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Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 17, 1999
Hercules Incorporated
(Exact name of registrant as specified in its charter)
Delaware 001-00496 51-0023450
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
(Address of principal executive offices) (Zip Code)
(302) 594-5000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On March 17, 1999, Hercules Trust I (the "Trust"), a wholly-owned
subsidiary of Hercules Incorporated ("Hercules"), issued $362,500,000 aggregate
liquidation amount of its 9.42% Trust Originated Preferred Securities at a
public offering price of $25 per preferred security. The preferred securities
are guaranteed by Hercules based on several obligations. The Trust invested the
proceeds from such sale, together with the proceeds from the sale of its common
securities to Hercules, into $373,711,350 aggregate principal amount of 9.42%
Junior Subordinated Deferrable Interest Debentures due 2029 of Hercules.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
1.1 Underwriting Agreement, dated March 12, 1999, among Hercules,
the Trust and the Underwriters named therein.
4.1 Officers' Certificate, dated as of March 17, 1999, pursuant to
the Junior Subordinated Debenture Indenture between Hercules
and The Chase Manhattan Bank, as trustee.
4.2 Form of 9.42% Trust Originated Preferred Securities.
4.3 Form of 9.42% Junior Subordinated Deferrable Interest
Debentures due 2029.
8.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding
tax matters.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HERCULES INCORPORATED
By: /s/ Israel J. Floyd
--------------------------------
March 17, 1999 Israel J. Floyd
Corporate Secretary
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EXHIBIT INDEX
Number Exhibit
1.1 Underwriting Agreement, dated March 12, 1999, among Hercules, the Trust
and the Underwriters named therein.
4.1 Officers' Certificate, dated as of March 17, 1999, pursuant to the
Junior Subordinated Debenture Indenture between Hercules and The Chase
Manhattan Bank, as trustee.
4.2 Form of 9.42% Trust Originated Preferred Securities.
4.3 Form of 9.42% Junior Subordinated Deferrable Interest Debentures due
2029.
8.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding tax
matters.
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EXHIBIT 1.1
HERCULES TRUST I
Preferred Securities
HERCULES INCORPORATED
Debt Securities
UNDERWRITING AGREEMENT
March 12, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
A.G. EDWARDS & SONS, INC.
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY INC.
as Representatives of the several Underwriters
listed in Schedule A
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
Hercules Trust I (the "Trust"), a statutory business trust organized
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Code, 12 Del. (Sections 3801 et seq.)),
and Hercules Incorporated, a Delaware corporation (the "Company"), confirm their
agreement with the Representatives named above and each of the other
underwriters listed in Schedule A hereto (collectively, the "Underwriters,"
which term shall also include any underwriter substituted as provided in Section
10 hereof) with respect to the issue and sale by the Trust and the purchase by
the Underwriters, acting severally and not jointly, of 9.42% Trust Originated
Preferred Securities (liquidation amount of $25 per security) of the Trust (the
"Preferred Securities") in the respective numbers specified in said Schedule A
(the "Initial Preferred Securities"). The Company will guarantee the Preferred
Securities of the Trust to the extent described in the Prospectus (as defined
below) (the "Preferred Securities Guarantee") and will issue and sell its 9.42%
Junior Subordinated Deferrable Interest Debentures due 2029 (the "Debt
Securities") in connection with the issue and sale of the Preferred Securities.
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The entire proceeds from the sale of the Preferred Securities will be
combined with the entire proceeds from the sale by the Trust to the Company of
its common securities (the "Common Securities"), as guaranteed by the Company to
the extent set forth in the Prospectus (the "Common Securities Guarantee" and,
together with the Preferred Securities Guarantee, the "Guarantees").
The Preferred Securities and the Common Securities will be issued
pursuant to the Amended and Restated Trust Agreement of the Trust, to be dated
as of Closing Time (as defined below) (the "Trust Agreement"), among the
Company, as sponsor, Israel J. Floyd, Jan M. King and Stuart C. Shears, as
administrative trustees (the "Administrative Trustees"), The Chase Manhattan
Bank, as property trustee (the "Property Trustee"), and Chase Manhattan Bank
Delaware, as Delaware trustee (the "Delaware Trustee," and, together with the
Property Trustee and the Administrative Trustees, the "Trustees"). The Preferred
Securities Guarantee will be issued pursuant to the Preferred Securities
Guarantee Agreement, to be dated as of Closing Time (the "Preferred Securities
Guarantee Agreement"), between the Company and The Chase Manhattan Bank, as
guarantee trustee (the "Guarantee Trustee"), and the Common Securities Guarantee
will be issued pursuant to the Common Securities Guarantee Agreement, to be
dated as of Closing Time (the "Common Securities Guarantee Agreement" and,
together with the Preferred Securities Guarantee Agreement, the "Guarantee
Agreements"), of the Company. The Debt Securities will be issued pursuant to a
Junior Subordinated Debentures Indenture, to be dated as of Closing Time (the
"Indenture"), between the Company and The Chase Manhattan Bank, as debt
securities trustee (the "Debt Securities Trustee").
The Preferred Securities, the Preferred Securities Guarantee and the
Debt Securities are referred to collectively as the "Securities." The Indenture,
the Trust Agreement, the Guarantee Agreements and this Underwriting Agreement
are referred to collectively as the "Operative Agreements."
The Company, the Trust and certain other trusts sponsored by the
Company have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-63423) and
pre-effective amendment no. 1 thereto for the registration of certain
securities, including the Securities, under the Securities Act of 1933, as
amended (the "1933 Act"), and the offering thereof from time to time in
accordance with Rule 415 of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations"). Such registration statement has been
declared effective by the Commission and each of the Trust Agreement, the
Preferred Securities Guarantee Agreement and the Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"),
and the Company, the Trust and the Other Hercules Trusts filed a post-effective
amendment thereto on November 9, 1998 and have filed such other post-effective
amendments thereto as may be required prior to the execution of this
Underwriting Agreement and each such post-effective amendment has become
effective. Such registration statement (as so amended), in the form in which it
became effective, is referred to herein as the "Registration Statement"; and the
final prospectus and the final prospectus supplement relating to the offering of
the Preferred Securities, in the form first furnished to the Underwriters by the
Hercules Trusts and the Company for use in connection with the offering of the
Preferred Securities, are collectively referred to herein as the "Prospectus";
provided, however, that all references to the "Registration Statement" and the
"Prospectus" shall also be deemed to include all documents incorporated therein
by reference pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), prior to the time
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the applicable final prospectus and the final prospectus supplement were first
furnished to the Underwriters by the Trust and the Company; and provided,
further, that if the Company, the Trust and the Other Hercules Trusts file a
registration statement with the Commission pursuant to Rule 462(b) of the 1933
Act Regulations (the "Rule 462(b) Registration Statement"), then, after such
filing, all references to "Registration Statement" shall also be deemed to
include the Rule 462 Registration Statement. A "preliminary prospectus" shall be
deemed to refer to any prospectus that omitted information to be included upon
pricing in a form of prospectus filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations and was used after such effectiveness but
prior to the delivery of the applicable final prospectus and the final
prospectus supplement. For purposes of this Underwriting Agreement, all
references to the Registration Statement, Prospectus or preliminary prospectus
or to any amendment or supplement to any of the foregoing shall be deemed to
include any copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Underwriting Agreement to financial statements
and schedules and other information which is "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be, prior to the delivery of the applicable final prospectus and
the final prospectus supplement in the forms first furnished to the Underwriters
by the Trust and the Company; and all references in this Underwriting Agreement
to amendments or supplements to the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include the filing of any
document under the 1934 Act which is incorporated by reference in the
Registration Statement, Prospectus or preliminary prospectus, as the case may
be, after the delivery of the applicable final prospectus and the final
prospectus supplement in the forms first furnished to the Underwriters by the
Trust and the Company.
SECTION 1 Representations and Warranties.
(a) Representations and Warranties by the Company and the Trust. Each
of the Trust, as to itself, and the Company, as to itself and its subsidiaries,
represents and warrants to each Underwriter as of the date hereof, as of Closing
Time and, if applicable, as of each Date of Delivery (as defined below) (in each
case, a "Representation Date"), as follows:
(1) Compliance with Registration Requirements. The Trust and
the Company meet the requirements for use of Form S-3 under the 1933
Act. The Registration Statement (including any Rule 462(b) Registration
Statement) has become effective under the 1933 Act. The Trust and the
Company have complied to the Commission's satisfaction with all
requests of the Commission for additional or supplemental information.
No stop order suspending the effectiveness of the Registration
Statement (or such Rule 462(b) Registration Statement) is in effect and
no proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Trust or the Company, are contemplated or
threatened by the Commission. In addition, each of the Trust Agreement,
the Preferred Securities Guarantee and the Indenture has been duly
qualified under the 1939 Act.
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At the respective times the Registration Statement (including
any Rule 462(b) Registration Statement) and any post-effective
amendments thereto (including the filing of the Company's most recent
Annual Report on Form 10-K with the Commission (the "Annual Report on
Form 10-K")) became effective and at each Representation Date, the
Registration Statement (including any Rule 462(b) Registration
Statement) and any amendments thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations") and did not
and will not contain an 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. At the date of the
Prospectus, at the Closing Time and at each Date of Delivery, if any,
neither the Prospectus nor any amendments and supplements thereto
included or will include an untrue statement of a material fact or
omitted or will omit 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. Notwithstanding the foregoing,
the representations and warranties set forth in this subsection do not
apply to statements in or omissions from the Registration Statement or
any post-effective amendment thereto or the Prospectus or any
amendments or supplements thereto made in reliance upon and in
conformity with information furnished to the Trust and the Company in
writing by any Underwriter through the Representatives expressly for
use therein.
