EXHIBIT 4.14
====================================
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
UDS Funding II, L.P.
Dated as of _________ __, 1997
====================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions................................... 2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee..................................... 3
SECTION 2.2. Waiver of Notice and Demand................... 3
SECTION 2.3. Obligations Not Affected...................... 4
SECTION 2.4. Rights of Holders............................. 5
SECTION 2.5. Guarantee of Payment.......................... 5
SECTION 2.6. Subrogation................................... 6
SECTION 2.7. Independent Obligations....................... 6
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions.................... 6
SECTION 3.2. Ranking....................................... 7
ARTICLE IV
TERMINATION
SECTION 4.1. Termination................................... 8
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns........................ 8
SECTION 5.2. Amendments.................................... 8
SECTION 5.3. Consolidations and Mergers.................... 9
SECTION 5.4. Notices....................................... 9
SECTION 5.5. Benefit....................................... 10
SECTION 5.6. Governing Law................................. 10
i
PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
This PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT (the
"Partnership Guarantee"), dated as of _________ __, 1997, is executed and
delivered by Ultramar Diamond Shamrock Corporation, a Delaware corporation (the
"Guarantor"), for the benefit of the holders from time to time of the
Partnership Preferred Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), dated as of the date hereof, of UDS
Funding II, L.P., a Delaware limited partnership (the "Issuer"), the Issuer may
issue a single series of limited partner interests in the Issuer (the
"Partnership Preferred Securities");
WHEREAS, pursuant to the Partnership Agreement, the proceeds
received by the Issuer from the issuance and sale of the Partnership Preferred
Securities will be invested by the Issuer in the Affiliate Investment
Instruments and Eligible Debt Securities (each as defined in the Partnership
Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Partnership Preferred Securities, desires hereby irrevocably
and unconditionally to agree, to the extent set forth herein, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby
acknowledges shall directly or indirectly provide at least some material benefit
to the Guarantor, the Guarantor executes and delivers this Partnership Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions
As used in this Partnership Guarantee, the terms set forth below
shall, unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Partnership Agreement.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Finance Subsidiary" means any wholly-owned subsidiary of the
Guarantor the principal purpose of which is to raise capital for the Guarantor
by issuing securities that are guaranteed by the Guarantor and the proceeds of
which are loaned to or invested in the Guarantor or one or more of its
affiliates.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid distributions that have theretofore been declared on the Partnership
Preferred Securities out of funds legally available therefor at such time, (ii)
the redemption price, including all accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price"), payable out of funds legally
available therefor at such time, with respect to any Partnership Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination or liquidation of the Issuer, the lesser of (a) the
aggregate of the liquidation preference and all accumulated and unpaid
distributions on the Partnership Preferred Securities to the date of payment out
of funds legally available therefor and (b) the amount of assets of the Issuer
after satisfaction of all liabilities remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Partnership Preferred Securities; provided,
however, that in determining whether the holders of the requisite percentage of
Partnership Preferred
2
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not apply to Partnership Preferred Securities owned beneficially by the
Guarantor or any Affiliate of the Guarantor.
"Rights Agreement" means the Rights Agreement dated June 25, 1992,
as amended, between the Guarantor and Registrar and Transfer Company, or any
successor to such Rights Agreement.
"Senior Indebtedness" means any indebtedness of the Guarantor for
money borrowed, except for any such indebtedness that is by its terms
subordinated to or pari passu with the debt instrument of the Guarantor
purchased by the Partnership (the "Company Debenture"), as the case may be.
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due (without duplication of
amounts theretofore paid by the Issuer), regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 2.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Partnership
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Partnership Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
3
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Partnership
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Partnership
Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the
Partnership Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Partnership
Preferred Securities;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Partnership
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 2.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.4. Rights of Holders
4
The Guarantor expressly acknowledges that (i) this Partnership
Guarantee will be deposited with the General Partner to be held for the benefit
of the Holders; (ii) in the event of the appointment of a Special Representative
to, among other things, enforce this Partnership Guarantee, the Special
Representative may take possession of this Partnership Guarantee for such
purpose; (iii) if no Special Representative has been appointed, the General
Partner has the right to enforce this Partnership Guarantee on behalf of the
Holders; (iv) the Holders of not less than a majority in aggregate liquidation
preference of the Partnership Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of this Partnership Guarantee including the giving of directions to the
General Partner or the Special Representative, as the case may be; and (v) if
the General Partner or Special Representative fails to enforce this Partnership
Guarantee after a Holder has made a written request and as above provided, any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Partnership Guarantee, without first instituting a
legal proceeding against the Issuer or any other person or entity.
Notwithstanding the foregoing, if the Guarantor has failed to make a guarantee
payment, a Holder may directly institute a proceeding against Guarantor to
enforce such payment under this Partnership Guarantee.
