Exhibit 1.1
VALERO ENERGY CORPORATION
DEBT SECURITIES
Underwriting Agreement
March 22, 2004
To the Representatives named in
Schedules I-A and I-B hereto
of the Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
Valero Energy Corporation, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the underwriters named in Schedule II hereto (the
"UNDERWRITERS"), for whom you are acting as representatives (the
"REPRESENTATIVES"), the principal amount of its debt securities identified in
Schedules I-A and I-B hereto (the "SECURITIES"), to be issued under the
indenture specified in Schedules I-A and I-B hereto (the "INDENTURE") between
the Company and the Trustee identified in such Schedules (the "TRUSTEE"). If the
firm or firms listed in Schedule II hereto include only the firm or firms listed
in Schedules I-A and I-B hereto, then the terms "Underwriters" and
"Representatives," as used herein, shall each be deemed to refer to such firm or
firms.
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement (the file number of which is set forth in Schedules I-A and I-B
hereto) on Form S-3, relating to certain debt securities (the "SHELF
SECURITIES") to be issued from time to time by the Company. The Company also has
filed with, or proposes to file with, the Commission pursuant to Rule 424 under
the Securities Act a prospectus supplement specifically relating to the
Securities. The registration statement as amended to the date of this Agreement
is hereinafter referred to as the "REGISTRATION STATEMENT" and the related
prospectus covering the Shelf Securities in the form first used to confirm sales
of the Securities is hereinafter referred to as the "BASIC PROSPECTUS." The
Basic Prospectus as supplemented by the prospectus supplement specifically
relating to the Securities in the form first used to confirm sales of the
Securities is hereinafter referred to as the "PROSPECTUS." If the Company has
filed an abbreviated registration statement pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement. Any reference
in this Agreement to the Registration Statement, the Basic Prospectus, any
preliminary form of prospectus (a "PRELIMINARY PROSPECTUS") previously filed
with the Commission pursuant to Rule 424 or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act which were filed under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "EXCHANGE ACT") on or before the
date of this Agreement or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be; and any reference to "amend,"
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, any preliminary prospectus or the Prospectus shall be deemed
to refer to and include any documents filed under the Exchange Act after the
date of this Agreement, or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be, which are deemed to be
incorporated by reference therein.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Securities to the
several Underwriters as hereinafter provided, and each Underwriter, on the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective principal amount of Securities set forth
opposite such Underwriter's name in Schedule II hereto at the purchase price set
forth in Schedules I-A and I-B hereto plus accrued interest, if any, from the
date specified in Schedules I-A and I-B hereto to the date of payment and
delivery.
2. The Company understands that the several Underwriters intend
(i) to make a public offering of their respective portions of the Securities and
(ii) initially to offer the Securities upon the terms set forth in the
Prospectus.
3. Payment for the Securities shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representatives, no later than noon the Business Day (as defined below) prior to
the Closing Date (as defined below), on the date and at the time and place set
forth in Schedules I-A and I-B hereto (or at such other time and place on the
same or such other date, not later than the fifth Business Day (as defined
below) thereafter, as you and the Company may agree in writing). As used herein,
the term "BUSINESS DAY" means any day other than a day on which banks are
permitted or required to be closed in New York City. The time and date of such
payment and delivery with respect to the Securities are referred to herein as
the "CLOSING DATE."
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Payment for the Securities shall be made against delivery to the
nominee of The Depository Trust Company for the respective accounts of the
several Underwriters of the Securities of one or more global notes (the "GLOBAL
NOTE") representing the Securities, with any transfer taxes payable in
connection with the transfer to the Underwriters of the Securities duly paid by
the Company. The Global Note will be made available for inspection by the
Representatives at such place as the Representatives and the Company shall agree
not later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date.
4. The Company represents and warrants to and agrees with each of
the Underwriters that:
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement
is in effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed
pursuant to the Exchange Act and incorporated by reference in the
Prospectus complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and regulations
of the Commission thereunder, (ii) the Registration Statement, when it
became effective, did not contain and, as amended or supplemented, if
applicable, will not contain, any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with
the Securities Act and the Trust Indenture Act of 1939, as amended, and
the applicable rules and regulations of the Commission thereunder and
(iv) the Prospectus does not contain and, as amended or supplemented,
if applicable, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this paragraph do not apply to (i) that part of the
Registration Statement which constitutes the Statements of Eligibility
and Qualification under the Trust Indenture Act of the Trustee (the
"FORMS T-1") and (ii) statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter or
its counsel through you expressly for use therein.