Each preliminary prospectus and 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 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with the offering
of Preferred Securities will, at the time of such delivery, be
identical to any electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(2) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations") and, when read
together with the other information in the Prospectus, at the date of
the Prospectus, at the Closing Time and at each Date of Delivery, if
any, did not and will not include an untrue statement of a material
fact or omit 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.
(3) Independent Accountants. Each of the accountants who
certified the financial statements and any supporting schedules thereto
included in the Registration Statement and the Prospectus are
independent public accountants as required by the 1933 Act, the 1933
Act Regulations, the 1934 Act and the 1934 Act Regulations.
(4) Financial Statements. The financial statements of the
Company included in the Registration Statement and the Prospectus,
together with the related schedules and
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notes, as well as those financial statements, schedules and notes of
any other entity included therein, present fairly the financial
position of the Company and its consolidated subsidiaries, or such
other entity, as the case may be, at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries, or such other entity, as the
case may be, for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the
Registration Statement and the Prospectus present fairly in accordance
with GAAP the information required to be stated therein. The selected
financial data, the summary financial information and the
capitalization information included in the Prospectus present fairly
the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in
the Registration Statement and the Prospectus. In addition, any pro
forma financial statements of the Company and its subsidiaries and the
related notes thereto included in the Registration Statement and the
Prospectus have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and have
been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein but the pro forma
financial statements may differ from actual results.
(5) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change, or any development that
could reasonably be expected to result in a material adverse change, in
the condition, financial or otherwise, or in or affecting the earnings
or operations of the Trust or the Company and its subsidiaries taken as
a whole, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered
into by the Trust, the Company or any of the Material Subsidiaries (as
defined below), other than those arising in the ordinary course of
business, which are, individually or in the aggregate, material with
respect to the Trust or the Company and its subsidiaries considered as
one enterprise or (C) except for regular dividends on the Company's
common stock or preferred stock (which dividends include amounts,
sometimes called "dividend equivalents" paid under the Company's
employee benefit and compensation plans on the common stock grants
(whether options, restricted stock or other) under such plans on the
common stock, but only to the extent such amounts do not exceed the
amounts of ordinary cash dividends that would be payable were such
common stock grants treated as common stock), in amounts per share that
are consistent with past practice or the applicable charter document or
supplement thereto, respectively, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock. "Material Subsidiary" shall mean every
subsidiary of the Company that (i) is listed on Schedule B hereto, (ii)
together with its subsidiaries on a consolidated basis during the 12
months preceding the date of this Underwriting Agreement accounts for
(or to which may be attributed) 5% or more of the net income or assets
(determined on a consolidated basis) of the Company and its
subsidiaries or (iii) is otherwise necessary for the ongoing business
operations of the Company or its subsidiaries.
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(6) Good Standing of the Company. The Company is a duly and
validly existing corporation in good standing under the laws of the
State of Delaware and has corporate power and authority to own, lease,
license and operate its properties, to conduct the business in which it
is currently engaged to issue the Guarantees and the Debt Securities
and to enter into and perform its obligations under, or as contemplated
under, the Operative Agreement to which it is a party and to consummate
the transactions contemplated hereby and thereby. The Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction where its ownership, lease,
licensing or operation of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified and in good standing would not result in a Material Adverse
Effect.
(7) Good Standing of Material Subsidiaries. Each Material
Subsidiary is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its incorporation or
organization, has corporate power and authority to own, lease, license
and operate its properties and to conduct the business in which it is
currently engaged and is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction
where its ownership, lease, licensing or operation of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified and in good standing would not result in a
Material Adverse Effect. All of the issued and outstanding capital
stock of each Material Subsidiary has been duly authorized and is
validly issued, fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity
of parties other than the Company's subsidiaries. None of the
outstanding capital stock of any Material Subsidiary was issued in
violation of preemptive or other similar rights of any securityholder
of such Material Subsidiary.
(8) Capitalization. The authorized, issued and outstanding
shares of capital stock of the Company is as set forth in the column
entitled "Actual" under such section. Such shares of capital stock have
been duly authorized and validly issued by the Company and are fully
paid and non-assessable, and none of such shares of capital stock was
issued in violation of preemptive or other similar rights of any
securityholder of the Company. There are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or other
rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or
any of its subsidiaries other than those described in the Prospectus.
(9) Good Standing of the Trust. The Trust has been duly
created and is validly existing in good standing as a business trust
under the Delaware Act with the power and authority to own property and
to conduct its business as described in the Prospectus, to issue the
Preferred Securities and the Common Securities and to enter into and
perform its obligations under the Operative Agreements to which it is a
party. The Trust is not a party to or otherwise bound by any agreement
other than those described in the Prospectus. The Trust is, and will
be, under current law, classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a
corporation.
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(10) Authorization of Common Securities. As of the Closing
Time, the Common Securities will have been duly authorized for issuance
by the Trust pursuant to the Trust Agreement and, when issued and
delivered by the Trust to the Company against payment therefor as
described in the Prospectus, will be validly issued and fully paid and
nonassessable undivided common beneficial interests in the assets of
the Trust. The issuance of the Common Securities will not be subject to
preemptive or other similar rights. As of the Closing Time, all of the
issued and outstanding Common Securities of the Trust will be directly
owned by the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equitable right.
(11) Authorization of Preferred Securities. As of the Closing
Time, the Preferred Securities will have been duly authorized for
issuance by the Trust and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
non-assessable undivided preferred beneficial interests in the assets
of the Trust. The issuance of the Preferred Securities will not be
subject to preemptive or other similar rights. The Preferred Securities
will be in the form contemplated by, and each registered holder thereof
will be entitled to the benefits of, the Trust Agreement.
(12) Authorization of the Trust Agreement. The Trust Agreement
has been duly authorized, executed and delivered by the Company and the
Trustees and, upon such authorization, execution and delivery and
assuming due authorization, execution and delivery of the Trust
Agreement by the Trustees, the Trust Agreement will constitute a valid
and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally or by general equitable principles (regardless of whether
enforcement is considered in a proceeding at law or in equity).
(13) Authorization of the Guarantee Agreements. Each of the
Guarantee Agreements has been duly authorized, executed and delivered
by the Company and, upon such authorization, execution and delivery and
assuming due authorization, execution and delivery of the Preferred
Securities Guarantee Agreement by the Guarantee Trustee, the Guarantee
Agreements will constitute valid and binding agreements of the Company,
enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a
proceeding at law or in equity).
(14) Authorization of the Administrative Trustees. Each of the
Administrative Trustees of the Trust is an officer of the Company and
has been duly authorized by the Company to execute and deliver the
Trust Agreement.
(15) Authorization of this Underwriting Agreement. This
Underwriting Agreement has been duly authorized, executed and delivered
by each of the Trust and the Company.
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(16) Authorization of the Indenture. The Indenture has been
duly authorized, executed and delivered by the Company and, upon such
authorization, execution and delivery and assuming due authorization,
execution and delivery of the Indenture by the Debt Securities Trustee,
the Indenture will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general
equitable principles (regardless of whether enforcement is considered
in a proceeding in equity or at law).
(17) Authorization of Debt Securities. The Debt Securities
have been duly authorized by the Company for issuance and sale to the
Trust as contemplated by this Underwriting Agreement. The Debt
Securities, when issued and authenticated in the manner provided for in
the Indenture and delivered against payment of the stated consideration
therefor, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law). The Debt Securities will be in the
form contemplated by, and each registered holder thereof will be
entitled to the benefits of, the Indenture.
(18) Descriptions of the Securities and the Operative
Agreements. The Securities and the Operative Agreements, as of each
Representation Date, conform and will conform, as applicable, in all
material respects to the statements relating thereto contained in the
Prospectus and will be in substantially the form filed or incorporated
by reference, as the case may be, as an exhibit to the Registration
Statement.
(19) Absence of Defaults and Conflicts. None of the Trust, the
Company or any of the Material Subsidiaries is in default or, with the
giving of notice or lapse of time, would be in default under any
indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Trust, the Company or
any of the Material Subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Trust, the Company or any of the Material Subsidiaries is subject
(each, an "Existing Instrument"), except for such defaults as could
not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(20) Noncontravention. The issuance of the Securities and the
execution, delivery and performance by the Company of the Operative
Agreements and any other agreement or instrument entered into or issued
or to be entered into or issued by the Trust and the Company, as
applicable, in connection with the transactions contemplated hereby or
thereby or in the Registration Statement and the Prospectus and the
consummation of the transactions contemplated herein and in the
Registration Statement and the Prospectus (including the use of the
proceeds as described under the caption "Use of Proceeds") and
compliance by the Company with its obligations hereunder and thereunder
(A) do not and
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will not result in any violation of the provisions of (i) the
Certificate of Incorporation or By-Laws or other constitutive documents
of the Company or any Material Subsidiary or (ii) the Trust Agreement
or certificate of trust of the Trust, (B) do not and will not conflict
with or result in a breach of, or constitute a default or Debt
Repayment Trigger Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
assets, properties or operations of the Trust, the Company or any of
the Material Subsidiaries pursuant to, or require the consent of any
other party to, any Existing Instrument, except for such conflicts,
breaches, defaults, liens (other than liens created by or contemplated
in the Company's credit agreement(s) in effect), charges or
encumbrances or failure to obtain consent as could not, individually or
in the aggregate, result in a Material Adverse Effect and (C) do not
and will not result in any violation of any applicable law or statute
or any order, rule, regulation or judgment of any court or governmental
agency or body having jurisdiction over the Trust, the Company or any
of the Material Subsidiaries or any of their assets, properties or
operations which could result in a Material Adverse Effect. "Debt
Repayment Trigger Event" means any event or condition that gives, or
with the giving of notice or lapse of time would give, the holder of
any note, debenture or other evidence of indebtedness for borrowed
money in excess of $25,000,000 (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Trust, the Company or any
of the Material Subsidiaries.
