EXHIBIT 4.12
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TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
UDS Capital II
Dated as of __________, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation........................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 6
SECTION 2.2 Lists of Holders of Securities........................... 6
SECTION 2.3 Reports by the Trust Preferred Guarantee
Trustee.................................................. 6
SECTION 2.4 Periodic Reports to Trust Preferred
Guarantee Trustee........................................ 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent................................................ 7
SECTION 2.6 Events of Default; Waiver................................ 7
SECTION 2.7 Event of Default; Notice................................. 7
SECTION 2.8 Conflicting Interests.................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred
Guarantee Trustee........................................ 8
SECTION 3.2 Certain Rights of Trust Preferred Guarantee
Trustee.................................................. 10
SECTION 3.3. Not Responsible for Recitals or Issuance
of Trust Preferred Securities Guarantee.................. 13
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee;
Eligibility.............................................. 13
SECTION 4.2 Appointment, Removal and Resignation
of Trust Preferred Guarantee Trustee..................... 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................ 15
SECTION 5.2 Waiver of Notice and Demand.............................. 15
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SECTION 5.3 Obligations Not Affected................................. 15
SECTION 5.4 Rights of Holders........................................ 16
SECTION 5.5 Guarantee of Payment..................................... 17
SECTION 5.6 Subrogation.............................................. 17
SECTION 5.7 Independent Obligations.................................. 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................... 17
SECTION 6.2 Ranking.................................................. 18
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................. 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.............................................. 19
SECTION 8.2 Indemnification.......................................... 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................... 20
SECTION 9.2 Amendments............................................... 20
SECTION 9.3 Consolidations and Mergers............................... 20
SECTION 9.4 Notices.................................................. 21
SECTION 9.5 Benefit.................................................. 21
SECTION 9.6 Governing Law............................................ 22
ii
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
This TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Trust
Preferred Securities Guarantee"), dated as of __________ __, 1997 is executed
and delivered by Ultramar Diamond Shamrock Corporation, a Delaware corporation
(the "Guarantor"), and The Bank of New York, a national banking association, as
trustee (the "Trust Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Trust Preferred Securities
(as defined herein) of UDS Capital II, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of _________ __, 1997, among the trustees of the
Issuer named therein, Ultramar Diamond Shamrock Corporation, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof Trust Originated Preferred
Securities, having an aggregate liquidation amount of $_____, designated the __%
Trust Originated Preferred Securities (the "Trust Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Trust
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Trust Preferred Securities Guarantee, to
pay to the Holders of the Trust Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein and;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Trust Common Securities Guarantee"), with substantially
identical terms to this Trust Preferred Securities Guarantee for the benefit of
the holders of the Trust Common Securities (as defined herein), except that if
the Guarantor is in default on any of its obligations under the Trust Preferred
Securities Guarantee, the Partnership Guarantee (as defined herein), or any
Investment Guarantee (as defined herein), or any default has occurred and is
continuing with respect to an Affiliate Investment Instrument (as defined
herein), the rights of holders of the Trust Common Securities to receive
Guarantee Payments under the Trust Common Securities Guarantee are subordinated,
to the extent and in the manner set forth in the Trust Common Securities
Guarantee, to the rights of Holders of Trust Preferred Securities to receive
Guarantee Payments under this Trust Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Trust Preferred Securities, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the
Guarantor executes and delivers this Trust Preferred Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Capitalized terms used in this Trust Preferred Securities
Guarantee but not otherwise defined herein shall have the
meanings assigned to them in the Declaration or the
Partnership Agreement, as the case may be.