(c) The Company (i) has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, (ii) has the corporate power and
authority
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to own its property and to conduct its business as described in the
Prospectus and (iii) is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company which is a significant
subsidiary as defined in Rule 1-02(w) of Regulation S-X (a "Significant
Subsidiary") (i) has been duly formed, is validly existing in good
standing under the laws of the jurisdiction of its formation, (ii) has
the corporate, limited liability company, limited partnership or
partnership power and authority to own its property and to conduct its
business as described in the Prospectus and (iii) is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company conforms
as to legal matters to the description thereof contained in the
Prospectus.
(g) The Securities have been duly authorized, and, when
issued and delivered pursuant to this Agreement, will have been duly
executed, authenticated, issued and delivered and will constitute valid
and binding obligations of the Company entitled to the benefits
provided by the Indenture; the Indenture has been duly authorized,
executed and delivered by the Company and is duly qualified under the
Trust Indenture Act and constitutes a valid and binding instrument,
enforceable in accordance with its terms, except as the enforceability
thereof is subject to the effect of (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws
relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); the Securities and the
Indenture will conform to the descriptions thereof in the Prospectus.
(h) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture and the Securities will not contravene any provision of
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applicable law or the certificate of incorporation or by-laws of the
Company or any agreement, indenture or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental body
or agency that has not already been obtained is required for the
performance by the Company of its obligations under this Agreement, the
Indenture or the Securities, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Securities.
(i) Neither the Company nor any of its subsidiaries is in
violation of its corporate charter or by-laws or other constitutive
document or in default under any agreement, indenture or instrument,
which default could reasonably be expected to have a material adverse
effect on the business, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, and
no event or condition has occurred or exists which, with the giving of
notice or the lapse of time or both, would result in any such violation
or default which would have such an effect. Except as described in the
Prospectus, neither the Company nor any of its subsidiaries is in
violation of any law, ordinance, governmental rule or regulation or
court decree to which it may be subject, which violation could
reasonably be expected to have a material adverse effect on the
business, properties, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole.
(j) There has not occurred any material adverse change,
or any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental investigations or
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject, that are required to be
described in the Registration Statement or the Prospectus and are not
so described or any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
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(l) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(m) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(n) All licenses, permits, consents, certificates of
need, authorizations, certifications, accreditations, franchises,
approvals, grants of rights by, or filings or registrations with, any
federal, state, local or foreign court or governmental or public body,
authority, or other instrumentality or third person (including without
limitation the Federal Energy Regulatory Commission ("FERC")) (any of
the foregoing a "LICENSE") necessary for the Company and its
subsidiaries to own, build, maintain or operate their respective
businesses or properties have been duly authorized and obtained, and
are in full force and effect, except where the failure to so be
obtained or in effect would not, individually or in the aggregate, have
a material adverse effect on the Company and its subsidiaries, taken as
a whole; and the Company and its subsidiaries are in compliance in all
material respects with all provisions thereof; no event has occurred
which permits (or with the passage of time would permit) the revocation
or termination of any License, or which could result in the imposition
of any restriction thereon, which is of such a nature or the effect of
which would reasonably be expected to have a material adverse effect on
the Company and its subsidiaries, taken as a whole; no material License
is the subject of any pending or, to the best of the Company's
knowledge, threatened challenge or revocation which, if such License
were revoked, would reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole; the
Company and its subsidiaries are not required to obtain any material
License that has not already been obtained from, or effect any material
filing or registration that has not already been effected with, the
FERC or any other federal, state or local regulatory authority in
connection with the execution and delivery of this Agreement, the
Indenture or the Securities; and except, in each case, as described in
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).
(o) The Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and
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regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; and except, in each case, as described in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement).
(p) Except as described in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this
Agreement), there are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(q) The Company has prepared its financial statements on
a consistent basis in accordance with generally accepted accounting
principles.
(r) Neither the Company nor any of its subsidiaries is a
"holding company", a "subsidiary company" of a "holding company", an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", or a "public utility", as each of such terms is
defined in the Public Utility Holding Company Act of 1935, as amended,
and the rules and regulations thereunder.
(s) The Company and its subsidiaries have good and
indefeasible title to all items of real property and good and
defensible title to all personal property owned by them and the right
to use all other property used or proposed to be used by them in the
ordinary course of business, in each case free and clear of all liens,
encumbrances and defects except such as are described or referred to in
the Prospectus or such as do not materially adversely affect the value
of such property and do not unreasonably interfere with the use made or
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by
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them under valid, existing and enforceable leases with such exceptions
as are not material and do not unreasonably interfere with the use made
or proposed to be made of such property and buildings by the Company or
its subsidiaries.
(t) Immediately after any sale of Securities by the
Company hereunder, the aggregate initial offering price of Securities
which have been issued and sold by the Company hereunder and of any
securities of the Company (other than the Securities) that shall have
been issued and sold pursuant to the Registration Statement will not
exceed the aggregate initial offering price of securities registered
under the Registration Statement.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to file the Prospectus in a form approved by you
pursuant to Rule 424 under the Securities Act not later than the
Commission's close of business on the second Business Day following the
date of determination of the offering price of the Securities or, if
applicable, such earlier time as may be required by Rule 424(b);
(b) to furnish to you, without charge, five conformed
copies of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to you
in New York City, without charge, prior to 10:00 a.m. New York City
time on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 5(e) below, as many copies of
the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request;
(c) from the date hereof and prior to the Closing Date,
to furnish to you a copy of any proposed amendment or supplement to the
Registration Statement or the Prospectus, for your review, and not to
file any such proposed amendment or supplement to which you reasonably
object;
(d) to file promptly all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities, and during such
same period, to advise you promptly, and to confirm such advice in
writing, (i) when any amendment to the Registration Statement shall
have become effective, (ii)
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of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for any
additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the initiation or threatening of any proceeding for that purpose,
and (iv) of the receipt by the Company of any notification with respect
to any suspension of the qualification of the Securities for offer and
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and to use its best efforts to prevent the
issuance of any such stop order or notification and, if issued, to
obtain as soon as possible the withdrawal thereof;
(e) if, during such period after the first date of the
public offering of the Securities as in the opinion of counsel for the
Underwriters a prospectus relating to the Securities is required by law
to be delivered in connection with sales by an Underwriter or dealer,
any event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with law, forthwith to prepare and furnish, at
the expense of the Company, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Securities may have been sold by you on behalf of the Underwriters and
to any other dealers upon request, such amendments or supplements to
the Prospectus as may be necessary so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request and to continue such qualification in effect
so long as reasonably required for distribution of the Securities;
(g) to make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering
the twelve-month period ending March 31, 2005 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations (including Rule 158) of the Commission thereunder;
(h) during the period beginning on the date hereof and
continuing to and including the Business Day following the Closing
Date, not to offer, sell, contract to sell or otherwise dispose of any
debt securities of or guaranteed by the Company which are substantially
similar to the Securities;
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(i) to use the net proceeds received by the Company from
the sale of the Securities pursuant to this Agreement in the manner
specified in the Prospectus under the caption "Use of Proceeds"; and
(j) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality of
the foregoing, all costs and expenses (i) incident to the preparation,
issuance, execution, authentication and delivery of the Securities,
including any expenses of the Trustee, (ii) incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement, the Prospectus and any preliminary prospectus
(including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or
qualification and determination of eligibility for investment of the
Securities under the laws of such jurisdictions as the Underwriters may
designate (including fees of counsel for the Underwriters and their
disbursements), (iv) related to any filing with National Association of
Securities Dealers, Inc., (v) in connection with the printing
(including word processing and duplication costs) and delivery of this
Agreement, the Indenture, the Preliminary and Supplemental Blue Sky
Memoranda and the furnishing to Underwriters and dealers of copies of
the Registration Statement and the Prospectus, including mailing and
shipping, as herein provided, (vi) payable to rating agencies in
connection with the rating of the Securities, (vii) incurred by the
Company in connection with a "road show" presentation to potential
investors and (viii) related to the cost and charges of any transfer
agent.
6. The several obligations of the Underwriters hereunder shall
be subject to the following conditions:
(a) the representations and warranties of the Company
contained herein are true and correct on and as of the Closing Date as
if made on and as of the Closing Date and the Company shall have
complied with all agreements and all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date;
(b) the Prospectus shall have been filed with the
Commission pursuant to Rule 424 within the applicable time period
prescribed for such filing by the rules and regulations under the
Securities Act; no stop order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceedings for such
purpose shall be pending before or threatened by the Commission; and
all requests for additional information on the part of the Commission
shall have been complied with to your satisfaction;
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(c) subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have occurred
any downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change that
does not indicate an improvement in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(d) since the respective dates as of which information is
given in the Prospectus there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any prospective material adverse change, or any
development involving a material adverse change, in or affecting the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which in the judgment of
the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities on the terms
and in the manner contemplated in the Prospectus;
(e) the Representatives shall have received on and as of
the Closing Date a certificate of an executive officer of the Company,
with specific knowledge about the Company's financial matters,
satisfactory to you to the effect set forth in Sections 6(a), 6(b),
6(c) and 6(d) (with respect to the respective representations,
warranties, agreements and conditions of the Company) and to the
further effect that there has not occurred any prospective material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, business,
prospects, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole, from that set forth or contemplated in the Registration
Statement;
(f) the Underwriters shall have received on the Closing
Date an opinion of Baker Botts L.L.P., outside counsel for the Company,
to the effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation and has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus;
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(ii) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(iii) the Securities have been duly authorized
and, when issued and delivered by the Company and, when duly
authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will constitute
valid and binding obligations of the Company enforceable
against the Company in accordance with their terms and
entitled to the benefits provided by the Indenture subject to
the effect of (A) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws relating to or
affecting creditors' rights generally and (B) general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law);
(iv) the Indenture has been duly authorized,
executed and delivered by the Company and constitutes a valid
and binding instrument of the Company enforceable against the
Company in accordance with its terms subject to the effect of
(A) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws relating to or affecting
creditors' rights generally and (B) general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the
Indenture has been duly qualified under the Trust Indenture
Act;
(v) this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) the execution and delivery by the Company
of, and the performance by the Company of its obligations
under, this Agreement, the Indenture and the Securities will
not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company;
(vii) the statements (A) in the Basic Prospectus
under the caption "Description of the Debt Securities", (B) in
the Prospectus under the caption "Description of the Notes,"
and (C) in the Registration Statement in Item 15, in each case
insofar as such statements constitute summaries of legal
matters, accurately present the information called for with
respect to such legal matters, documents and proceedings and
accurately summarize the matters referred to therein; and
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(viii) the Company is not, and after giving effect
to the offering and sale of the Securities and the application
of the proceeds thereof as described in the Prospectus will
not be, required to register as an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended.
In addition, such counsel shall state that no facts have come to such
counsel's attention to lead such counsel to believe that (A) the Registration
Statement and Prospectus (except for financial statements and schedules and
other financial and statistical data included therein or the Forms T-1 as to
which such counsel need not comment) do not comply as to form in all material
respects with the Securities Act and the applicable rules and regulations of the
Commission thereunder or (B)(i) (except for financial statements and schedules
and other financial and statistical data and the Forms T-1 as to which such
counsel need not comment) the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective or at the time
of the execution of this Agreement contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) (except for
financial statements and schedules and other financial and statistical data and
the Forms T-1 as to which such counsel need not comment) the Prospectus contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(g) the Underwriters shall have received on the Closing
Date an opinion of Jay D. Browning, Esq., Corporate Secretary and
Managing Attorney, Corporate Law for the Company, to the effect that:
(i) the Company is duly qualified to transact
business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(ii) each Significant Subsidiary of the Company
has been duly formed, is validly existing in good standing
under the laws of the jurisdiction of its formation, has the
corporate, limited liability company, limited partnership or
partnership power and authority to own its property and to
conduct its business and is in good standing in each
jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified
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or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii) the execution and delivery by the Company
of, and the performance by the Company of its obligations
under, this Agreement, the Indenture and the Securities will
not contravene any agreement, indenture or other instrument
binding upon the Company or any of its subsidiaries that is
known to such counsel and material to the Company and its
subsidiaries, taken as a whole, or to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency that has not already been obtained
is required for the performance by the Company of its
obligations under this Agreement, the Indenture or the
Securities, except such as may be required by the securities
or Blue Sky laws of the various states in connection with the
offer and sale of the Securities;
(iv) the statements (A) in the Registration
Statement in Item 15 and (B) incorporated by reference into
the Prospectus under the caption "Items 1. & 2. - Business &
Properties - Environmental Matters" and "Item 3. - Legal
Proceedings" in the Company's Annual Report on Form 10-K for
the year ended December 31, 2003, in each case insofar as such
statements constitute summaries of legal matters, accurately
present the information called for with respect to such legal
matters, documents and proceedings and accurately summarize
the matters referred to therein;
(v) after due inquiry, such counsel does not
know of any legal or governmental investigations or
proceedings pending or threatened to which the Company or any
of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(vi) no facts have come to such counsel's
attention to lead such counsel to believe that the Company and
its subsidiaries (A) are not in compliance with any and all
applicable
14
Environmental Laws, (B) have not received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses or
(C) are not in compliance with all terms and conditions of any
such permit, license or approval, except as described in the
Prospectus and except where such noncompliance with
Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
and
(vii) the documents incorporated by reference in
the Prospectus (except for the consolidated financial
statements and schedules and other financial or statistical
data included therein or omitted therefrom, as to which such
counsel need express no opinion), as of the dates they were
filed with the Commission or to the extent such documents were
subsequently amended prior to the date hereof, at the time so
amended, complied as to form in all material respects with the
requirements of the Exchange Act and the regulations
thereunder.