(21) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, now pending, or to the knowledge of the
Trust or the Company threatened, against or affecting the Trust, the
Company or any of its subsidiaries which is required to be disclosed in
the Registration Statement and the Prospectus (other than as stated
therein), or which could reasonably be expected to result in a Material
Adverse Effect, or adversely effect the consummation of the
transactions contemplated under the Prospectus or the Operative
Agreements or the performance by the Trust or the Company of their
respective obligations hereunder and thereunder. The aggregate of all
pending legal or governmental proceedings to which the Trust, the
Company or any of its subsidiaries is a party or of which any of their
respective assets, properties or operations is the subject which are
not described in the Registration Statement and the Prospectus,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(22) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(23) Absence of Further Requirements. No consent, approval,
authorization, order, registration or qualification of or with any
court or governmental agency or body having jurisdiction over the
Trust, the Company or any of the Material Subsidiaries or any of their
respective assets, properties or operations is required for the
issuance and sale (as applicable) by the Trust and the Company of the
Securities, for the due authorization, execution and delivery by the
Trust or the Company of the Operative Agreements or for the performance
by the Trust or the Company of the transactions contemplated under the
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Prospectus or the Operative Agreements, except such as have been
already made, obtained or rendered, as applicable.
(24) Possession of Intellectual Property. Except as otherwise
disclosed in the Prospectus, the Company and each Material Subsidiary
own, lease, license or otherwise possess adequate trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now
operated by them. Neither the Company nor any of its Material
Subsidiaries has received any written notice of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property, which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
(25) Possession of Licenses and Permits. The Company and each
Material Subsidiary possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses") issued
by the appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct the business now operated by them,
except where the failure to possess Governmental Licenses could not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect. The Company and its Material Subsidiaries are
in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply could not, individually
or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. All of the Governmental Licenses are valid and in full
force and effect, except where the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any of its Material Subsidiaries has received any
written notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, individually or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, could reasonably be expected to result in a Material Adverse
Effect.
(26) Investment Company Act. Neither the Trust nor the Company
is, and upon the issuance and sale (as applicable) of the Securities as
herein contemplated and the application of the net proceeds therefrom
as described in the Prospectus neither the Trust nor the Company will
be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act").
(27) Environmental Laws. (i) Except as would not have or could
not reasonably be expected to result in a Material Adverse Effect, or
as is not otherwise disclosed in the Prospectus:
(A) each of the real properties owned by the Company or
any of its Material Subsidiaries (the "Real Properties") and
all operations at the Real Properties are in compliance with
all applicable Environmental Laws (as defined below), and
there is no violation of any Environmental Law with respect to
the Real Properties or the businesses operated by the Company
or any of its Material Subsidiaries (the "Businesses"), and
there are no conditions relating to the Businesses or Real
Properties that could be reasonably expected to give rise to
liability under any applicable Environmental Laws;
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(B) neither the Company nor any of its Material
Subsidiaries has received any written notice of, or inquiry
from any governmental authority regarding, any violation,
alleged violation, non-compliance, liability or potential
liability regarding Hazardous Materials (as defined below) or
compliance with Environmental Laws with regard to any of the
Real Properties or the Businesses, nor does the Company or any
of its Material Subsidiaries have knowledge or reason to
believe that any such notice is being threatened;
(C) Hazardous Materials have not been transported or
disposed of from the Real Properties, or generated, treated,
stored or disposed of at, on or under any of the Real
Properties or any other location, in each case by, or on
behalf or with the permission of, the Company or any of its
Material Subsidiaries;
(D) no judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the
Company, threatened, under any Environmental Law to which the
Company or any Material Subsidiary, is or, to the best
knowledge of the Company, will be named as a party, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental
Law with respect to the Company or any of its Material
Subsidiaries, the Real Properties or the Businesses;
(E) there has been no release or, to the best knowledge
of the Company or any Material Subsidiary, threat of release
of Hazardous Materials at or from the Real Properties, or
arising from or related to the operations (including, without
limitation, disposal) of the Company or any of its Material
Subsidiaries in connection with the Real Properties or
otherwise in connection with the Businesses, in violation of,
or in amounts or in a manner that could give rise to liability
under, Environmental Laws;
(F) none of the Real Properties contains, or has
previously contained, any Hazardous Materials at, on or under
the Real Properties in amounts or concentrations that, if
released, constitute or constituted a violation of, or would
give rise to liability under, Environmental Laws; and
(G) neither the Company nor any of its Material
Subsidiaries has assumed any liability of any Person (other
than the Company or one of its Material Subsidiaries) under
any Environmental Law.
(ii) The Company has adopted reasonable procedures that are
designed to (A) ensure that for the Company and each of its Material
Subsidiaries, each of their respective operations and each of the
properties owned or leased by each such entity remains in compliance
with applicable Environmental Laws, to the extent that the failure to
comply with such Environmental Laws would result in or could be
reasonably expected to result in a Material Adverse Effect and (B)
manage, to the same extent as and in accordance with the practices of
companies engaged in the same or a similar business, any liabilities or
potential liabilities that each such entity, any of its respective
operations and each of
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the properties owned or leased by such entity may have under applicable
Environmental Laws,
"Environmental Laws" shall mean any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental restrictions relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without limitation, ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"Hazardous Materials" shall mean any substance, material or waste
defined or regulated in or under any Environmental Laws.
(b) Officers' Certificates. Any certificate signed by any Trustee of
the Trust or any officer of the Company or any of its subsidiaries and delivered
to any Underwriter or to counsel for the Underwriters in connection with the
offering of the Preferred Securities shall be deemed a representation and
warranty by the Trust or the Company, as applicable, to each Underwriter as to
the matters covered thereby on the date of such certificate and, unless
subsequently amended or supplemented, at each Representation Date subsequent
thereto.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Preferred Securities. On the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the Trust agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Trust, at the initial public offering price per
security set forth in Schedule C, the number of Initial Preferred Securities set
forth in Schedule A opposite the name of such Underwriter, plus any additional
number of Initial Preferred Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
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(b) Option Preferred Securities. On the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the Trust hereby grants an option to the
Underwriters, severally and not jointly, to purchase 500,000 additional
Preferred Securities (the "Option Preferred Securities") at a price per Option
Preferred Security equal to the price per Initial Preferred Security. Such
option will expire 30 days after the date of this Underwriting Agreement and may
be exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Initial Preferred Securities upon notice by Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") to the Trust setting forth
the number of Option Preferred Securities as to which the several Underwriters
are then exercising the option and the time, date and place of payment and
delivery for such Option Preferred Securities. Any such time and date of payment
and delivery (each, a "Date of Delivery") shall be determined by Merrill Lynch
and the Trust, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, unless
otherwise agreed upon by Merrill Lynch and the Trust. If the option is exercised
as to all or any portion of the Option Preferred Securities, each of the
Underwriters, severally and not jointly, will purchase that proportion of the
total number of Option Preferred Securities then being purchased which the
number of Initial Preferred Securities each such Underwriter has severally
agreed to purchase bears to the total number of Initial Preferred Securities,
subject to such adjustments as Merrill Lynch in its discretion shall make to
eliminate any sales or purchases of a fractional number of Option Preferred
Securities.
(c) Payment. Payment of the purchase price for, and delivery of, the
Initial Preferred Securities shall be made at the offices of Ballard Spahr
Andrews & Ingersoll, LLP, or at such other place as shall be agreed upon by
Merrill Lynch and the Trust, at 10:00 A.M. (Eastern time) on the third (fourth,
if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business
day after the date of this Underwriting Agreement (unless postponed in
accordance with the provisions of Section 10 hereof), or such other time not
later than ten business days after such date as shall be agreed upon by Merrill
Lynch and the Trust (such time and date of payment and delivery being herein
called the "Closing Time"). In addition, in the event that the Underwriters have
exercised their option to purchase any or all of the Option Preferred
Securities, payment of the purchase price for, and delivery of such Option
Preferred Securities, shall be made at the above-mentioned offices of Ballard
Spahr Andrews & Ingersoll, LLP, or at such other place as shall be agreed upon
by Merrill Lynch and the Trust, on the relevant Date of Delivery as specified in
the notice from Merrill Lynch to the Trust.
Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Trust, against delivery to
Merrill Lynch for the respective accounts of the Underwriters of the Preferred
Securities to be purchased by them. It is understood that each Underwriter has
authorized Merrill Lynch, for its account, to accept delivery of, receipt for,
and make payment of the purchase price for, the Preferred Securities which it
has severally agreed to purchase. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Preferred Securities to be purchased by
any Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
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(d) Denominations; Registration. The Preferred Securities shall be in
such denominations and registered in such names as Merrill Lynch may request in
writing at least one full business day prior to the Closing Time or the relevant
Date of Delivery, as the case may be. The Preferred Securities will be made
available for examination and, if applicable, packaging by Merrill Lynch in The
City of New York not later than 9:00 A.M. (Eastern time) on the business day
prior to the Closing Time or the relevant Date of Delivery, as the case may be.
(e) Compensation. As compensation to the Underwriters for their
commitments hereunder and in view of the fact that the proceeds of the sale of
the Preferred Securities will be used to purchase Debt Securities of the
Company, the Company hereby agrees to pay at the Closing Time or the relevant
Date of Delivery, as the case may be, to Merrill Lynch, for the respective
accounts of the Underwriters, in immediately available funds, a commission per
Preferred Security to be delivered by the Trust at the Closing Time or the
relevant Date of Delivery, as the case may be, as is specified in Schedule C
hereto.
(f) Appointment of Qualified Independent Underwriter. The Trust and the
Company hereby confirm their engagement of Merrill Lynch as, and Merrill Lynch
hereby confirms their agreement with the Trust and the Company to render
services as, a "qualified independent underwriter" within the meaning of Rule
2720 of the Conduct Rules of the National Association of Securities Dealers,
Inc. (the "NASD") with respect to the offering and sale of the Preferred
Securities. Merrill Lynch, solely in its capacity as qualified independent
underwriter and not otherwise, is referred to herein as the "Independent
Underwriter".
SECTION 3. Covenants. The Trust and the Company covenant with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Trust and the Company, subject to Section 3(b), will comply with the
requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the
1933 Act Regulations, if and as applicable, and will notify Merrill Lynch
immediately, and confirm the notice in writing, of (i) the effectiveness of any
post-effective amendment to the Registration Statement or the filing of any
supplement or amendment to the Prospectus, (ii) the receipt of any comments from
the Commission, (iii) any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Trust and the Company will promptly effect the filings
necessary pursuant to Rule 424 and will take such steps as they deem necessary
to ascertain promptly whether the Prospectus transmitted for filing under Rule
424 was received for filing by the Commission and, in the event that it was not,
they will promptly file the Prospectus. The Trust and the Company will use their
best efforts to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
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<PAGE> 15
(b) Filing of Amendments. The Trust and the Company will give Merrill
Lynch notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b) of the 1933 Act
Regulations) or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or to the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will
furnish Merrill Lynch with copies of any such document that could reasonably
relate to an investment decision for the Preferred Securities a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which Merrill Lynch or counsel for the
Underwriters shall reasonably object in writing within 3 days of receipt
thereof.
(c) Delivery of Registration Statements. The Trust and the Company have
furnished or will deliver to Merrill Lynch and counsel for the Underwriters,
without charge, a signed copy of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to be
incorporated by reference therein) and a signed copy of all consents and
certificates of experts, and will also deliver to Merrill Lynch, without charge,
a conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to any electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
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<PAGE> 16
(d) Delivery of Prospectuses. The Trust and the Company will deliver to
each Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter may reasonably request, and the Trust and the Company hereby
consent to the use of such copies for purposes permitted by the 1933 Act. The
Trust and the Company will furnish to each Underwriter, without charge, during
the period when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, such number of copies of the Prospectus as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Trust and the
Company will comply with the 1933 Act and the 1933 Act Regulations and the 1934
Act and the 1934 Act Regulations so as to permit the completion of the
distribution of the Preferred Securities as contemplated in this Underwriting
Agreement and in the Registration Statement and the Prospectus. If at any time
when the Prospectus is required by the 1933 Act or the 1934 Act to be delivered
in connection with sales of the Securities, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel for
the Underwriters or for the Company, to amend the Registration Statement in
order that the Registration Statement will not contain an 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 or to amend or
supplement the Prospectus in order that the Prospectus will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Trust and the Company will promptly prepare and file with the Commission,
subject to Section 3(b), at the expense of the Company, such amendment or
supplement as may be necessary to correct such statement or omission or to make
the Registration Statement or the Prospectus comply with such requirements, and
the Trust and the Company will furnish to the Underwriters, without charge, such
number of copies of such amendment or supplement as such Underwriters may
reasonably request.
(f) Earnings Statement. The Trust (to the extent applicable) and the
Company will timely file such reports pursuant to the 1934 Act as are necessary
in order to make generally available to their securityholders as soon as
practicable an earnings statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(g) DTC. The Trust and the Company will cooperate with the Underwriters
and use their best efforts to permit the Preferred Securities to be eligible for
clearance and settlement through the facilities of The Depository Trust Company.
(h) Use of Proceeds. The Trust and the Company will use the proceeds
referred to in the Prospectus under "Use of Proceeds" in the manner described
therein.
(i) Listing. The Trust and the Company will use their best efforts to
have the Preferred Securities approved for listing, subject only to official
notice of issuance on the New York Stock Exchange, and will provide such
official notice when notified by Merrill Lynch.
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(j) Restriction on Sale of Securities. For 30 days from the date of
this Underwriting Agreement, neither the Trust nor the Company will, without the
prior written consent of Merrill Lynch, directly or indirectly, issue, sell,
offer or contract to sell, grant any option for the sale of, or otherwise
dispose of, (i) preferred securities or any security convertible into or
exchangeable for preferred securities substantially similar to the Preferred
Securities or any guarantee of such preferred securities or (ii) junior debt
securities substantially similar to the Debt Securities, except for the
Securities issued pursuant to this Agreement and except with respect to any
required remarketing of $200 million of Redeemable Hybrid Income Overnight
Shares of Hercules Trust V initially sold on November 12, 1998.
(k) Reporting Requirements. The Trust and the Company, during the
period when the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and
the 1934 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of the obligations of the Trust and the Company under this
Underwriting Agreement, including (i) the preparation, printing and filing of
the Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Underwriting Agreement, any Agreement
among Underwriters, the Operative Agreements and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Preferred Securities, (iii) the preparation, issuance and delivery of the
Preferred Securities to the Underwriters, including any transfer taxes and any
stamp or other duties payable upon the sale, issuance or delivery of the
Preferred Securities to the Underwriters, (iv) the fees and disbursements of the
counsel, accountants and other advisors or agents (including transfer agents and
registrars) to the Trust and the Company, as well as the fees and disbursements
of the Trustees, the Guarantee Trustee and the Debt Securities Trustee and their
respective counsel, (v) the printing and delivery to the Underwriters of copies
of each preliminary prospectus, and the Prospectus and any amendments or
supplements thereto, (vi) the fees charged by nationally recognized statistical
rating organizations for the rating of the Preferred Securities, (vii) the fees
and expenses incurred with respect to the listing of the Preferred Securities on
the New York Stock Exchange, (viii) the fees and expenses of the Independent
Underwriter, as applicable, and (ix) the cost of making the Preferred Securities
eligible for clearance and settlement through the facilities of The Depository
Trust Company.
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(b) Termination of Agreement. If this Underwriting Agreement is
terminated by Merrill Lynch in accordance with the provisions of Section 5 or
Section 9(a)(i) hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Preferred Securities pursuant to
this Underwriting Agreement are subject to the accuracy of the representations
and warranties of the Trust and the Company contained in Section 1 hereof or in
certificates of any Trustees of the Trust or any officer of the Company or any
of its subsidiaries delivered pursuant to the provisions hereof, to the
performance by the Trust and the Company of their covenants and other
obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act and no
proceedings for that purpose shall have been instituted or be pending or
threatened by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters. A prospectus containing information
relating to the description of the Preferred Securities, the specific method of
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b).
(b) Opinions of Counsel for Company. At Closing Time, the Underwriters
shall have received an opinion, dated as of Closing Time, of (i) Israel J.
Floyd, Assistant General Counsel of the Company, (ii) Ballard Spahr Andrews &
Ingersoll, LLP, counsel for the Company, and (iii) Richards, Layton & Finger
LLP, counsel for the Trust, each in form and substance satisfactory to the
Underwriters, to the effect set forth in Exhibits A, B and C hereto and to such
further effect as counsel to the Underwriters may reasonably request. Mr. Floyd
may rely upon the opinion of Ballard Spahr Andrews & Ingersoll, LLP, as to
matters of law involving the Internal Revenue Code of 1986, as to the laws of
the State of New York and as to federal securities laws, to the extent covered
by such counsel in their opinion.
(c) Opinion of Special Tax Counsel for the Trust and the Company. At
Closing Time, the Company, the Trust and Underwriters shall have received an
opinion, dated as of Closing Time, of Ballard Spahr Andrews & Ingersoll, LLP,
special tax counsel to the Trust and the Company, that (i) the Debt Securities
will be classified for United States federal income tax purposes as indebtedness
of the Company, (ii) the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation and (iii) although the discussion set forth in the Prospectus under
the heading "Certain Federal Income Tax Consequences" does not purport to
discuss all possible United States federal income tax consequences of the
purchase, ownership and disposition of the Preferred Securities, such discussion
constitutes, in all material respects, a fair and accurate summary of the United
States federal income tax consequences of the purchase, ownership and
disposition of the Preferred Securities under current law. Such opinion may be
conditioned on, among other things, the initial and continuing accuracy of the
facts, financial and other information, covenants and representations set forth
in certificates of officers of the Company and other documents deemed necessary
for such opinion.