SECTION 2.5. Guarantee of Payment
This Partnership Guarantee will not be discharged except by payment
of the Guarantee Payments in full to the extent not paid by the Issuer.
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Partnership Guarantee provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Partnership Guarantee, if, at the time of any
such payment, any amounts are due and unpaid under this Partnership Guarantee.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guaran-
5
tor agrees to hold such amount in trust for the Holders and to pay over such
amount to the Holders.
SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Partnership
Preferred Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Partnership Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (f), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions
So long as any Partnership Preferred Securities remain outstanding,
if (a) for any distribution period, full distributions on a cumulative basis on
any Partnership Preferred Securities have not been paid or declared and set
apart for payment (b) there shall have occurred an Event of Default under the
Partnership Agreement or (c) the Guarantor shall be in default with respect to
its payment obligations under this Partnership Guarantee, the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee or any Investment
Guarantee then, during such period (i) the Guarantor shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or comparable equity interest (except for (x) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, its capital stock and conversions or exchanges of common stock of one class
into common stock of another class, (y) redemptions or purchases of any rights
pursuant to the Rights Agreement and the issuance of preferred stock pursuant to
such rights and (z) purchases or acquisitions by the Guarantor or its affiliates
in connection with transactions effected by or for the account of customers of
the Guarantor or any of its subsidiaries or in connection with the distribution
or trading of such capital stock or comparable equity interest) and (ii) the
Guarantor shall not make, or permit any Finance Subsidiary to make, any payments
that would enable any Finance Subsidiary to make, any payment of any
6
dividends on, any distribution with respect to, or any redemption, purchase or
other acquisition of, or any liquidation payment with respect to, any preferred
security or comparable equity interest of any Finance Subsidiary.
SECTION 3.2. Ranking
(a) This Partnership Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued from time to time
by the Guarantor and with any other guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Finance
Subsidiary, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Guarantor with respect to Partnership Preferred
Securities that is silent as to seniority will rank pari passu with this
Partnership Guarantee.
(b) The holders of obligations of the Guarantor that are senior to
the obligations under the Partnership Guarantee (including, but not limited to,
obligations constituting Senior Indebtedness) will be entitled to the same
rights upon payment default or dissolution, liquidation and reorganization in
respect of the Partnership Guarantee that inure to the holders of "Senior
Indebtedness" under Article [Eleven] of the Indenture dated as of ___________
__, 1997 between Ultramar Diamond Shamrock Corporation and The Bank of New York
as against holders of the Company Debenture, and the holders of the Partnership
Preferred Securities will be subject to all the terms and conditions of such
Article [Eleven] with respect to any claims or rights hereunder with the same
effect as though fully set forth herein.
ARTICLE IV
TERMINATION
SECTION 4.1. Termination
This Partnership Guarantee shall terminate and be of no further
force and effect, as to the Partnership Preferred Securities, upon full payment
of the Redemption Price of all Partnership Preferred Securities, and will
terminate completely upon full payment of the amounts payable in accordance with
7
the Partnership Agreement upon liquidation of the Issuer. This Partnership
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must, in accordance with Delaware Revised Uniform
Limited Partnership Act, restore payment of any sums paid under any Partnership
Preferred Securities or this Partnership Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Partnership
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Partnership Preferred Securities then outstanding.
SECTION 5.2. Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Partnership Guarantee may only be amended with the prior approval of the Holders
of not less than a majority in aggregate liquidation preference of all the
outstanding Partnership Preferred Securities.
SECTION 5.3. Consolidations and Mergers
The Guarantor may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation;
provided, that in any such case, (i) either the Guarantor shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States of America thereof
and such successor corporation shall expressly assume the due and punctual
payment of the Guarantee Payments payable pursuant to Section 5.1 hereof and the
due and punctual performance and observance of all of the covenants and
conditions of this Partnership Guarantee to be performed by the Guarantor by a
separate guarantee satisfactory to the Trust Preferred Guarantee Trustee (as
defined in the Trust Preferred Securities Guarantee Agreement dated as of
_______________, 1997), executed and delivered to the Trust Preferred Guarantee
Trustee by such corporation, and (ii) the
8
Guarantor or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale, lease or
conveyance, be in default in the performance of any such covenant or condition.
SECTION 5.4. Notices
Any notice, request or other communication required or permitted to
be given hereunder to the Guarantor shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
addressed to the Guarantor, as follows (and if so given, shall be deemed given
when mailed):
Ultramar Diamond Shamrock Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Any notice, request or other communication required or permitted to
be given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.5. Benefit
This Partnership Guarantee is solely for the benefit of the Holders
and is not separately transferable from the Partnership Preferred Securities.
SECTION 5.6. Governing Law
THIS PARTNERSHIP GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
9
THIS PARTNERSHIP GUARANTEE is executed as of the day and year first
above written.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By:
-----------------------------
Name:
Title:
