one or more
series under an indenture (the "Subordinated Indenture"), entered into between
UDS and The Bank of New York, as Trustee (the "Debt Trustee"). 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 UDS. 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 UDS's Board of Directors or a special
committee appointed thereby (each, a "Supplemental Subordinated Indenture").
(Section 301)
In the event Subordinated Debt Securities are issued to a UDS Capital II or
a trustee of such trust in connection with the issuance of Trust Securities by
UDS Capital II, such Subordinated Debt Securities subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of UDS Capital II 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 UDS Capital II or a
trustee of such trust in connection with the issuance of Trust Securities by UDS
Capital II.
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 UDS 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
UDS by check mailed to the address of the person entitled thereto as it appears
in the Security Register. (Section 307)
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 UDS, 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 UDS 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
UDS 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 UDS 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 UDS to the extent set forth in the
applicable Prospectus Supplement.
Certain Covenants of UDS
If Subordinated Debt Securities are issued to UDS Capital II or a trustee
of such trust in connection with the issuance of Trust Securities by UDS Capital
II and (i) there shall have occurred any event that would constitute an Event of
Default (as defined herein) or (ii) UDS shall be in default with respect to its
payment of any obligations under the related Trust Guarantee or Common
Securities Guarantee, then (a) UDS 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) UDS 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 UDS
which rank pari passu with or junior to such Subordinated Debt Securities.
If Subordinated Debt Securities are issued to UDS Capital II or a trustee
of such trust in connection with the issuance of Trust Securities by UDS Capital
II and UDS 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) UDS 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) UDS 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 UDS
which rank pari passu with or junior to such Subordinated Debt Securities.
In the event Subordinated Debt Securities are issued to UDS Capital II or a
trustee of such trust in connection with the issuance of Trust Securities of UDS
Capital II, for so long as such Trust Securities remain outstanding, UDS will
covenant (i) to directly or indirectly maintain 100% ownership of the Common
Securities of UDS Capital II; provided, however, that any permitted successor of
UDS under the Subordinated Indenture may succeed to UDS's ownership of such
Common Securities, (ii) to use its reasonable efforts to cause UDS Capital II
(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 UDS Capital II, the redemption of all of the Trust Securities
of UDS Capital II, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration of UDS Capital II, 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 UDS 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 UDS under the
Subordinated Indenture. (Section 801)
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 UDS 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 UDS 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 UDS; or
(e) in the event Subordinated Debt Securities are issued to UDS Capital II
or a trustee of such trust in connection with the issuance of Trust Securities
by UDS Capital II, the voluntary or involuntary dissolution, winding-up or
termination of UDS Capital II, except in connection with the distribution of
Subordinated Debt Securities to the holders of Trust Securities in liquidation
of UDS Capital II, the redemption of all of the Trust Securities of UDS Capital
II, or certain mergers, consolidations or amalgamations, each as permitted by
the Declaration of UDS Capital II. (Section 5.01)
The Subordinated Indenture provides that the Debt Trustee may withhold
notice to the holders of a series of Subordinated Debt Securities (except in
payment of principal or of interest or premium on the Subordinated Debt
Securities) if the Trustee considers it in the interest of such holders to do
so. (Section 5.08).
The Subordinated Indenture provides that, (a) if an Event of Default due to
the default in the payment of principal, interest or premium, if any, on any
series of Subordinated Debt Securities shall have occurred and be continuing,
either the Debt Trustee or the holders of 25 percent in principal amount of the
Subordinated Debt Securities of all series affected thereby then outstanding may
declare the principal of all such Subordinated Debt Securities to be due and
payable immediately, and (b) if an Event of Default resulting from default in
the performance of any other of the covenants or agreements in the Subordinated
Indenture or certain events of bankruptcy, insolvency and reorganization of UDS
shall have occurred and be continuing, either the Debt Trustee or the holders of
25 percent in principal amount of all Subordinated Debt Securities then
outstanding (treated as one class) may declare the principal of all Subordinated
Debt Securities to be due and payable immediately, but upon certain conditions
such declarations may be annulled and past defaults may be waived (except
defaults in payment of principal of or interest or premium on the Subordinated
Debt Securities) by the holders of a majority in principal amount of the
Subordinated Debt Securities of such series (or of all series, as the case may
be) then outstanding. (Section 5.01)
The holders of a majority in principal amount of the Subordinated Debt
Securities of any and all series affected and then outstanding shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Debt Trustee under the Subordinated Indenture, provided
that the holders of the Subordinated Debt Securities shall have offered to the
Debt Trustee reasonable indemnity against expenses and liabilities. (Sections
5.07 and 5.04)
Modification
The Subordinated Indenture contains provisions permitting UDS and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debt Securities of all series affected by
such modification at the time outstanding, to modify the Subordinated Indenture
or any supplemental Subordinated Indenture or the rights of the holders of the
Subordinated Debt Securities; provided that no such modification shall (i)
extend the fixed maturity of any Security, or reduce the principal amount
thereof (including in the case of a discounted Security the amount payable
thereon in the event of acceleration or the amount provable in bankruptcy) or
any redemption premium thereon, or reduce the rate or extend the time of payment
of interest thereon, or make the principal of, or interest or premium on, the
Subordinated Debt Securities payable in any coin or currency other than that
provided in the Subordinated Debt Securities, or impair or affect the right of
any holder of Subordinated Debt Securities to institute suit for the payment
thereof or the right of prepayment, if any, at the option of the holder, without
the consent of the holder of each Security so affected, or (ii) reduce the
aforesaid percentage of Subordinated Debt Securities the consent of the holders
of which is required for any such modification without the consent of the
holders of each Security affected. (Section 9.02)
Governing Law
The Subordinated Indenture and the Subordinated Debt Securities will be
governed by, and construed in accordance with, the internal laws of the State of
New York. (Section 113).