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<PAGE> 19
(d) Opinion of Counsel for The Chase Manhattan Bank. At Closing Time,
the Underwriters shall have received an opinion, dated as of Closing Time, of
Morgan, Lewis & Bockius LLP, counsel to The Chase Manhattan Bank, as Property
Trustee, Guarantee Trustee and Debt Securities Trustee, in form and substance
satisfactory to the Underwriters.
(e) Opinion of Counsel for Underwriters. At Closing Time, the
Underwriters shall have received an opinion, dated as of Closing Time, of Brown
& Wood LLP, counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters, in form and substance
satisfactory to the Underwriters. Such counsel may state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company, of Trustees of the Trust
and of public officials.
(f) Officers' Certificate. At Closing Time, there shall not have been,
since the date of this Underwriting Agreement or since the respective dates as
of which information is given in the Prospectus, any material adverse change, or
any development that could reasonably be expected to result in a material
adverse change, in the condition, financial or otherwise, or in or affecting the
earnings, business or operations of the Trust or the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Underwriters shall have received a
certificate of the Chief Executive Officer, the President or a Vice President of
the Company and the chief financial officer or chief accounting officer of the
Company and of an Administrative Trustee of the Trust, dated as of Closing Time,
to the effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) are true and correct with the
same force and effect as though expressly made at and as of the Closing Time,
(iii) the Trust or the Company, as applicable, has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
have been instituted, are pending or, to the best of such officer's or
Administrative Trustee's knowledge, are threatened by the Commission.
(g) Accountant's Comfort Letters. At the time of the execution of this
Underwriting Agreement, the Underwriters shall have received from
PricewaterhouseCoopers and Ernst & Young LLP letters, each dated such date, in
form and substance satisfactory to the Underwriters, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and financial information
contained in the Registration Statement and the Prospectus.
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(h) Bring-down Comfort Letter. At Closing Time, the Underwriters shall
have received from PricewaterhouseCoopers a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (g) of this Section 5, except that the specified date
referred to shall be a date not more than three business days prior to the
Closing Time.
(i) Ratings. At Closing Time and at any relevant Date of Delivery, the
Preferred Securities shall be rated BB by Standard & Poor's Ratings Services and
Ba2 by Moody's Investors Service, Inc. and the Company shall have delivered to
the Underwriters a letter, dated as of such date, from each such rating
organization, or other evidence satisfactory to the Underwriters, confirming
that the Preferred Securities have such ratings. Since the time of execution of
this Underwriting Agreement, there shall not have occurred a downgrading in, or
withdrawal of, the rating assigned to the Preferred Securities or any of the
Company's other securities by any such rating organization, and no such rating
organization shall have publicly announced that it has under surveillance or
review its rating of the Preferred Securities or any of the Company's other
securities.
(j) Approval of Listing. At Closing Time, the Preferred Securities
shall have been approved for listing, subject only to official notice of
issuance, on the New York Stock Exchange.
(k) Over-Allotment Option. In the event that the Underwriters exercise
their option to purchase all or any portion of the Option Preferred Securities,
the representations and warranties of the Trust and the Company contained herein
and the statements in any certificates furnished by the Trust or the Company or
any of its subsidiaries hereunder shall be true and correct as of each Date of
Delivery, and, at the relevant Date of Delivery, Merrill Lynch shall have
received:
(1) A certificate, dated such Date of Delivery, of the Chief
Executive Officer, the President or a Vice President of the Company and
the chief financial officer or chief accounting officer of the Company
and of an Administrative Trustee of the Trust, confirming that the
certificates delivered at the Closing Time pursuant to Section 5(f)
hereof remains true and correct as of such Date of Delivery.
(2) The opinion of (i) Israel J. Floyd, Assistant General
Counsel of the Company, (ii) Ballard Spahr Andrews & Ingersoll, LLP,
counsel for the Company and (iii) Richards, Layton & Finger LLP,
counsel to the Trust, each in form and substance satisfactory to the
Underwriters, dated such Date of Delivery, relating to the Option
Preferred Securities and otherwise to the same effect as the opinions
required by Section 5(b) hereof.
(3) The opinion of Ballard Spahr Andrews & Ingersoll, LLP,
special tax counsel to the Trust and the Company, in form and substance
satisfactory to the Underwriters, dated such Date of Delivery, relating
to the Option Preferred Securities and otherwise to the same effect as
the opinions required by Section 5(c) hereof.
(4) The opinion of Brown & Wood LLP, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Preferred Securities and otherwise to the same effect as the opinion
required by Section 5(e) hereof.
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(5) A letter from PricewaterhouseCoopers, in form and
substance satisfactory to the Underwriters and dated such Date of
Delivery, substantially in the same form and substance as the letter
furnished to the Underwriters pursuant to Section 5(g) hereof, except
that the "specified date" on the letter furnished pursuant to this
paragraph shall be a date not more than three business days prior to
such Date of Delivery.
(6) Since the time of execution of this Underwriting
Agreement, there shall not have occurred a downgrading in, or
withdrawal of, the rating assigned to the Preferred Securities or any
of the Company's other securities by any nationally recognized
statistical rating organization, and no such rating organization shall
have publicly announced that it has under surveillance or review its
rating of the Preferred Securities or any of the Company's other
securities.
(l) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may reasonably require for the purpose of enabling them to pass
upon the issuance and sale (as applicable) of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Trust and the Company in connection with the
issuance and sale (as applicable) of the Securities as herein contemplated shall
be satisfactory in form and substance to the Underwriters.
(m) Termination of Agreement. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be fulfilled,
this Underwriting Agreement (or, with respect to the Underwriters' exercise of
the over-allotment option for the purchase of Option Preferred Securities on a
Date of Delivery after the Closing Time, the obligations of the Underwriters to
purchase the Option Preferred Securities on such Date of Delivery) may be
terminated by the Representatives by notice to the Trust at any time at or prior
to the Closing Time (or such Date of Delivery, as applicable), and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.
21
<PAGE> 22
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Trust and the Company, jointly
and severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act from and against any
and all losses, claims, damages and liabilities (including, without limitation,
the reasonable legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted in respect thereof), as
incurred, to which such Underwriter or controlling person may be subject,
insofar as such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereto or the omission
or alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus, the Prospectus as amended or
supplemented or any amendment or supplement thereto, or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, neither the Trust nor the Company shall be liable
insofar as such losses, claims, damages or liabilities arise out of or are based
upon an untrue statement or omission or alleged untrue statement or omission
made in any preliminary prospectus or in the Registration Statement or any
amendment thereto, the Prospectus, the Prospectus as amended or supplemented or
any amendment or supplement thereto in reliance upon and in conformity with
information furnished to the Trust and the Company in writing by any Underwriter
through the Representatives expressly for use therein; and provided, further,
that neither the Trust nor the Company shall be liable to any Underwriter or any
person controlling such Underwriter under the indemnity agreement provided for
in this Section 6 with respect to a preliminary prospectus to the extent that
any such loss, claim, damage or liability of such Underwriter or controlling
person results solely from the fact that such Underwriter sold Preferred
Securities to a person to whom there was not sent or given, if required by law
so to have been delivered, with or prior to the delivery of the written
confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or the Prospectus as then amended or supplemented
(excluding documents incorporated by reference), whichever is most recent, if
(A) the Trust and the Company have previously furnished copies thereof to such
Underwriter a reasonable amount of time in advance of such confirmation and (B)
the applicable untrue or alleged untrue statement or omission was corrected
therein.
In addition to, and without limitation of, the joint and several
obligation of the Trust and the Company to indemnify Merrill Lynch as an
Underwriter, the Trust and the Company, jointly and severally, also agree to
indemnify and hold harmless the Independent Underwriter and each person, if any,
who controls the Independent Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, from and against any and all loss,
liability, claim, damage and expense, as incurred, incurred as a result of the
Independent Underwriter's participation as a "qualified independent underwriter"
within the meaning of Rule 2720 of the Conduct Rules of the NASD in connection
with the offering of the Preferred Securities.
(b) Indemnification of Company, Directors and Officers and the Trust
and Trustees. Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, the Trust, the Trustees
22
<PAGE> 23
and each person, if any, who controls the Company or the Trust within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, the reasonable legal fees and other expenses reasonably incurred in
connection with any suit, action or proceeding or any claim asserted in respect
thereof), as incurred, to which the Company or the Trust may become subject,
insofar as such losses, claims, damages or liabilities arise out of or are based
upon untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement or any amendment thereto, any preliminary
prospectus or the Prospectus, the Prospectus as amended or supplemented or any
amendment or supplement thereto in reliance upon and in conformity with
information furnished to the Trust and the Company in writing by such
Underwriter through the Representatives expressly for use therein.
(c) Actions against Parties; Notification. 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 (the "Indemnified Person") pursuant to either of
subsections (a) or (b) above, such Indemnified Person shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Person") in
writing (in such detail as may be available to such Indemnified Person). In no
case shall an Indemnifying Person be liable under this Section 6 with respect to
any claim made against an Indemnified Person unless such Indemnifying Person
shall be notified in writing of the nature of the claim within a reasonable time
after the Indemnified Person is aware of such claim thereof, but failure so to
notify such Indemnifying Person shall not relieve it from any liability which it
may have otherwise than on account of this Section 6. Upon such notice, the
Indemnifying Person shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other Indemnifying Person similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Person, and after notice from the Indemnifying Person to such
Indemnified Person of its election so to assume the defense thereof, the
Indemnifying Person shall not be liable to such Indemnified Person for any legal
or other expenses subsequently incurred by such Indemnified Person in connection
with the defense thereof other than reasonable costs of investigation or as
provided in the next succeeding paragraph. Each Indemnified Person shall assist
the Indemnifying Person in any defense undertaken pursuant to this Section 6 by
providing such assistance and cooperation (including, without limitation,
witness and documentary or other information) as may be reasonably requested by
the Indemnifying Person in connection with such defense, provided that all
reasonable costs and expenses of such assistance and cooperation shall be borne
by the Indemnifying Person.
Notwithstanding anything to the contrary herein contained, 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 the applicable suit, action, proceeding,
claim or demand (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 or defenses available to them. It is understood that the
Indemnifying Person shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) retained by the
Indemnified Persons in accordance with the preceding
23
<PAGE> 24
sentence, and that all such fees and expenses, to the extent they are
reasonable, shall be reimbursed as they are incurred, subject to the provisions
of the succeeding paragraph. Any such separate firm for the Underwriters and
controlling persons of the Underwriters shall be designated in writing by
Merrill Lynch and any such separate firm for the Company, its directors, its
officers who sign the Registration Statement, the Trust, the Trustees and
controlling persons of the Company or the Trust shall be designated in writing
by the Company.
Notwithstanding anything to the contrary contained herein, if indemnity
is sought pursuant to the second paragraph of Section 6(a), then, in addition to
the fees and expenses of counsel for the Indemnified Persons, the Indemnifying
Person shall be not liable for the fees and expenses of more than one firm (in
addition to any local counsel) separate from its own counsel and that of the
other Indemnified Persons for the Independent Underwriter in its capacity as a
"qualified independent underwriter" and all persons, if any, who control the
Independent Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of 1934 Act in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances if, in the reasonable judgment of the Independent
Underwriter, there may exist a conflict of interest between the Independent
Underwriter and the other Indemnified Persons. Any such separate counsel for the
Independent Underwriter and such control persons of the Independent Underwriter
shall be designated in writing by the Independent Underwriter.
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 any Indemnified Person, the
Indemnifying Person agrees to indemnify each 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 Party shall have requested
an Indemnifying Party to reimburse the Indemnified Party for fees and expenses
of counsel, the Indemnifying Party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such Indemnifying
Party of the aforesaid request and (ii) such Indemnifying Party shall not have
reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement. Notwithstanding the immediately preceding 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, an
Indemnifying Person shall not be liable for any settlement referred to in such
sentence effected without its consent if such Indemnifying Person (i) reimburses
such Indemnified Person in accordance with such request to the extent it
considers such request to be reasonable and (ii) provides written notice to the
Indemnified Person substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement
No Indemnifying Person shall, without the prior written consent of all
Indemnified Persons, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 (whether or not the Indemnified Persons are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each Indemnified Person from
all liability arising out of such litigation,
24
<PAGE> 25
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
SECTION 7. Contribution. If the indemnification provided for in Section
6 is unavailable or insufficient to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under Section 6, 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 Trust and the Company, on the one hand, and the Underwriters, on
the other hand, from the offering of the Preferred 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 Trust and the
Company, on the one hand, and the Underwriters, on the other hand, 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 Trust and the Company, on the one
hand, and the Underwriters, on the other hand, in connection with the offering
of the Preferred Securities shall be deemed to be in the same respective
proportions as the total proceeds from the offering of such Preferred Securities
(before deducting expenses) received by the Trust (net of the amount of the
total underwriting discount paid by the Company) and the total underwriting
discounts received by the Underwriters, in each case as set forth on the cover
page of the Prospectus, bear to the aggregate initial public offering price of
such Preferred Securities as set forth on such cover page.
The relative fault of the Trust and the Company, on the one hand, and
the Underwriters, on the other hand, 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 Trust or 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. With respect to any Underwriter,
such relative fault shall also be determined by reference to the extent (if any)
to which such losses, claims, damages or liabilities (or actions in respect
thereof) with respect to any preliminary prospectus result from the fact that
such Underwriter sold Preferred Securities to a person to whom there was not
sent or given, if required by law so to have been delivered, with or prior to
the delivery of the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) or of the Prospectus as then
amended or supplemented (excluding documents incorporated by reference) if (A)
the Company has previously furnished copies thereof to such Underwriter a
reasonable amount of time in advance of such confirmation and (B) the applicable
untrue or alleged untrue statement or omission was corrected therein.
The Trust, the Company and the Underwriters agree that Merrill Lynch
will not receive any additional benefits hereunder for serving as the
Independent Underwriter in connection with the offering and sale of the
Preferred Securities.
The Trust, 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
25
<PAGE> 26
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 two immediately preceding paragraphs. The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses 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 Preferred 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
any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, each Trustee and each person, if any, who controls the
Company or the Trust within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company and
the Trust. The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of the Initial Preferred
Securities set forth opposite their names in the Schedule A hereto, and not
joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Underwriting Agreement or in certificates of Trustees of the Trust or officers
of the Company or any of its subsidiaries submitted pursuant hereto shall remain
operative and in full force and effect for the period contemplated by the
applicable statute of limitations, regardless of any investigation made by or on
behalf of any Underwriter or controlling person, or by or on behalf of the Trust
or the Company, and shall survive delivery of and payment for the Preferred
Securities.
SECTION 9. Termination.
(a) Termination. The Representatives may terminate this Underwriting
Agreement, by notice to the Trust and the Company, at any time at or prior to
the Closing Time or any relevant Date of Delivery, if (i) there has been, since
the time of execution of this Underwriting Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change, or any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or in or
affecting the earnings, business or operations of the Trust or the Company and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) there has occurred any material adverse
change in the financial markets in the United States or any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change in
national or international political, financial or economic conditions, in each
case the effect of which is such
26
<PAGE> 27
as to make it, in the judgment of the Representatives, impracticable to market
the Preferred Securities or to enforce contracts for the sale of the Preferred
Securities, or (iii) trading in any securities of the Trust or the Company has
been suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the New York Stock Exchange or the American
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by either of said exchanges or by such
system or by order of the Commission, the NASD or any other governmental
authority, or (iv) a banking moratorium has been declared by either Federal or
New York authorities.
(b) Liabilities. If this Underwriting Agreement is terminated pursuant
to this Section 9, such termination shall be without liability of any party to
any other party except as provided in Section 4 hereof, and provided further
that Sections 1, 6, 7 and 8 shall survive such termination and remain in full
force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time or the relevant Date of
Delivery, as the case may be, to purchase the Preferred Securities which it or
they are obligated to purchase under this Underwriting Agreement (the "Defaulted
Securities"), then Merrill Lynch shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, Merrill Lynch shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Preferred Securities to be purchased on such date
pursuant to this Underwriting Agreement, the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase
the full amount thereof in the proportions that their respective
underwriting obligations under this Underwriting Agreement bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Preferred Securities to be purchased on such date pursuant to
this Underwriting Agreement, this Underwriting Agreement (or, with
respect to the Underwriters' exercise of the over-allotment option for
the purchase of Option Preferred Securities on a Date of Delivery after
the Closing Time, the obligations of the Underwriters to purchase, and
the Company to sell, such Option Preferred Securities on such Date of
Delivery) shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in (i) a
termination of this Underwriting Agreement or (ii) in the case of a Date of
Delivery after the Closing Time, a termination of the obligations of the
Underwriters and the Company with respect to the related Option Preferred
Securities, as the case may be, either Merrill Lynch or the Company shall have
the right to postpone the Closing Time or the relevant Date of Delivery, as the
case may be, for a
27
<PAGE> 28
period not exceeding seven days in order to effect any required changes in the
Registration Statement or the Prospectus or in any other documents or
arrangements.
SECTION 11. Notices. 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 directed to Merrill Lynch at World Financial Center, North
Tower, attention of Paul Collins, Managing Director, with a copy to Edward F.
Petrosky, Esq., Brown & Wood LLP, One World Trade Center, New York, New York
10281; and notices to the Trust and the Company shall be directed to it at
Hercules Incorporated, Hercules Plaza, 1313 North Market Street, Wilmington,
Delaware 19894-0001, attention of Israel J. Floyd, Esq., with a copy to Justin
P. Klein, Esq., Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, 51st
Floor, Philadelphia, Pennsylvania 19103.
SECTION 12. Parties. This Underwriting Agreement shall each inure to
the benefit of and be binding upon the Trust, the Company, the Underwriters and
their respective successors. Nothing expressed or mentioned in this Underwriting
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Trust and the Company and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this
Underwriting Agreement or any provision herein contained. This Underwriting
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Preferred Securities from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
28
<PAGE> 29
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust and the Company a counterpart
hereof, whereupon this Underwriting Agreement, along with all counterparts, will
become a binding agreement among the Underwriters and the Trust and the Company
in accordance with its terms.
Very truly yours,
HERCULES TRUST I
By: /s/ Stuart C. Shears
-----------------------------
Name: Stuart C. Shears
Administrative Trustee
HERCULES INCORPORATED
By: /s/ George MacKenzie
------------------------------
Name: George MacKenzie
Title: Senior Vice President
and Chief Financial
Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
A.G. EDWARDS & SONS, INC.
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY INC.
as Representatives of the several Underwriters
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Gregory P. Kelly
-------------------------------------
Authorized Signatory
On behalf of itself and the other several
Underwriters
29
<PAGE> 30
Schedule A
<TABLE>
<CAPTION>
Number of
Initial
Preferred
Underwriter Securities
----------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................. 1,505,000
A.G. Edwards & Sons, Inc............................................. 1,505,000
Morgan Stanley & Co. Incorporated.................................... 1,505,000
PaineWebber Incorporated............................................. 1,505,000
Prudential Securities Incorporated................................... 1,505,000
Salomon Smith Barney Inc............................................. 1,505,000
Chase Securities Inc................................................. 280,000
J.P. Morgan Securities Inc........................................... 280,000
NationsBanc Montgomery Securities LLC................................ 280,000
Warburg Dillon Read LLC.............................................. 280,000
ABN AMRO Incorporated................................................ 140,000
BT Alex. Brown Incorporated.......................................... 140,000
Robert W. Baird & Co. Incorporated................................... 140,000
Bear, Stearns & Co. Inc.............................................. 140,000
CIBC Oppenheimer Corp................................................ 140,000
Dain Rauscher Incorporated........................................... 140,000
Donaldson, Lufkin & Jenrette Securities Corporation.................. 140,000
EVEREN Securities, Inc............................................... 140,000
Fleet Securities, Inc................................................ 140,000
Goldman, Sachs & Co.................................................. 140,000
Legg Mason Wood Walker, Incorporated................................. 140,000
U.S. Bancorp Piper Jaffray Inc....................................... 140,000
Raymond James & Associates, Inc...................................... 140,000
SG Cowen Securities Corporation...................................... 140,000
Tucker Anthony Incorporated.......................................... 140,000
Advest, Inc.......................................................... 70,000
J.C. Bradford & Co................................................... 70,000
Craigie Incorporated................................................. 70,000
Crowell, Weedon & Co................................................. 70,000
Fahnestock & Co. Inc................................................. 70,000
Fidelity Capital Markets, A Division of National Financial Services Co 70,000
Fifth Third/ The Ohio Company........................................ 70,000
First Albany Corporation............................................. 70,000
Gibraltar Securities Co.............................................. 70,000
Gruntal & Co., L.L.C................................................. 70,000
Howe Barnes Investments, Inc......................................... 70,000
Wayne Hummer Investments LLC......................................... 70,000
Janney Montgomery Scott Inc.......................................... 70,000
</TABLE>
A-1
<PAGE> 31
<TABLE>
<CAPTION>
Number of
Initial
Preferred
Underwriter Securities
----------- ----------
<S> <C>
McDonald Investments Inc............................................. 70,000
Mesirow Financial, Inc............................................... 70,000
Morgan Keegan & Company, Inc......................................... 70,000
David A. Noyes & Company............................................. 70,000
Parker/Hunter Incorporated........................................... 70,000
The Robinson-Humphrey Company, LLC................................... 70,000
Roney Capital Markets, A Division of First Chicago
Capital Markets, Inc................................................. 70,000
Scott & Stringfellow, Inc............................................ 70,000
Stephens Inc......................................................... 70,000
Stifel, Nicolaus & Company, Incorporated............................. 70,000
Trilon International Inc............................................. 70,000
Utendahl Capital Partners, L.P....................................... 70,000
------
Total............................................. 14,000,000
==========
</TABLE>
A-2
<PAGE> 32
Schedule B
Material Subsidiaries
Hercules Credit, Inc.
Hercules Flavor, Inc.
WSP, Inc.
Aqualon Company
Hercules Finance Company
FiberVisions, L.L.C.
FiberVisions Incorporated
FiberVisions Products, Inc.
BetzDearborn Europe, Inc.
DRC, Ltd.
BL Technologies, Inc.
BLI Holdings, Inc.
BetzDearborn Paper Process Group, Inc.
BetzDearborn, Inc.
BetzDearborn Hydrocarbon Process Group, Inc.
Hercules Investments Global, Ltd.
Hercules Overseas Corporation
Hercules International Trade Corporation Limited
Hercules International Limited
Hercules Nederland BV
BetzDearborn Canada, Inc.
B-1
<PAGE> 33
Schedule C
<TABLE>
<S> <C>
Title: 9.42% Trust Originated Preferred Securities
Distribution rate: 9.42% per annum
Distribution payment dates: March 31, June 30, September 30 and December 31, commencing June 30, 1999
Liquidation amount: $25.00 per security, plus accumulated distributions, if any
Redemption provisions: Upon the occurrence of a Special Event before March 17, 2004 and
thereafter upon the maturity of the Debt Securities on March 31, 2029 or
earlier redemption thereof
Initial public offering price: $25.00 per security plus accumulated distributions, if any, from March 17,
1999
Purchase price: $25.00 per security plus accumulated distributions, if any, from March 17,
1999
Underwriter compensation: $.7875 per security
Form: Book-entry only
</TABLE>
C-1
<PAGE> 1
EXHIBIT 4.1
HERCULES INCORPORATED
Officers' Certificate
Pursuant to Sections 2.01 and 2.03 of Indenture
Hercules Trust I, a Delaware statutory business trust (the "Trust"),
has offered to the public in an underwritten offering $350,000,000 aggregate
liquidation amount of its 9.42% Trust Originated Preferred Securities (the
"Preferred Securities"), representing undivided beneficial interests in the
assets of the Trust and proposes to invest the proceeds from such offering,
together with the proceeds of the issuance and sale by the Trust to Hercules
Incorporated, a Delaware corporation (the "Company") of $10,824,750 aggregate
liquidation amount of its Common Securities (the "Common Securities" and,
together with the Preferred Securities, the "Trust Securities"), in $360,824,750
aggregate principal amount of the Subordinated Debentures referred to below
issued under the Junior Subordinated Debentures Indenture, dated as of March 17,
1999 (the "Indenture"), between the Company and The Chase Manhattan Bank, as
trustee (the "Trustee"). The Trust Securities will be issued pursuant to the
terms of an Amended and Restated Trust Agreement of the Trust, dated as of March
17, 1999 (the "Trust Agreement"), among the Administrative Trustees (as defined
therein), the Property Trustee (as defined therein) and the Delaware Trustee (as
defined therein), and the Company. Pursuant to the terms of the Underwriting
Agreement, dated as of March 12, 1999, by and among the Company, the Trust, and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, A.G.
Edwards & Sons, Inc., Morgan Stanley & Co. Incorporated, PaineWebber
Incorporated, Prudential Securities Incorporated and Salomon Smith Barney Inc.,
as representatives of the several underwriters (the "Underwriting Agreement"),
the underwriters have an option to purchase up to $12,500,000 aggregate
liquidation amount of additional Preferred Securities. Such over-allotment
option has been exercised in full and the aggregate liquidation amount of the
Preferred Securities will be $362,500,000, the aggregate liquidation amount of
the Common Securities will be $11,211,350 and the aggregate principal amount of
the Subordinated Debentures will be $373,711,350.
Capitalized terms used herein and not otherwise defined herein have the
meanings specified in the Indenture.
Pursuant to Section 2.01 and Section 2.03 of the Indenture, the
undersigned Chief Executive Officer and Assistant Treasurer of the Company
hereby certify on behalf of the Company as follows:
1. Authorization. The Board of Directors of the Company has approved
and authorized the establishment of a series of junior subordinated debentures
of the Company in accordance with the provisions of the Indenture pursuant to
resolutions adopted by the Board of Directors of the Company on February 3, 1993
(Standing Resolution for Empowered Persons), August 27, 1998 (and the related
Finance Committee Resolutions of the same date) and
<PAGE> 2
February 19, 1999 (and the Related Finance Committee Resolutions of the same
date). A copy of such resolutions has been delivered to the Trustee with the
Secretary's Certificate of the Company.
2. Compliance with Covenants and Conditions Precedent. The Company has
complied with all covenants and conditions precedent provided for in the
Indenture relating to the establishment of a series of junior subordinated
debentures thereunder.
3. Terms. The terms of the series of junior subordinated debentures
established pursuant to this Officers' Certificate shall be as follows:
(a) Title. The title of the series of Debentures is the 9.42%
Junior Subordinated Deferrable Interest Debentures due 2029 (the
"Subordinated Debentures").
(b) Aggregate Principal Amount. The aggregate principal amount
of the Subordinated Debentures which may be authenticated and delivered
under the Indenture (except for Subordinated Debentures authenticated
and delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Subordinated Debentures of the same series pursuant
to Section 2.07, 2.08 or 2.10 of the Indenture, or pursuant to the
terms of such Subordinated Debentures) is $373,711,350. Such amount
includes the $12,886,600 that is issuable upon exercise of the
over-allotment option on March 17, 1999, and described in the
introductory paragraph to this Officers' Certificate.