In addition, such counsel shall state that no facts have come to such
counsel's attention to lead such counsel to believe that (A) the Registration
Statement and Prospectus (except for financial statements and schedules and
other financial and statistical data included therein and the Forms T-1 as to
which such counsel need not comment) do not comply as to form in all material
respects with the Securities Act and the applicable rules and regulations of the
Commission thereunder or (B)(i) (except for financial statements and schedules
and other financial and statistical data included therein and the Forms T-1 as
to which such counsel need not comment) the Registration Statement and the
prospectus included therein at the time the Registration Statement became
effective or at the time of the execution of this Agreement contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) (except for financial statements and schedules and other financial and
statistical data included therein and the Forms T-1 as to which such counsel
need not comment) the Prospectus contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
The opinions of Baker Botts L.L.P. and Jay D. Browning, Esq. referred
to in paragraphs 6(f) and 6(g) above shall be rendered to the Underwriters at
the request of the Company and shall so state therein.
15
(h) on the Closing Date, Ernst & Young LLP shall have
furnished to you a letter dated such date, in form and substance
satisfactory to you, containing statements and information of the type
customarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
and
(i) you shall have received on and as of the Closing Date
an opinion of Davis Polk & Wardwell, counsel to the Underwriters, in
form and substance satisfactory to you.
7. The Company agrees to indemnify and hold harmless each
Underwriter, each affiliate of any Underwriter which assists such Underwriter in
the distribution of the Securities and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including without limitation the legal fees and other
expenses reasonably incurred in connection with any suit, action or proceeding
or any claim asserted) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Securities to such person, and if the Prospectus
(as so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 5(b) hereof.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act, to the same
16
extent as the foregoing indemnity from the Company to each Underwriter, but only
with reference to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement, the Prospectus, any amendment or supplement
thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "INDEMNIFIED PERSON") shall promptly
notify the person against whom such indemnity may be sought (the "INDEMNIFYING
PERSON") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Securities and such control persons of Underwriters shall be
designated in writing by the first of the named Representatives on Schedule I
hereto and any such separate firm for the Company, its directors, its officers
who sign the Registration Statement and such control persons of the Company or
authorized representatives shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any
17
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same respective proportions as the net proceeds from the offering
of such Securities (before deducting expenses) received by the Company and the
total underwriting discounts and the commissions received by the Underwriters
bear to the aggregate public offering price of the Securities. The relative
fault of the Company on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall
18
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall an Underwriter be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 7 are several in proportion to the respective principal amount of the
Securities set forth opposite their names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Securities.
8. Notwithstanding anything herein contained, this Agreement may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company, if (a) after the execution and delivery of this Agreement and
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange or the National Association of Securities
Dealers, Inc., (ii) trading of any securities of or guaranteed by the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State authorities, or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Representatives, is material and adverse and (b) in the case of any of the
events specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or
together with any other event, makes it, in the judgment of the Representatives,
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus.
19
9. If, on the Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase Securities which it or they have agreed to
purchase under this Agreement, and the aggregate principal amount of Securities
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount of the
Securities, the other Underwriters shall be obligated severally in the
proportions that the principal amount of Securities set forth opposite their
respective names in Schedule II hereto bears to the aggregate principal amount
of Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Representatives may specify,
to purchase the Securities which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase on such date; provided that in no event
shall the principal amount of Securities that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-tenth of such principal amount of Securities without the
written consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Securities and the aggregate
principal amount of Securities with respect to which such default occurs is more
than one-tenth of the aggregate principal amount of Securities to be purchased,
and arrangements satisfactory to you and the Company for the purchase of such
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company agrees to reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and expenses of
their counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering of Securities.