The Debt Trustee
UDS may have normal banking relationships with the Debt Trustee in the
ordinary course of business.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
UDS Capital II 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 UDS Capital II authorizes the Regular
Trustees of UDS Capital II to issue on behalf of UDS Capital II 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 UDS Capital II for specific terms, including (i)
the distinctive designation of such Trust Preferred Securities; (ii) the number
of Trust Preferred Securities issued by UDS Capital II; (iii) the annual
distribution rate (or method of determining such rate) for Trust Preferred
Securities issued by UDS Capital II 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 UDS Capital II 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 UDS Capital II shall be
cumulative; (v) the amount or amounts which shall be paid out of the assets of
UDS Capital II to the holders of Trust Preferred Securities of UDS Capital II
upon voluntary or involuntary dissolution, winding-up or termination of UDS
Capital II; (vi) the obligation, if any, of UDS Capital II to purchase or redeem
Trust Preferred Securities issued by UDS Capital II 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 UDS Capital II 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 UDS Capital II 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 UDS Capital II,
as a condition to specified action or amendments to the Declaration of UDS
Capital II; (viii) the terms and conditions, if any, upon which the assets of
UDS Capital II 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 UDS Capital
II not inconsistent with the Declaration of UDS Capital II or with applicable
law. All Trust Preferred Securities offered hereby will be guaranteed by UDS 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, UDS Capital
II will issue one series of Common Securities. The Declaration of UDS Capital II
authorizes the Regular Trustees of such trust to issue on behalf of UDS Capital
II 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 UDS Capital II 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 UDS Capital II.
All of the Common Securities of UDS Capital II will be directly or indirectly
owned by UDS.
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 UDS Capital II.
General
Pursuant to each Trust Guarantee, UDS 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 UDS Capital II, the Trust Guarantee
Payments (as defined herein) (except to the extent paid by UDS Capital II), as
and when due, regardless of any defense, right of set-off or counterclaim which
UDS Capital II may have or assert. The following payments with respect to Trust
Preferred Securities issued by UDS Capital II to the extent not paid by UDS
Capital II (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 UDS Capital II shall have funds available therefor; (ii) the
redemption price, including all accrued and unpaid distributions (the
"Redemption Price"), to the extent UDS Capital II has funds available therefor
with respect to any Trust Preferred Securities called for redemption by UDS
Capital II and (iii) upon a voluntary or involuntary dissolution, winding-up, or
termination of UDS Capital II (other than in connection with the distribution of
the assets of UDS Capital II 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 UDS
Capital II has funds available therefor and (b) the amount of assets of UDS
Capital II remaining available for distribution to holders of such Trust
Preferred Securities in liquidation of UDS Capital II. UDS's obligation to make
a Trust Guarantee Payment may be satisfied by direct payment of the required
amounts by UDS to the holders of Trust Preferred Securities or by causing UDS
Capital II 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 UDS Capital II, but will not
apply to any payment of distributions except to the extent UDS Capital II shall
have funds available therefor. If UDS does not make interest payments on the
Subordinated Debt Securities purchased by UDS Funding II, L.P., or if UDS
Funding II, L.P. does not make distributions on the Partnership Preferred
Securities purchased by UDS Capital II, UDS Capital II will not pay
distributions on the Trust Preferred Securities issued by UDS Capital II and
will not have funds available therefor. See "Description of the Subordinated
Debt Securities -- Certain Covenants" and "Description of the Partnership
Preferred Securities."
UDS has also agreed separately to irrevocably and unconditionally guarantee
the obligations of UDS Capital II with respect to the Common Securities (the
"Common Securities Guarantees") to the same extent as the Trust Guarantees,
except that upon an event of default under the Subordinated Indenture, holders
of Trust Preferred Securities shall have priority over holders of Common
Securities with respect to distributions and payments on liquidation, redemption
or otherwise.
Certain Covenants of UDS
In each Trust Guarantee, UDS will covenant that, so long as any Trust
Preferred Securities issued by UDS Capital II remain outstanding, if there shall
have occurred any event that would constitute an event of default under such
Trust Guarantee or the Declaration of UDS Capital II, then (a) UDS 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) UDS 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 UDS 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 UDS Capital II. 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 UDS and shall inure to the benefit of the
holders of the Trust Preferred Securities of UDS Capital II then outstanding.
Termination
Each Trust Guarantee will terminate as to the Trust Preferred Securities
issued by UDS Capital II (a) upon full payment of the Redemption Price of all
Trust Preferred Securities of UDS Capital II, (b) upon distribution of the
assets of UDS Capital II to the holders of the Trust Preferred Securities of UDS
Capital II or (c) upon full payment of the amounts payable in accordance with
the Declaration of UDS Capital II upon liquidation of UDS Capital II. 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 UDS
Capital II 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
UDS 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 UDS to enforce the Preferred Guarantee Trustee's rights under such Trust
Guarantee, without first instituting a legal proceeding against UDS Capital II,
the Preferred Guarantee Trustee or any other person or entity. Notwithstanding
the foregoing, if UDS has failed to make a guarantee payment, a holder of Trust
Preferred Securities may directly institute a proceeding against UDS for
enforcement of the Trust Guarantee for such payment. UDS waives any right or
remedy to require that any action be brought first against UDS Capital II or any
other person or entity before proceeding directly against UDS.