(c) a term defined anywhere in this Trust Preferred
Securities Guarantee has the same meaning through-
out;
(d) all references to "the Trust Preferred Securities Guarantee"
or "this Trust Preferred Securities Guarantee" are to this
Trust Preferred Securities Guarantee as modified, supplemented
or amended from time to time;
(e) all references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Trust Preferred Securities Guarantee, unless otherwise
specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless
otherwise defined in this Trust Preferred Securities Guarantee
or unless the context otherwise requires; and
(g) a reference to the singular includes the plural
and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
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"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Corporate Trust Office" means the principal trust office of the
Trust Preferred Guarantee Trustee in the Borough of Manhattan, The City of New
York, which office at the date hereof is located at 000 Xxxxxxx Xxxxxx, Xxxxx 00
Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Covered Person" means any Holder or beneficial owner of Trust
Preferred Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Trust Preferred Securities Guarantee.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Guarantor the principal purpose of which is to raise capital for the Guarantor
by issuing securities that are guaranteed by the Guarantor and the proceeds of
which are loaned to or invested in the Guarantor or one or more of its
affiliates.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Trust Preferred Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Trust Preferred Securities, to the extent the Issuer has funds legally
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price"), to the extent the Issuer has funds legally available therefor at such
time, with respect to any Trust Preferred Securities called for redemption by
the Issuer, and (iii) upon a voluntary or involuntary termination or liquidation
of the Issuer (other than in connection with the distribution of Partnership
Preferred Securities to the Holders in exchange for Trust Preferred Securities
as provided in the Declaration or the redemption of all of the Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Trust Preferred Securities to the
date of payment, to the extent the Issuer has funds legally available therefor,
and (b) the amount of assets of the Issuer, after satisfaction of all
liabilities, remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Trust Preferred Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Trust
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder"
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shall not apply to Trust Preferred Securities beneficially owned by the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Trust Preferred Guarantee Trustee,
any Affiliate of the Trust Preferred Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Trust Preferred Guarantee Trustee.
"Majority in liquidation amount of the Trust Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Trust Preferred Securities, voting separately as a class, of more than 50% of
the aggregate liquidation amount (including the amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all Trust
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, the President, a Vice President
or the Treasurer, and by an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Preferred
Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Partnership" means UDS Funding II, L.P.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of ____________ __, 1997, among
Ultramar Diamond Shamrock Corporation, a Delaware corporation, as general
partner, H. Xxxx Xxxxx, as initial limited partner and such other persons who
become limited partners as provided therein.
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"Partnership Preferred Securities" means those securities
representing limited partnership interests in the Partnership.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, the chairman or vice-chairman of the board of directors, the
chairman or vice-chairman of the executive committee of the board of directors,
the president, any vice president (whether or not designated by a number or a
word or words added before or after the title "vice president"), the secretary,
any assistant secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust officer, or any
other officer of the Trust Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Rights Agreement" means the Rights Agreement dated June 25, 1992,
as amended, between the Guarantor and Registrar and Transfer Company, or any
successor to such Rights Agreement.
"Senior Indebtedness" means any indebtedness of the Guarantor for
money borrowed, except for any such indebtedness that is by its terms
subordinated to or pari passu with the debt instrument of the Guarantor
purchased by the Partnership (the "Company Debenture"), as the case may be.
"Successor Trust Preferred Guarantee Trustee" means a successor
Trust Preferred Guarantee Trustee possessing the qualifications to act as Trust
Preferred Guarantee Trustee under Section 4.1.
"Trust Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Preferred Guarantee Trustee" means The Bank of New York, a
New York banking corporation, until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Trust Preferred
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Securities Guarantee and thereafter means each such Successor Trust Preferred
Guarantee Trustee.
"Trust Securities" means the Trust Common Securities together with
the Trust Preferred Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Trust Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this Trust
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this Trust Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Trust Guarantee Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of Holders of Trust Preferred Securities. If the Trust Guarantee
Trustee is not the Registrar, the Guarantor shall furnish to the Trust Guarantee
Trustee semi-annually on or before June 15 and December 15 in each year, and at
such other times as the Trust Guarantee Trustee may request in writing, a list,
in such form and as of such date as the Trust Guarantee Trustee may require,
containing all the information in the possession or control of the Registrar,
the Guarantor or any of its Paying Agents other than the Trust Guarantee Trustee
as to the names and addresses of Holders of Trust Preferred Securities. If there
are unregistered securities outstanding, even if the Trust Guarantee Trustee is
the Registrar, the Guarantor shall furnish to the Trust Guarantee Trustee such a
list containing such information with respect to Holders of such unregistered
securities only.
(b) The Trust Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee
Within 60 days after December 15 of each year, commencing
___________ __, 1997, the Trust Preferred Guarantee Trustee shall provide to the
Holders of the Trust Preferred Securities
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such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture
Act. The Trust Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Trust Preferred Guarantee
Trustee
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Trust Preferred Securities Guarantee that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of the Holders of all of the Trust Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Trust Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Trust Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Trust Preferred Securities, notices of
all Events of Default actually known to a Responsible Officer of the Trust
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice, provided, that, except in the case of default in any
Guarantee Payment, the Trust Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Trust
Preferred Guarantee Trustee in good faith determines that the withholding of
such
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notice is in the interests of the Holders of the Trust Preferred Securities
Trust Preferred Securities.
(b) The Trust Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Trust Preferred Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Trust Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Trust Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Guarantee
Trustee
(a) This Trust Preferred Securities Guarantee shall be held by the
Trust Preferred Guarantee Trustee for the benefit of the Holders of the Trust
Preferred Securities, and the Trust Preferred Guarantee Trustee shall not
transfer this Trust Preferred Securities Guarantee to any Person except a Holder
of Trust Preferred Securities exercising his or her rights pursuant to Section
5.4(b) or to a Successor Trust Preferred Guarantee Trustee on acceptance by such
Successor Trust Preferred Guarantee Trustee of its appointment to act as
Successor Trust Preferred Guarantee Trustee. The right, title and interest of
the Trust Preferred Guarantee Trustee shall automatically vest in any Successor
Trust Preferred Guarantee Trustee, and such vesting and succession of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Trust Preferred
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Trust Preferred Guarantee Trustee has occurred and is continuing, the
Trust Preferred Guarantee Trustee shall enforce this Trust Preferred Securities
Guarantee for the benefit of the Holders of the Trust Preferred Securities.
(c) The Trust Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing or waiver of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Preferred Securities Guarantee, and no
implied covenants
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shall be read into this Trust Preferred Securities Guarantee against the Trust
Preferred Guarantee Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6) and is actually known to a
Responsible Officer of the Trust Preferred Guarantee Trustee, the Trust
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Trust Preferred Securities Guarantee, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Preferred Securities Guarantee shall
be construed to relieve the Trust Preferred Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Trust Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Trust Preferred Securities Guarantee, and the
Trust Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Trust Preferred Securities Guarantee, and no implied
covenants or obligations shall be read into this Trust Preferred
Securities Guarantee against the Trust Preferred Guarantee Trustee;
and
(B) in the absence of bad faith on the part of the Trust
Preferred Guarantee Trustee, the Trust Preferred Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trust Preferred Guarantee Trustee and
conforming to the requirements of this Trust Preferred Securities
Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Trust Preferred Guarantee Trustee, the Trust Preferred Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Trust
Preferred Securities Guarantee;
(ii) the Trust Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Trust Preferred Guarantee Trustee, unless it shall be proved that the
Trust Preferred Guar-
9
xxxxx Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Trust Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in liquidation
amount of the Trust Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Trust
Preferred Guarantee Trustee, or exercising any trust or power conferred
upon the Trust Preferred Guarantee Trustee under this Trust Preferred
Securities Guarantee; and
(iv) no provision of this Trust Preferred Securities Guarantee shall
require the Trust Preferred Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or powers, if
the Trust Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not assured to
it under the terms of this Trust Preferred Securities Guarantee or
indemnity, reasonably satisfactory to the Trust Preferred Guarantee
Trustee, against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Trust Preferred Guarantee
Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Trust Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Trust Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Trust Preferred
Securities Guarantee, the Trust Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering
or omitting any action hereunder, the Trust Preferred Guarantee Trustee
(unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon re-
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ceipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Trust Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Trust Preferred Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect
to legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel may
be counsel to the Guarantor or any of its Affiliates and may include any
of its employees. The Trust Preferred Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of
this Trust Preferred Securities Guarantee from any court of competent
jurisdiction.
(vi) The Trust Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Trust Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Trust Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Trust Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Preferred
Guarantee Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Trust
Preferred Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Trust Preferred Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Preferred
Securities Guarantee.
(vii) The Trust Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trust Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Trust Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any
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duties hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Trust Preferred Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Trust Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Trust Preferred
Securities, and the signature of the Trust Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the authority of
the Trust Preferred Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Trust Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the Trust
Preferred Guarantee Trustee or its agent taking such action.
(x) Whenever in the administration of this Trust Preferred
Securities Guarantee the Trust Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Trust Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Trust Preferred Securities, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in
conclusively relying on or acting in accordance with such instructions.
(xi) The Trust Preferred Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Trust
Preferred Securities Guarantee.
(b) No provision of this Trust Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Trust Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Trust Preferred Guarantee Trustee shall be unqualified
or incompetent in accordance with applicable law, to perform any such act or
acts or to exercise any such right, power, duty or obligation. No permissive
power or authority available to the Trust Preferred Guarantee Trustee shall be
construed to be a duty.
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SECTION 3.3. Not Responsible for Recitals or Issuance of Trust
Preferred Securities Guarantee
The recitals contained in this Trust Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Trust Preferred
Guarantee Trustee does not assume any responsibility for their correctness. The
Trust Preferred Guarantee Trustee makes no representation as to the validity or
sufficiency of this Trust Preferred Securities Guarantee.
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Trust Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Trust Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Trust Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section
4.2(c).
(c) If the Trust Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Trust Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
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SECTION 4.2 Appointment, Removal and Resignation of Trust
Preferred Guarantee Trustee
(a) Subject to Section 4.2(b), the Trust Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor except
during an Event of Default.
(b) The Trust Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Trust Preferred Guarantee Trustee and
delivered to the Guarantor.
(c) The Trust Preferred Guarantee Trustee shall hold office until a
Successor Trust Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Trust Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Trust Preferred Guarantee Trustee and delivered to
the Guarantor, which resignation shall not take effect until a Successor Trust
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Trust Preferred Guarantee
Trustee and delivered to the Guarantor and the resigning Trust Preferred
Guarantee Trustee.
(d) If no Successor Trust Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery of an instrument of removal or resignation, the Trust
Preferred Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Trust Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trust Preferred Guarantee Trustee.
(e) No Trust Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Trust Preferred Guarantee Trustee.
(f) Upon termination of this Trust Preferred Securities Guarantee or
removal or resignation of the Trust Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Trust Preferred Guarantee Trustee
all amounts due to the Trust Preferred Guarantee Trustee accumulated to the date
of such termination, removal or resignation.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), if, as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Trust Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Trust Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Trust Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Trust Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Trust Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Trust
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust Preferred
Guarantee Trustee in respect of this Trust Preferred Securities Guarantee or
exercising any trust or power conferred upon the Trust Preferred Guarantee
Trustee under this Trust Preferred Securities Guarantee.
(b) If the Trust Preferred Guarantee Trustee fails to enforce its
rights under the Trust Preferred Securities Guarantee after a Holder of Trust
Preferred Securities has made a written request, such Holder of Trust Preferred
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Trust Preferred Guarantee Trustee's rights under this Trust
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Trust Preferred Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Guarantor has failed to make a
guarantee payment, a Holder of Trust Preferred Securities may directly institute
a proceeding in such Holder's own name against the Guarantor for enforcement of
the Trust Preferred Securities Guarantee for such payment. The Guarantor waives
any right or remedy to require that any action be brought first against the
Issuer or any other person or entity before proceeding directly against the
Guarantor.
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SECTION 5.5 Guarantee of Payment
This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Trust Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Trust Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Trust Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Trust Preferred Securities Guarantee. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Trust
Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Trust Preferred Securities remain outstanding, if (a)
for any distribution period, full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid or declared and set apart for
payment, (b) an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred and is continuing,
or (c) the Guarantor is in default of its obligations under the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee, the Partnership
Guarantee or any Investment Guarantee, then, during such period (i) the
Guarantor shall not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to any of its capital stock or comparable equity
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interest (except for (x) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, its capital stock and
conversions or exchanges of common stock of one class into common stock of
another class, (y) redemptions or purchases of any rights pursuant to the Rights
Agreement and the issuance of preferred stock pursuant to such rights and (z)
purchases or acquisitions by the Guarantor or its affiliates in connection with
transactions effected by or for the account of customers of the Guarantor or any
of its subsidiaries or in connection with the distribution or trading of such
capital stock or comparable equity interest) and (ii) the Guarantor shall not
make, or permit any Finance Subsidiary to make, any payments that would enable
any Finance Subsidiary to make, any payment of any dividends on, any
distribution with respect to, or any redemption, purchase or other acquisition
of, or any liquidation payment with respect to, any preferred security or
comparable equity interest of any Finance Subsidiary.
SECTION 6.2 Ranking
(a) This Trust Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any other guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Guarantor with respect to Trust Preferred
Securities that is silent as to seniority will rank pari passu with this Trust
Preferred Securities Guarantee.
(b) The holders of obligations of the Guarantor that are senior to
the obligations under the Trust Preferred Securities Guarantee (including, but
not limited to, obligations constituting Senior Indebtedness) will be entitled
to the same rights upon payment default or dissolution, liquidation and
reorganization in respect of the Trust Preferred Securities Guarantee that inure
to the holders of "Senior Indebtedness" under Article [Eleven] of the Indenture
dated as of ________ __, 1997 between Ultramar Diamond Shamrock Corporation and
The Bank of New York as against the holders of the Company Debenture, and the
holders of the Trust Preferred Securities will be subject to all the terms and
conditions of such Article [Eleven] with respect to any claims or rights
hereunder with the same effect as though fully set forth herein.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Trust Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Trust Preferred Securities, (ii)
upon the distribution of the Partnership Preferred Securities to the Holders of
all of the Trust Preferred Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Trust Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Trust Preferred Securities must restore payment of any sums
paid under the Trust Preferred Securities or under this Trust Preferred
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Trust
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Trust Preferred Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Trust Preferred
Securities might properly be paid.
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SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Trust Preferred Securities Guarantee or the earlier resignation or removal of
the Trust Preferred Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Trust Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Trust Preferred Securities Guarantee may only be amended with
the prior approval of the Holders of at least a Majority in liquidation amount
of the Trust Preferred Securities (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined). The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Consolidations and Mergers
The Guarantor may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation;
provided, that in any such case, (i) either the Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to
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Section 5.1 hereof and the due and punctual performance and observance of all of
the covenants and conditions of this Trust Preferred Securities Guarantee to be
performed by the Guarantor by a separate guarantee satisfactory to the Trust
Preferred Guarantee Trustee, executed and delivered to the Trust Preferred
Guarantee Trustee by such corporation, and (ii) the Guarantor or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale, lease or conveyance, be in default in the
performance of any such covenant or condition.
SECTION 9.4 Notices
All notices provided for in this Trust Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Trust Preferred Guarantee Trustee, at the Trust
Preferred Guarantee Trustee's Corporate Trust Office.
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Trust Preferred Securities):
Ultramar Diamond Shamrock
Corporation
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Treasurer
(c) If given to any Holder of Trust Preferred Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.5 Benefit
This Trust Preferred Securities Guarantee is solely for the benefit
of the Holders of the Trust Preferred Securities and, subject to Section 3.1(a),
is not separately transferable from the Trust Preferred Securities.
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SECTION 9.6 Governing Law
THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
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THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
as Guarantor
By:
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK, as
Trust Preferred Guarantee Trustee
By:
-----------------------------------
Name:
Title:
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