11. This Agreement shall inure to the benefit of and be binding
upon the Company, each affiliate of any Underwriter which assists such
Underwriter in the distribution of the Securities, the Underwriters, any
controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or
20
in respect of this Agreement or any provision herein contained. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by you
jointly or by the first of the named Representatives set forth in Schedule I
hereto alone on behalf of the Underwriters, and any such action taken by you
jointly or by the first of the named Representatives set forth in Schedule I
hereto alone shall be binding upon the Underwriters. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be given at the address set forth in Schedules
I-A and I-B hereto. Notices to the Company shall be given to it at Valero Energy
Corporation, One Valero Place, San Antonio, Texas 78212 (facsimile: (210)
370-2490); Attention: Corporate Secretary.
13. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument.
14. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of laws provisions thereof.
21
Very truly yours,
VALERO ENERGY CORPORATION
\
By: /s/ Gregory C. King
--------------------------------------
Name: Gregory C. King
Title: President
Accepted: March 22, 2004
Acting severally on behalf of itself and
the several Underwriters listed in
Schedule II hereto.
LEHMAN BROTHERS INC.
By: /s/ Greg Hall
------------------------------------
Name: Greg Hall
Title: Managing Director
BARCLAYS CAPITAL INC.
By: /s/ Pamela Kendall
------------------------------------
Name: Pamela Kendall
Title: Director
SCHEDULE I-A
Representatives: Lehman Brothers Inc.
Barclays Capital Inc.
__________________________________________
Underwriting Agreement dated: March 22, 2004
Registration Statement No.: 333-84820
Title of Securities: 3.500% Notes due 2009
Aggregate principal amount: $200,000,000
Purchase Price: 98.935%
Price to Public: 99.535% of the principal amount of the
Securities, plus accrued interest, if any,
from March 25, 2004 to the Closing Date.
Indenture: Indenture dated as of December 12, 1997
between the Company and The Bank of New
York, as Trustee.
Maturity: April 1, 2009
Interest Rate: 3.500%
Interest Payment Dates: April 1 and October 1, beginning October
1, 2004
Closing Date and Time of Delivery: March 25, 2004
Closing Location: Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Address for Notices to Underwriters: Lehman Brothers Inc.
745 7th Avenue
New York, NY 10019
(212) 526-7000
SCHEDULE I-B
Representatives: Lehman Brothers Inc.
Barclays Capital Inc.
__________________________________________
Underwriting Agreement dated: March 22, 2004
Registration Statement No.: 333-84820
Title of Securities: 4.750% Notes due 2014
Aggregate principal amount: $200,000,000
Purchase Price: 98.947%
Price to Public: 99.597% of the principal amount of the
Securities, plus accrued interest, if any,
from March 25, 2004 to the Closing Date.
Indenture: Indenture dated as of December 12, 1997
between the Company and The Bank of New
York, as Trustee.
Maturity: April 1, 2014
Interest Rate: 4.750%
Interest Payment Dates: April 1 and October 1, beginning October
1, 2004
Closing Date and Time of Delivery: March 25, 2004
Closing Location: Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Address for Notices to Underwriters: Lehman Brothers Inc.
745 7th Avenue
New York, NY 10019
(212) 526-7000
SCHEDULE II
PRINCIPAL AMOUNT
OF SECURITIES PURCHASED
---------------------------
Underwriter 2009 Notes 2014 Notes
----------- ------------ ------------
Lehman Brothers Inc................................ $ 60,000,000 $ 60,000,000
Barclays Capital Inc............................... 60,000,000 60,000,000
Morgan Stanley & Co. Incorporated.................. 16,000,000 16,000,000
RBC Capital Markets Corporation.................... 16,000,000 16,000,000
BNP Paribas Securities Corp........................ 8,000,000 8,000,000
Citigroup Global Markets Inc....................... 8,000,000 8,000,000
Credit Lyonnais Securities (USA) Inc............... 8,000,000 8,000,000
Mizuho International plc........................... 8,000,000 8,000,000
Scotia Capital (USA) Inc........................... 8,000,000 8,000,000
SunTrust Capital Markets, Inc...................... 8,000,000 8,000,000
Total.............................................. $200,000,000 $200,000,000
============ ============