Status of the Trust Guarantees
The Trust Guarantees will constitute unsecured obligations of UDS and will
rank (i) subordinate and junior in right of payment to all other liabilities of
UDS, (ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by UDS and with any guarantee now or hereafter entered into by
UDS in respect of any preferred or preference stock of any affiliate of UDS; and
(iii) senior to UDS's common stock. The terms of the Trust Preferred Securities
provide that each holder of Trust Preferred Securities issued by UDS Capital II
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.
UDS 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 UDS Funding II, L.P., other than the
Partnership Preferred Securities acquired by UDS Capital II, will be owned
directly by UDS. Initially, UDS will be the sole General Partner of UDS Funding
II, L.P. The Limited Partnership Agreement of UDS Funding II, L.P. authorizes
and creates the Partnership Preferred Securities, which represent limited
partner interests in UDS Funding II, L.P. 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 UDS Funding II, L.P. Except as otherwise
described in the applicable Prospectus Supplement, the Limited Partnership
Agreement of UDS Funding II, L.P. does not permit the issuance of any additional
partnership interests, or the incurrence of any indebtedness by UDS Funding II,
L.P. The Partnership Preferred Securities will have such terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferred, or other special rights or such restrictions as shall be set forth in
the Limited Partnership Agreement or made part of the Limited Partnership
Agreement by the Partnership Act. Reference is made to the Prospectus Supplement
relating to the Partnership Preferred Securities of UDS Funding II, L.P. for
specific terms, including (i) the distinctive designation of such Partnership
Preferred Securities; (ii) the number of Partnership Preferred Securities issued
by UDS Funding II, L.P.; (iii) the annual distribution rate (or method of
determining such rate) for Partnership Preferred Securities issued by UDS
Funding II, L.P. 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 UDS Funding II, L.P. 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 UDS Funding II, L.P.
shall be cumulative; (v) the amount or amounts which shall be paid out of the
assets of UDS Funding II, L.P. to the holders of Partnership Preferred
Securities of UDS Funding II, L.P. upon voluntary or involuntary dissolution,
winding-up or termination of UDS Funding II, L.P.; (vi) the obligation, if any,
of UDS Funding II, L.P. to purchase or redeem Partnership Preferred Securities
issued by UDS Funding II, L.P. 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 UDS Funding II, L.P. 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 UDS Funding II,
L.P. 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 UDS Funding II, L.P. 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 issued by UDS Funding II, L.P., as a condition to specified
action or amendments to the Limited Partnership Agreement of UDS Funding II,
L.P.; (viii) the terms and conditions, if any, upon which the assets of UDS
Funding II, L.P. 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 UDS Funding II, L.P. not inconsistent with the
Limited Partnership Agreement of UDS Funding II, L.P. or with applicable law.
All Partnership Preferred Securities offered hereby will be guaranteed by UDS 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 UDS Funding II, L.P. for the benefit of the holders of the
Partnership Preferred Securities of UDS Funding II, L.P.
General
Pursuant to each Partnership Guarantee, UDS 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 UDS Funding II, L.P.,
the Partnership Guarantee Payments (as defined herein) (except to the extent
paid by UDS Funding II, L.P.), as and when due, regardless of any defense, right
of set-off or counterclaim which UDS Funding II, L.P. may have or assert. The
following payments with respect to Partnership Preferred Securities issued by
UDS Funding II, L.P. to the extent not paid by UDS Funding II, L.P. (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 UDS Funding II, L.P. and (iii) upon a liquidation of UDS Funding
II, L.P., 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 UDS Funding II, L.P., after
satisfaction of all liabilities, remaining available for distribution to holders
of such Partnership Preferred Securities in liquidation of UDS Funding II, L.P.
UDS's obligation to make a Partnership Guarantee Payment may be satisfied by
direct payment of the required amounts by UDS to the holders of Partnership
Preferred Securities or by causing UDS Funding II, L.P. 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 UDS Funding II, L.P.,
but will not apply to any payment of distributions or Redemption Price, or to
payments upon the liquidation of UDS Funding II, L.P., except to the extent UDS
Funding II, L.P. shall have funds legally available therefor. If issuers
(including, where applicable, UDS, as guarantor) of the securities in which UDS
Funding II, L.P. invests fail to make any payments in respect of such securities
(or, if applicable, guarantees), UDS Funding II, L.P. may not declare or pay
dividends on the Partnership Preferred Securities of UDS Funding II, L.P. 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 UDS" below.
Certain Covenants of UDS
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 UDS Funding II,
L.P. invests has occurred and is continuing or (c) UDS is in default of its
obligations under the applicable Trust Guarantee, Partnership Guarantee or any
Investment Guarantee, then, during such period (i) UDS shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to any of its capital stock
(except for dividends or distributions in shares of its common stock and
exchanges of common stock of one class for common stock of another class), (ii)
UDS shall not make any payment or cause any payment to be made that would result
in, and shall take such action as shall be necessary to prevent, the payment of
dividends on, any distribution with respect to, any redemption, purchase or
other acquisition of, or any liquidation payment with respect to, any preferred
security hereafter issued by any finance subsidiary of UDS, the principal
purpose of which is to lend the proceeds of the sale thereof to UDS or to
eligible affiliates of UDS, and (iii) UDS shall not make any guarantee payments
with respect to the foregoing.
Modification of the Partnership Guarantees; Assignment
Except with respect to any changes which do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no vote will be
required), each Partnership Guarantee may be amended only with the prior
approval of the holders of not less than a majority in liquidation amount of the
outstanding Partnership Preferred Securities issued by UDS Funding II, L.P. 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 UDS and shall
inure to the benefit of the holders of the Partnership Preferred Securities of
UDS Funding II, L.P. then outstanding.
Termination
Each Partnership Guarantee will terminate as to the Partnership Preferred
Securities issued by UDS Funding II, L.P. (a) upon full payment of the
Redemption Price of all Partnership Preferred Securities of UDS Funding II,
L.P., or (b) upon full payment of the amounts payable in accordance with the
Limited Partnership Agreement of UDS Funding II, L.P. upon liquidation of UDS
Funding II, L.P. 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 UDS Funding II, L.P. 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 UDS 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 UDS to enforce the Special
Representative's rights under such Partnership Guarantee, without first
instituting a legal proceeding against UDS Funding II, L.P., the Special
Representative or any other person or entity. Notwithstanding the foregoing, if
UDS has failed to make a Partnership Guarantee Payment, a holder of Partnership
Preferred Securities may directly institute a proceeding against UDS for
enforcement of the Partnership Guarantee for such payment.
Status of the Partnership Guarantees
The Partnership Guarantees will constitute unsecured obligations of UDS and
will rank (i) subordinate and junior in right of payment to all other
liabilities of UDS, (ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by UDS and with any guarantee now or hereafter
entered into by UDS in respect of any preferred or preference stock of any
affiliate of UDS; and (iii) senior to UDS's common stock. The terms of the
Partnership Preferred Securities provide that each holder of Partnership
Preferred Securities issued by UDS Funding II, L.P. 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
UDS Funding II, L.P. to be held for the benefit or the holders of the
Partnership Preferred Securities of UDS Funding II, L.P. 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 UDS Funding II, L.P.
Governing Law
The Partnership Guarantees will be governed by and construed in accordance
with the internal laws of the State of New York.
DESCRIPTION OF CAPITAL STOCK OF UDS
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Delaware General Corporation Law
(the "DGCL"), the certificate of incorporation of UDS (the "UDS Charter") and
the terms of the UDS Rights Agreement (as defined below under "UDS Rights
Plan").
UDS's authorized capital stock consists of 250,000,000 shares of common
stock (the "UDS Shares"), of which 86,662,761 shares were issued and outstanding
on December 31, 1997, and 25,000,000 preferred shares, of which 1,724,400 were
issued and outstanding on December 31, 1997.
UDS Common Stock
Dividend Rights. Holders of UDS Shares are entitled to receive dividends
when, as and if declared by the UDS Board, out of funds legally available
therefor, subject, however, to the rights relating to any outstanding preferred
stock of UDS.
Voting Rights. Subject to the rights, if any, of the holders of any series
of preferred stock of UDS, all voting rights are vested in the holders of UDS
Shares, each share being entitled to one vote on each matter presented for a
vote, including the election of directors. The UDS Board, which currently
consists of 12 directors, is divided into three classes of directors with the
term of one class expiring at each annual meeting of stockholders. Because
holders of UDS Shares do not have cumulative voting rights, the holders of a
plurality of the UDS Shares represented at a meeting can elect all the directors
standing for election at such meeting.
Rights upon Liquidation. In the event of the liquidation, dissolution or
winding up of UDS, whether voluntary or involuntary, the holders of UDS Shares
will be entitled to share ratably in assets available for distribution to
holders of UDS Shares, subject, however, to the rights relating to any
outstanding preferred stock of UDS.
Miscellaneous. UDS Shares are not liable for further calls or assessments
by UDS and the holders of UDS Shares are not liable for any liabilities of UDS.
The UDS Shares do not have preemptive or other subscription rights, any
conversion rights, or any redemption or sinking fund provisions. Registrar &
Transfer Company and The R-M Trust Company act as transfer agent and registrar
for the UDS Shares in the United States and Canada, respectively.
UDS Rights. For a description of rights which are attached to each outstanding
UDS Share, see "UDS Rights Plan."
UDS Preferred Stock
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of Preferred
Stock offered by a Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of Preferred Stock. The description set forth
below is subject to and qualified in its entirety by reference to the UDS
Charter and the form of Certificate of Designations (the "Designation")
establishing a particular series of Preferred Stock which will be filed with the
Commission in connection with the offering of such series of Preferred Stock.
General. Under the UDS Charter, the Board of Directors of the Company (the
"Board of Directors") is authorized, without further shareholder action, to
provide for the issuance of up to 25,000,000 shares of Preferred Stock, in one
or more series, and to fix the designations, terms, and relative rights and
preferences, including the dividend rate, voting rights, conversion rights,
redemption, and sinking fund provisions and liquidation values of each such
series. UDS may amend the UDS Charter from time to time to increase the number
of authorized shares of Preferred Stock. Any such amendment would require the
approval of the holders of a majority of the outstanding shares of all series of
Preferred Stock voting together as a single class without regard to series. As
of the date of this Prospectus, UDS has one series of Preferred Stock
outstanding.
The Preferred Stock will have the dividend, liquidation, redemption,
conversion, and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specified terms, including, (i) the
title and liquidation preference per share of such Preferred Stock and the
number of shares offered; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence to
accumulate; (iv) any redemption or sinking fund provisions of such Preferred
Stock; (v) any conversion or exchange provisions of such Preferred Stock; (vi)
the voting rights, if any, of such Preferred Stock; and (vii) any additional
dividend, liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations, and restrictions of such Preferred Stock. The Preferred
Stock will, when issued, be fully paid and nonassessable.
