exv4w12



 






EXHIBIT 4.12




GUARANTEE




     GUARANTEE dated as of September 2, 2005 of Valero Energy Corporation, a Delaware corporation
(“Valero”), for the benefit of Deutsche Bank Trust Company Americas (“Deutsche Bank”) and HSBC Bank
USA, National Association (successor by merger to HSBC Bank USA) (“HSBC” and, together with
Deutsche Bank, the “Trustees”), and holders (“Holders”) from time to time of the Notes (as defined
herein) of The Premcor Refining Group Inc., a Delaware corporation and an indirect, wholly owned
subsidiary of Valero (the “Company”), and Port Arthur Finance Corp., a Delaware corporation and an
indirect, wholly owned subsidiary of the Company (“PAFC”).



RECITALS




     WHEREAS, PAFC, Port Arthur Coker Company L.P. (“PACC”), Sabine River Holding Corp. (“Sabine”),
Neches River Holding Corp. (“Neches”), HSBC and Bankers Trust Company (“Bankers Trust”) have
executed an Indenture dated August 19, 1999 (the “1999 Indenture”), as supplemented by the First
Supplemental Indenture dated June 6, 2002 (the “First Supplemental Indenture” and, together with
the 1999 Indenture, the “PAFC Indenture”), among PAFC, PACC, Sabine, Neches, The Premcor Refining
Group Inc. (“PRG”), HSBC and Deutsche Bank (formerly known as Bankers Trust), pursuant to which
PAFC’s 121/2% Senior Notes due January 15, 2009 (the “2009 Notes”) were issued and guaranteed by
PACC, Sabine, Neches and PRG;



     WHEREAS, the Company and Deutsche Bank have executed an Indenture dated February 11, 2003 (as
supplemented to date and collectively with the PAFC Indenture, the “Indentures”), pursuant to which
the Company’s (i) 91/4% Senior Notes due February 1, 2010; (ii) 63/4% Senior Notes due February 1,
2011; (iii) 73/4% Senior Subordinated Notes due February 1, 2012; (iv) 91/2% Senior Notes due February
1, 2013; and (v) 71/2% Senior Notes due June 15, 2015 (collectively with the 2009 Notes, the “Notes”)
were issued;



     WHEREAS, Valero desires to provide for the unconditional guarantee by Valero of the due and
punctual payment of the principal of, premium (if any) and interest on, and all other amounts due
under, the Notes and the Indentures;



     NOW, THEREFORE, Valero hereby agrees, for the benefit of each of the Trustees and for the
equal and proportionate benefit of all Holders of the Notes, as follows:



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ARTICLE ONE




THE GUARANTEE





Section 1.01 Guarantee.



     Valero hereby unconditionally guarantees to the Holders from time to time of the Notes of each
series (a) the full and prompt payment of the principal of and any premium on any Note of such
series when and as the same shall become due, whether at the stated maturity thereof, by
acceleration, redemption or otherwise, and (b) the full and prompt payment of any interest on and
any additional amounts with respect to any Note of such series when and as the same shall become
due, subject in each case to any applicable grace period or notice requirement or both (the
“Guarantee”). Valero also hereby unconditionally guarantees to each of the Trustees the full and
prompt payment of all amounts due it from the Company under each Indenture. The Guarantee
hereunder constitutes a guarantee of payment and not of collection.



     The obligations of Valero hereunder with respect to a series of Notes shall be absolute and
unconditional and shall remain in full force and effect until the entire principal of, premium (if
any) and interest on and any additional amounts with respect to the Notes of such series shall have
been paid or provided for in accordance with the provisions of such series and of the applicable
Indenture, or amounts due to each of the Trustees under each Indenture shall remain outstanding
until paid irrespective of the validity, regularity or enforceability of any Note of such series or
such Indenture, any change or amendment thereto, the absence of any action to enforce the same, any
waiver or consent by any of the Trustees or the Holder of any Note of such series with respect to
any provision of such Note or such Indenture, the recovery of any judgment against the Company,
PACC, Sabine, Neches or PRG, as applicable, or any action to enforce the same, or any other
circumstances that may otherwise constitute a legal or equitable discharge or defense of a
guarantor. Valero hereby waives presentment or demand of payment or notice to Valero with respect
to such Note and the obligations evidenced thereby or hereby. Valero further waives any right of
set-off or counterclaim it may have against any Holder of a Note arising from any other obligations
any such Holder may have to the Company, PACC, Sabine, Neches, PRG or Valero.



     The obligations of Valero to make any payment hereunder may be satisfied by causing the
Company, PACC, Sabine, Neches or PRG to make such payment.




Section 1.02 Subrogation.



     Valero shall be subrogated to all rights against the Company, PACC, Sabine, Neches or PRG, as
applicable, of any Holder of Notes of a series in respect of any amounts paid by Valero pursuant to
the provisions of the Guarantee; provided, however, that Valero shall be entitled to enforce, or to
receive any payments arising out of or based upon, such right of subrogation only after the
expiration of two years and one day after the principal of, premium (if any) and interest on and
any additional amounts with respect to all Notes of such series have been paid in full.



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Section 1.03 Guarantee for Benefit of Holders.



     The Guarantee is entered into by Valero for the benefit of each of the Trustees and the
Holders from time to time of the Notes. Such provisions shall not be deemed to create any right
in, or to be in whole or in part for the benefit of, any person other than the Trustees, Valero,
the Holders from time to time of the Notes and their permitted successors and assigns.




Section 1.04 No Recourse Against Others.



     A director, officer, employee, stockholder, partner or other owner of Valero, as such, shall
not have any liability for any obligations of Valero under the Guarantee or for any claim based on,
in respect of or by reason of such obligations or their creation.



ARTICLE TWO




MISCELLANEOUS





Section 2.01 SEC Reports; Financial Statements.



     Valero shall file with each of the Trustees, within 15 days after it files the same with the
United States Securities and Exchange Commission (“SEC”), copies of the annual reports and the
information, documents and other reports (or copies of such portions of any of the foregoing as the
SEC may by rules and regulations prescribe) that Valero is required to file with the SEC pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and any successor
statute. Valero shall also comply with the provisions of Section 314(a) of the Trust Indenture Act
of 1939 (the “Trust Indenture Act”). Delivery of such reports, information and documents to the
Trustees is for informational purposes only and the Trustees’ receipt thereof shall not constitute
constructive notice of any information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants under each Indenture.




Section 2.02 Trust Indenture Act Controls.



     If any provision of this Guarantee limits, qualifies or conflicts with any provision of the
Trust Indenture Act that is required under such Act to be part of and govern this Guarantee, the
latter provision shall control. If any provision hereof modifies or excludes any provision of the
Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to
apply to this Guarantee, as so modified or excluded, as the case may be.




Section 2.03 Notices.



     Any notice or communication provided for herein shall be duly given if in writing and
delivered in person or mailed by mail (registered, return receipt requested, first-class postage
prepaid), facsimile or overnight air courier guaranteeing next day delivery, as follows:




	 	(a)	 	If to the Trustees, to the address set forth in the applicable Indenture;





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	 	(b)	 	If to Valero:




Valero Energy Corporation

One Valero Way

San Antonio, Texas 78249

Attn: Chief Financial Officer

Telephone: (210) 345-2000

Facsimile: (210) 345-2646



     Valero or any of the Trustees by notice to the other may designate additional or different
addresses for subsequent notices or communications.



     All such notices and communications shall be in writing and shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; 10 business days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if by facsimile; and
the next business day after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery. If, by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to give such notice or communication by mail,
then such notice or communication as shall be made with the approval of the Trustees shall
constitute a sufficient notification or communication for every purpose hereunder.




Section 2.04 Date and Time of Effectiveness.



     This Guarantee shall become a legally effective and binding instrument at and as of the date
hereof.




Section 2.05 Notes Deemed Conformed.



     As of the date hereof, the provisions of the Notes shall be deemed to be conformed, without
the necessity for any reissuance or exchange of such Note or any other action on the part of the
Holders of Notes, the Company, PACC, Sabine, Neches, PRG or any of the Trustees, so as to reflect
this Guarantee.




Section 2.06 Successors.



     All agreements of Valero in this Guarantee shall bind its successors and assigns, whether or
not so expressed.




Section 2.07 Benefits of Guarantee.



     Nothing in this Guarantee, express or implied, shall give to any person, other than the
parties hereto and their successors hereunder and the Holders of Notes, any benefit or any legal or
equitable right, remedy or claim under this Guarantee.



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Section 2.08 Separability.



     In case any provision in this Guarantee shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to
the full extent permitted by law.




Section 2.09 Headings.



     The section headings of this Guarantee have been inserted for convenience of reference only,
are not to be considered a part of this Guarantee and shall in no way modify or restrict any of the
terms or provisions hereof.




Section 2.10 GOVERNING LAW.



     THIS GUARANTEE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK.




Section 2.11 Amendments.



     This Guarantee may be amended by the parties hereto by an instrument in writing signed on
behalf of each of the parties. Upon the execution of any such amendment, this Guarantee shall be
modified in accordance therewith, and such amendment shall form a part of this Guarantee for all
purposes; and every Holder of Notes shall be bound thereby.




Section 2.12 Counterparts.



     This Guarantee may be executed in two or more counterparts, each of which shall constitute an
original, but all of which when taken together shall constitute the same instrument.




Section 2.13 Trustees Not Responsible for Recitals.



     The recitals herein contained are made by Valero, and not by the Trustees, and the Trustees
assume no responsibility for the correctness thereof. The Trustees make no representations as to
the validity or sufficiency of this Guarantee.



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     IN WITNESS WHEREOF, Valero has caused this Guarantee to be duly executed as of the day and
year first above written.



	 	 	 	 	 
	 	VALERO ENERGY CORPORATION

 	 
	 	By:  	/s/ Michael S. Ciskowski
 	 
	 	 	Name:  	Michael S. Ciskowski 	 
	 	 	Title:  	Executive Vice President and
Chief Financial Officer 	 
	 




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ACCEPTED this 2nd day of

September, 2005.




DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Trustee
 

By:
/s/ Susan Johnson



 




       Name: Susan Johnson

       Title: Vice President




HSBC BANK USA, NATIONAL ASSOCIATION,

as Capital Markets Trustee
 

By:
/s/ Herawattee Alli



 




       Name: Herawattee Alli

       Title: Assistant Vice President





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