Dividend Rights. The Preferred Stock will be preferred over the Common
Stock as to payment of dividends. Before any dividends or distributions on the
Common Stock shall be declared and set apart for payment or paid, the holders of
shares of each series of Preferred Stock shall be entitled to receive dividends
(either in cash, shares of Common Stock or Preferred Stock, or otherwise) when,
as, and if declared by the Board of Directors, at the rate and on the date or
dates as set forth in the Prospectus Supplement. With respect to each series of
Preferred Stock, the dividends on each share of such series with respect to
which dividends are cumulative shall be cumulative from the date of issue of
such share unless some other date is set forth in the Prospectus Supplement
relating to any such series. Accruals of dividends shall not bear interest.
Rights Upon Liquidation. The Preferred Stock shall be preferred over the
Common Stock as to assets so that the holders of each series of Preferred Stock
shall be entitled to be paid, upon the voluntary or involuntary liquidation,
dissolution or winding up of UDS, and before any distribution is made to the
holders of Common Stock, the amount set forth in the Prospectus Supplement
relating to any such series, but in such case the holders of such series of
Preferred Stock shall not be entitled to any other or further payment. If upon
any such liquidation, dissolution, or winding up of UDS its net assets shall be
insufficient to permit the payment in full of the respective amounts to which
the holders of all outstanding Preferred Stock are entitled, the entire
remaining net assets of UDS shall be distributed among the holders of each
series of Preferred Stock in amounts proportionate to the full amounts to which
the holders of each such series are respectively so entitled.
Redemption and Conversion. All shares of any series of Preferred Stock
shall be redeemable to the extent set forth in the Prospectus Supplement
relating to any such series. All shares of any series of Preferred Stock shall
be convertible into shares of Common Stock or into shares of any other series of
Preferred Stock to the extent set forth in the Prospectus Supplement relating to
any such series.
Voting Rights. All shares of any series of Preferred Stock shall have the
voting rights set forth in the Prospectus Supplement relating to any such
series.
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. Until a UDS Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of UDS, including, without
limitation, the right to vote or to receive dividends.
Until the earlier of (i) such time as UDS learns that a person has become a
UDS Acquiring Person (as defined below) and (ii) the close of business on such
date, if any, as may be designated by the UDS Board following the commencement
of, or first public disclosure of an intent to commence, a tender or exchange
offer by any person (subject to certain exceptions) for outstanding UDS Shares,
if upon consummation of such tender or exchange offer such person's beneficial
ownership of outstanding UDS Shares could equal or exceed such person's
Ownership Threshold (as defined below) (the earlier of such dates being the "UDS
Distribution Date"), the UDS Rights will be evidenced by the certificates for
UDS Shares registered in the names of the holders thereof and not by separate
right certificates. Therefore, until the UDS Distribution Date, the UDS Rights
will be transferred with and only with the UDS Shares.
For purposes of the UDS Rights Agreement, (i) the term "UDS Acquiring
Person" means, subject to certain exceptions set forth in the UDS Rights
Agreement, any person, alone or together with all affiliates and associates of
such person, whose beneficial ownership of outstanding UDS Shares equals or
exceeds such person's Ownership Threshold and (ii) the term "Ownership
Threshold" means, with respect to any person, beneficial ownership of the
greater of (a) 10% of the outstanding UDS Shares or (b) 3% plus the percentage
of the outstanding UDS Shares beneficially owned by such person on May 10, 1994.
Pursuant to its terms and with certain limited exceptions, the Rights
Agreement may be amended or supplemented by UDS without the approval of any
holder of UDS Rights.
In the event a person becomes a UDS Acquiring Person, the UDS Rights will
entitle each holder thereof (other than the UDS Acquiring Person (or any
affiliate or associate of such UDS Acquiring Person)) to purchase, for the UDS
Rights Purchase Price, that number of UDS Shares equivalent to the number of UDS
Shares which at the time of the transaction would have a market value of twice
the UDS Rights Purchase Price. Any UDS Rights that are at any time beneficially
owned by a UDS Acquiring Person (or any affiliate or associate of a UDS
Acquiring Person) will be null and void and nontransferable and any holder of
any such UDS Right (including any purported transferee or subsequent holder)
will be unable to exercise or transfer any such UDS Right.
After there is a UDS Acquiring Person, the UDS Board may elect to exchange
each UDS Right (other than UDS Rights that have become null and void and
nontransferable as described above) for consideration per UDS Right consisting
of one-half of the securities that would be issuable at such time upon the
exercise of one UDS Right pursuant to the terms of the UDS Rights Agreement, and
without payment of the UDS Rights Purchase Price.
In the event that, following a UDS Distribution Date, UDS is acquired in a
merger by, or other business combination with, or 50% or more of its assets or
assets representing 50% or more of its earning power are sold, leased, exchanged
or otherwise transferred (in one or more transactions) to, a publicly traded
corporation, or such corporation merges with and into UDS (in certain
circumstances), each UDS Right will entitle its holder (subject to the next
paragraph) to purchase, for the UDS Rights Purchase Price, that number of common
shares of such corporation which at the time of the transaction would have a
market value of twice the UDS Rights Purchase Price. In the event UDS is
acquired in a merger by, or other business combination with, or 50% or more of
its assets or assets representing 50% or more of the earning power of UDS are
sold, leased, exchanged or otherwise transferred (in one or more transactions)
to an entity that is not a publicly traded corporation or such corporation
merges with and into UDS (in certain circumstances), each UDS Right will entitle
its holder (subject to the next paragraph) to purchase, for the UDS Rights
Purchase Price, at such holder's option, (i) that number of shares of such
entity (or, at such holder's option, of the surviving corporation in such
acquisition, which could be UDS) which at the time of the transaction would have
a book value of twice the UDS Rights Purchase Price or (ii) if such entity has
an affiliate which has publicly traded common shares, that number of common
shares of such affiliate which at the time of the transaction would have a
market value of twice the UDS Rights Purchase Price.
The UDS Rights are not exercisable until the UDS Distribution Date and will
expire on July 6, 2002 (the "UDS Rights Expiration Date") unless earlier
redeemed or canceled by UDS as described below. At any time prior to the earlier
of (i) such time as a person becomes an UDS Acquiring Person and (ii) the UDS
Rights Expiration Date, the UDS Board may redeem the UDS Rights in whole, but
not in part, at a price (in cash or UDS Shares or other securities of UDS deemed
by the UDS Board to be at least equivalent in value) of $.01 per UDS Right,
subject to adjustment as provided in the UDS Rights Agreement (the "UDS Rights
Redemption Price"); provided that, for the 120-day period after any date of a
change (resulting from a proxy or consent solicitation) in a majority of the UDS
Board in office at the commencement of such solicitation, the UDS Rights may
only be redeemed if (a) there are directors then in office who were in office at
the commencement of such solicitation and (b) the UDS Board, with the
concurrence of a majority of such directors then in office, determines that such
redemption is, in its judgment, in the best interests of UDS and its
stockholders. Immediately upon the action of the UDS Board electing to redeem
the UDS Rights, the right to exercise the UDS Rights will terminate and within
ten business days, UDS will give notice thereof to holders of UDS Rights.
The Delaware Business Combination Act
Section 203 of the General Corporation Law of the State of Delaware (the
"DGCL") imposes a three-year moratorium on business combinations (as defined)
between a Delaware corporation and an "interested stockholder" (in general, a
stockholder owning 15 percent or more of a corporation's outstanding voting
stock) or an affiliate or associate thereof unless (a) prior to an interested
stockholder becoming such, the Board of Directors of the corporation approved
either the business combination or the transaction resulting in the interested
stockholder becoming such, (b) upon consummation of the transaction resulting in
an interested stockholder becoming such, the interested stockholder owns at
least 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 UDS, (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, or other financial benefits provided by the corporation.
Certain Provisions of the Certificate of Incorporation and By-laws
The Certificate of Incorporation of UDS (the "Certificate") and By-laws of
UDS (the "By-laws") contain certain provisions that may delay, defer or prevent
a change in control of UDS and make removal of management of UDS more difficult.
The Certificate provides that the Board of Directors of UDS 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 UDS's voting stock) or its affiliate
or associate attempts to effect a "business combination" with UDS. The term
"business combination" includes any merger or consolidation of UDS involving the
interested stockholder, certain dispositions of assets of UDS, any issuance of
securities of UDS, meeting certain threshold amounts, to the interested
stockholder, adoption of any plan of liquidation or dissolution of UDS proposed
by the interested stockholder and any reclassification of securities of UDS
having the effect of increasing the proportionate share of ownership of the
interested stockholder. In general, a business combination between UDS 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 UDS by such stockholder 60 days in advance of an annual meeting
or within ten days after the date of notice by UDS of a special meeting
involving the election of directors. The By-laws and Certificate also provide
that any newly created directorship resulting from an increase in the number of
directors or a vacancy on the Board shall be filled by vote of a majority of the
remaining directors then in office, even, in the case of a vacancy other than a
newly created directorship, if less than a quorum. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office. A
director elected by reason of an increase in the number of directors shall be
elected until the next election of one or more directors by the stockholders.
Directors may be removed from office but only for cause and only by the
affirmative vote of a majority of the then outstanding shares of stock entitled
to vote on the matter. "Cause" is defined in the Certificate to mean the "wilful
and continuous failure of a director to substantially perform such director's
duties to the Corporation (including any such failure resulting from incapacity
due to physical or mental illness) or the wilful engaging by a director in gross
misconduct materially and demonstrably injurious to the Corporation." The
Certificate provides that the By-laws and Certificate may not be amended without
the approval of at least 80% of the voting power of all shares of UDS 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 UDS's Common Stock even if such removal or assumption would be
beneficial, in the short term, to stockholders of UDS. 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,
the Preferred Stock, or the Common Stock, UDS Funding II, L.P. may sell the
Partnership Preferred Securities, and UDS Capital II 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, UDS
Funding II, L.P. and/or UDS Capital II, as the case may be, or by agents
designated by UDS, UDS Funding II, L.P. and/or UDS Capital II, 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 UDS in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale, UDS, UDS
Funding II, L.P., and/or UDS Capital II 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, UDS Funding II, L.P. and/or UDS Capital
II, 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, UDS Funding II, L.P. and/or UDS Capital
II, as the case may be, against certain liabilities, including liabilities under
the Securities Act of 1933.
The place and time of delivery for the Offered Securities in respect of
which this Prospectus is delivered are set forth in the accompanying Prospectus
Supplement.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities and the Partnership Preferred Securities will be passed
upon on behalf of UDS Capital II and UDS Funding II, L.P. by Skadden, Arps,
Slate, Meagher & Flom, LLP special Delaware counsel to UDS Capital II and UDS
Funding II, L.P. The validity of the Senior Debt Securities, Subordinated Debt
Securities, Common Stock, Preferred Stock, and the Guarantees and certain
matters relating thereto will be passed upon for UDS by Curtis V. Anastasio,
Vice President, General Counsel, and Secretary of UDS. Certain United States
federal income taxation matters will be passed upon for UDS, UDS Funding II,
L.P., and UDS Capital II by Skadden, Arps, Slate, Meagher & Flom, LLP special
tax counsel to UDS, UDS Capital II, and UDS Funding II, L.P.
EXPERTS
The financial statements and schedule as of and for the year ended December
31, 1997, incorporated by reference in this registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements and schedule of UDS as of December
31, 1996 and for each of the two years in the period ended December 31, 1996
appearing in UDS's Annual Report (Form 10-K) for the year ended December 31,
1997, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference
which, as to all periods presented, is based in part on the report of Price
Waterhouse LLP, independent accountants, also included therein, and incorporated
herein by reference. Such financial statements are incorporated by reference
herein in reliance upon such reports of Ernst & Young LLP and Price Waterhouse
LLP given upon the authority of such firms as experts in accounting and
auditing.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee....................................... $206,500
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.............................................. 88,500
------------
$500,000
============
- -------------
* Estimated.
Item 15. Indemnification of Directors and Officers.
The By-Laws of the Registrant provide that the Registrant shall indemnify
its officers and directors to the fullest extent permitted by applicable law.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides, in
general, that each director and officer of a corporation may be indemnified
against expenses (including attorneys' fees, judgments, fines and amounts paid
in settlement) actually and reasonably incurred in connection with the defense
or settlement of any threatened, pending or completed legal proceedings in which
he is involved by reason of the fact that he is or was a director or officer, if
he acted in good faith and in a manner that he reasonably believed to be in or
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, if he had no reasonable cause to believe that his
conduct was unlawful. If the legal proceeding, however, is by or in the right of
the corporation, the director or officer may not be indemnified in respect of
any claim, issue or matter as to which he shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to UDS 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.
Pursuant to their employment agreements with the Registrant, Messrs. Jean
Gaulin and H. Pete Smith are indemnified from all liabilities arising out of the
activities reasonably taken in the performance of their duties.
The Registrant also maintains insurance for officers and directors against
certain liabilities, including liabilities under the Securities Act of 1933. The
effect of this insurance is to indemnify any officer or director of the
Registrant against expenses, including, without limitation, attorneys' fees,
judgments, fines and amounts paid in settlement, incurred by an officer or
director upon a determination that such person acted in good faith. The premiums
for such insurance are paid by the Registrant.
The above discussion of the Registrant's By-laws, its Certificate of
Incorporation, its employment and the DGCL is not intended to be exclusive and
is respectively qualified in its entirety by such By-laws, Certificate of
Incorporation, employment agreements, and statute.
Item 16. Exhibits
Unless otherwise indicated, each of the following exhibits has been previously
filed with the Securities and Exchange Commission by UDS 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>
<S> <C> <C>
Exhibit Incorporated by Reference
Number Description to the Following Documents
- ------- ----------- --------------------------
1.1 Form of Underwriting Agreement for the To be filed by UDS as exhibit to Current
Trust Preferred Securities being offered Report on Form 8-K in connection with
under this Registration Statement specific offering
3.1 Certificate of Incorporation dated April 27, Registration Statement on Form S-1 (File
1992, as amended on April 28, 1992 No. 33-47586), Exhibit 3.1
3.2 Certificate of Merger of Diamond Registration Statement on Form S-8 (File
Shamrock, Inc. with and into UDS, No. 333-19131), Exhibit 4.2
amending UDS's Articles of Incorporation
3.3 By-laws dated April 28, 1992 Registration Statement on Form S-1 (File
No. 33-47586), Exhibit 3.2
3.4 Amendment dated July 22, 1993 to By-laws Annual Report on Form 10-K for the Year
Ended December 31, 1995, Exhibit 3.3
3.5 Amendment dated December 3, 1996 to Registration Statement on Form S-8 (File
By-laws No. 333-19131), Exhibit 4.6
4.1 Indenture dated March 15, 1994 between Annual Report on Form 10-K for the Year
Ultramar Diamond Shamrock Corporation, Ended December 31, 1995, Exhibit 4.7
as issuer, and The Bank of New York, as
trustee
4.2 Rights Agreement dated June 25, 1992, as Registration Statement on Form S-1 (File
amended No. 33-47586), Exhibit 4.2; Quarterly Report
on Form 10-Q for the quarter ended September
30, 1992, Exhibit 4.2; Annual report on
Form 10-K for the year ended December 31,
1994, Exhibit 4.3
4.3 Certificate of Trust of UDS Capital II Registration Statement on Form S-3 (File
No. 333-28737) ("Registration 333-
28737"), Exhibit 4.4
4.4 Form of Amended and Restated Registration 333-28737, Exhibit 4.6
Declaration of Trust of UDS Capital II
(including form of Trust Preferred Security)
4.5 Certificate of Limited Partnership of UDS Registration 333-28737, Exhibit 4.8
Funding II, L.P.
4.6 Form of Limited Partnership Agreement of Registration 333-28737, Exhibit 4.10
UDS Funding II, L.P. (including Form of
Partnership Preferred Security)
4.7 Form of Trust Preferred Securities Registration 333-28737, Exhibit 4.12
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
4.8 Form of Partnership Preferred Securities Registration 333-28737, Exhibit 4.14
Guarantee Agreement by UDS for the
benefit of the holders of Partnership
Preferred Securities of UDS Funding II,
L.P.
4.9 Subordinated Debt Indenture between UDS Current Report on Form 8-K dated June
and The Bank of New York 20, 1997, Exhibit 4.3
4.10 Form of Subordinated Debenture Registration 333-28737, Exhibit 4.16
4.14 Form of Affiliate Debenture Guarantee Registration 333-28737, Exhibit 4.17
Agreement by UDS
5.1 Opinion of Curtis V. Anastasio as to the *
validity of the Common Stock, Senior
Debt Securities,Subordinated Debt
Securities, and Guarantees
5.2 Opinion of Skadden, Arps, Slate, Meagher **
& Flom LLP as to validity of Trust Preferred
Securities, partnership Preferred Securities
8.1 Opinion of Skadden Arps Slate Meagher & **
Flom as to certain federal income tax
matters
12 Computations of Ratios of Earnings to +
Fixed Charges
23.1 Consent of Arthur Andersen LLP +
23.2 Consent of Ernst & Young LLP +
23.3 Consent of Price Waterhouse LLP +
23.4 Consent of Curtis V. Anastasio Included in Exhibit 5.1
23.5 Consent of Skadden Arps Slate Meagher & **
Flom
24.1 Power of Attorney of Company *
24.2 Powers of Attorney of Officers and *
Directors
25.1 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 Statement of Eligibility under the Trust *
Indenture Act of 1939 of The Bank of New
York, as trustee under Subordinated Debt
Indenture
25.3 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
25.4 Statement of Eligibility under the Trust *
Indenture Act of 1939 of The Bank of New
York, as Preferred Guaranty Trustee under
the Trust Guaranty pertaining to UDS
Capital II
</TABLE>
- ----------------
+ Filed herewith.
* Previously filed
** To be filed by amendment
Item 17. Undertakings.
A. Undertaking Pursuant to Rule 415.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if the
Registration Statement is on Form S-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by UDS 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 UDS's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
C. Undertaking in Respect of Indemnification.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Registrants
pursuant to the provisions described and the documents referenced under Item 15
above, or otherwise, the Registrants have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer,
or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the Registrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the adjudication of such issue.
D. Undertaking regarding Post-Effective Amendments.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Antonio and State of Texas on
April 2, 1998.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ TODD WALKER
Name: Todd Walker
Title: Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed on April 2, 1998, by
the following persons in the capacities indicated with respect to Ultramar
Diamond Shamrock Corporation:
<TABLE>
<CAPTION>
<S> <C>
Signature Capacity
* 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
* 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 filed with
the Securities and Exchange Commission.
/s/ TODD WALKER Attorney-in-Fact
Todd Walker
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned Registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Antonio and State of
Texas on April 2, 1998.
UDS CAPITAL II
By: /s/ H. PETE SMITH
Name: H. Pete Smith, Trustee
By: /s/ STEVE BLANK
Name: Steve Blank, Trustee
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
<TABLE>
<CAPTION>
EXHIBIT 12
"REVISED"
ULTRAMAR DIAMOND SHAMROCK CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGE
AND PREFERRED STOCK DIVIDENDS
(dollars in millions, except ratios)
Year Ended December 31,
-----------------------
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
Earnings:
Income before taxes 275.2 37.2 (1) 141.1 220.7 197.3 133.4
Add: Fixed Charges 162.3 157.1 158.74 115.3 125.1 124.3
Amortization of interest previously capitalized 0.3 0.2
Losses of investees 0.5 1.1
Less: Capitalized interest (2.8) (10.6) (16.4) (7.8) (6.1) (6.1)
Undistributed earnings of investees (0.2)
Earnings as adjusted 434.7 184.0 284.1 328.2 316.1 252.7
Computation of Fixed Charges:
Interest expense 120.2 110.1 113.9 87.1 93.1 93.5
Capitalized interest 2.8 10.6 16.4 7.8 6.1 6.1
Dividend requirement on preferred stock (2) 7.1 7.1 7.1 6.7 7.1 4.2
Interest portion of lease commitments 32.2 29.3 21.3 13.7 18.8 20.5
Total Fixed Charges 162.3 157.1 158.7 115.3 125.1 124.3
Ratio of Earnings to Fixed Charges (3) 2.7 1.2 1.8 2.8 2.5 2.0
(1) Excludes merger and integration costs of $77.4 million.
(2) The preferred stock dividend requirement has been increased to an amount
representing the pre-tax earnings which would be required to cover such
dividend requirements.
(3) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings as adjusted" consist of income before income taxes after adding
certain fixed charges as noted above. "Fixed charges" consist of interest
expense, amortization of debt discount and a portion of rent expense
representative of the interest factor.
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 27, 1998
included in Ultramar Diamond Shamrock Corporation's Form 10-K for the year ended
December 31, 1997 and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
San Antonio, Texas
April 1, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
following Registration Statements: (i) Amendment No. 1 to the Registration
Statement on Form S-3 (No. 333-46775), (ii) Amendment No. 1 to the Registration
Statement on Form S-3 (No. 333-46775-01), (iii) Amendment No. 1 to the
Registration Statement on Form S-3 (No. 333-46775-02), and (iv) Post-Effective
Amendment No. 2 to the Registration Statement on Form S-3 (No. 333-28737) and
related Prospectus of Ultramar Diamond Shamrock Corporation, UDS Capital II, and
UDS Funding II, L.P. for the registration of up to an additional $700,000,000 of
debt or equity securities thereby offering up to $1,000,000,000 of debt or
equity securities, and to the incorporation therein by reference 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, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
San Antonio, Texas
April 1, 1998
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incoporation by reference in Amendment No. 1 to
the registration statement on Form S-3 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 reference
to us under the heading "Experts" in such Registration Statement.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
San Antonio, Texas
April 1, 1998