(c) Stated Maturity. The principal amount of the Subordinated
Debentures will be payable on March 31, 2029 (the "Maturity Date"),
subject to earlier redemption as set forth in paragraph (j) below. The
Subordinated Debentures will not be entitled to the benefit of any
sinking fund prior to maturity.
(d) Interest and Payment of Interest.
(i) Interest will be payable to the Person in whose
name a Subordinated Debenture is registered in the Register at
the close of business (whether or not a Business Day) on the
Regular Record Date with respect to the relevant Interest
Payment Date, except for interest payable on a Subordinated
Debenture surrendered for redemption as set forth in paragraph
(j) below.
(ii) The Subordinated Debentures will bear interest at the
rate of 9.42% per annum (the "Interest Rate"). Interest on the
Subordinated Debentures will be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, an
"Interest Payment Date"), commencing on June 30, 1999. In respect of
any Subordinated Debentures of which the Property Trustee is the
registered holder or any Subordinated Debentures which are in
book-entry only form, the Regular Record Date shall be one (1) Business
Day before the relevant Interest Payment Date. Notwithstanding the
foregoing sentence, if the Preferred Securities are no longer in
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<PAGE> 3
book-entry only form or if the Subordinated Debentures are no longer
held by the Property Trustee or in book-entry only form, the Regular
Record Date shall be the close of business on the 15th day of the
calendar month in which such Interest Payment Date occurs, whether or
not a Business Day. The Subordinated Debentures will bear interest from
March 17, 1999 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for until the principal thereof
is paid or made available for payment. Interest payments shall be the
amount of interest accrued from and including the most recent Interest
Payment Date in respect of which interest has been paid or duly
provided for (or from and including March 17, 1999, if no interest has
been paid or duly provided for with respect to such Subordinated
Debenture), to but excluding the next succeeding Interest Payment Date.
(iii) The amount of interest payable for any period
will be computed on the basis of a 360-day year of twelve
30-day months. The interest payable for any partial period
will be computed on the basis of the actual number of days
elapsed in such period. In the event that any date on which
interest is payable on the Subordinated Debentures is not a
Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with the
same force and effect as if made on such date.
(e) Additional Sums. If at any time while the Property Trustee
is the holder of any Subordinated Debentures, the Trust or the Property
Trustee is required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes
on payments made to holders of the Preferred Securities) imposed by the
United States, or any other taxing authority, then, in any such case,
the Company will pay additional amounts ("Additional Sums") on the
Subordinated Debentures as shall be required so that the net amounts
received and retained by the Trust and the Property Trustee after
paying such taxes, duties, assessments or other governmental charges
will be equal to the amounts the Trust and the Property Trustee would
have received had no such taxes, duties, assessments or other
governmental charges been imposed.
(f) Extension of Interest Payment Period.
(i) Right to Extend. The Company shall have the
right, at any time, and from time to time, during the term of
the Subordinated Debentures to extend the interest payment
period of such Subordinated Debentures for up to 20
consecutive quarterly periods (an "Extended Interest Payment
Period"), provided no Event of Default has occurred and is
continuing with respect to the Subordinated Debentures and
provided, further, that such Extended Interest Payment Period
must end on an Interest Payment Date and may not extend beyond
the Maturity Date or any Redemption Date. At the end of an
Extended
3
<PAGE> 4
Interest Payment Period, the Company shall pay all interest
then accrued and unpaid (together with interest thereon at the
rate specified for the Subordinated Debentures to the extent
that payment of such interest is enforceable under applicable
law). To the extent permitted by applicable law, interest, the
payment of which has been deferred because of the extension of
the Interest Payment Period pursuant to this paragraph, will
bear interest thereon at the Interest Rate for each quarterly
period of the Extended Interest Payment Period. At the end of
the Extended Interest Payment Period, the Company shall pay
all interest then accrued and unpaid on the Subordinated
Debentures including any Additional Sums which shall be
payable to the Holders of the Subordinated Debentures in whose
names the Subordinated Debentures are registered in the
Register on the first Regular Record Date after the end of the
Extended Interest Payment Period. Before the termination of
any Extended Interest Payment Period, the Company may shorten
or further extend such Extended Interest Payment Period,
provided, however, that such Extended Interest Payment Period,
together with all such previous further extensions thereof,
shall not exceed 20 consecutive quarterly periods. At the
termination of any Extended Interest Payment Period and upon
the payment of all accrued and unpaid interest and any
Additional Sums then due, the Company may elect a new Extended
Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof.
(ii) Notice of Extension.
(1) If the Property Trustee is the only
registered holder of the Subordinated Debentures at
the time the Company selects an Extended Interest
Payment Period, the Company shall give written notice
to both the Administrative Trustees and the Property
Trustee of its selection of such Extended Interest
Payment Period in accordance with the notice
provisions of Section 4.01 of the Indenture.
(2) If the Property Trustee is not the only
holder of the Subordinated Debentures at the time the
Company selects an Extended Interest Payment Period,
the Company shall give the holders of the
Subordinated Debenture's written notice of its
selection of such Extended Interest Payment Period in
accordance with the notice provisions of Section 4.01
of the Indenture.
(3) The quarterly period in which any notice
is given pursuant to paragraphs (1) or (2) of this
subparagraph (ii) shall be counted as one of the 20
quarterly periods permitted in the maximum Extended
Interest Payment Period permitted under this
paragraph (f).
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<PAGE> 5
(g) Issue Date. The issue date for the Subordinated Debentures
is March 17, 1999.
(h) Denominations. The Subordinated Debentures are issuable in
denominations of $25 and integral multiples thereof.
(i) Place of Payment; Registration of Transfer and Exchange;
Notices to Company. Payment of the principal of and interest on the
Subordinated Debentures will be made at the Capital Markets Fiduciary
Services office of the Trustee maintained for that purpose in
Philadelphia, Pennsylvania, or at any other office or agency designated
by the Company for such purpose in such coin or currency of the United
States of America as at the time of payment is legal tender for the
payment of public and private debts. Payment of interest on an Interest
Payment Date may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Register;
provided, however, that a Holder of the Subordinated Debentures shall
be entitled to receive payments of interest on the Subordinated
Debentures by wire transfer of immediately available funds if such
Holder owns at least $10,000,000 aggregate principal amount of the
Subordinated Debentures and if appropriate wire transfer instructions
have been received in writing by the Trustee not less than l5 days
prior to the applicable Interest Payment Date; and provided, further,
that so long as the registered Holder of any Subordinated Debentures is
the Property Trustee, the payment of the principal of and interest
(including Additional Sums, if any) on such Subordinated Debentures
held by the Property Trustee will be made at such place and to such
account as may be designated by the Property Trustee. The Subordinated
Debentures may be presented for exchange and registration of transfer
at the Corporate Trust Office of the Company in the Borough of
Manhattan, The City of New York, or at the office of any transfer agent
hereafter designated by the Company for such purpose. Notices and
demands to or upon the Company in respect of the Subordinated
Debentures and the Indenture may be served at Hercules Incorporated,
Hercules Plaza, 1313 North Market Street, Wilmington, Delaware,
19894-0001, Attention: Vice President and Treasurer.
(j) Redemption. The Subordinated Debentures are not entitled
to any mandatory redemption or sinking fund payments.
(i) Optional Redemption: The Subordinated Debentures
will be redeemable at the option of the Company, in whole or,
on or after March 17, 2004, in part, before their maturity:
(A) on one or more occasions any time on or after March 17,
2004; or (B) before March 17, 2004, upon the occurrence of a
Special Event (as defined below). If Hercules decides to
redeem Subordinated Debentures in these circumstances, the
redemption price of each Subordinated Debenture redeemed will
be equal to 100% of the principal amount of such Subordinated
Debenture plus accrued and unpaid interest on such
Subordinated Debenture to the date of redemption (the
"Redemption Price").
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<PAGE> 6
(ii) Special Event Redemption: If a Tax Event or an
Investment Company Event (each as defined below, and each a
"Special Event") shall occur before March 17, 2004, the
Company shall have the right to redeem the Subordinated
Debentures in whole, but not in part, within 90 days following
the occurrence of such Special Event, at the Redemption Price.
(A) "Investment Company Event" means that
the Administrative Trustees and the Company shall
have received an opinion of independent counsel
experienced in such matters under the Investment
Company Act of 1940, as amended to the effect that,
as a result of any amendment to, or change (including
any announced prospective change) in, the laws or
regulations thereunder of the United States, or as a
result of any official administrative pronouncement
or judicial decision interpreting or applying such
laws or regulations, which amendment or change is
effective or which pronouncement or decision is
announced on or after March 17, 1999, there is more
than an insubstantial risk that the Trust is or will
be considered an "Investment Company" which is
required to be registered under the Investment
Company Act and such risk cannot be and could not
have been avoided either (1) by dissolution of the
Trust and distribution of the Subordinated Debentures
to Holders in accordance with Section 8.1(a)(iii) of
the Trust Agreement or (2) by the Trust or the
Sponsor taking some ministerial action, such as
filing a form or making an election, or pursuing some
other similar reasonable measure that has no adverse
effect on the Trust, the Sponsor or the Holders.
(B) "Tax Event" means that the
Administrative Trustees and the Company shall have
received an opinion of independent counsel
experienced in such matters to the effect that, (1)
as a result of any amendment to, or change (including
any announced prospective change) in, the laws or any
regulations thereunder of the United States or as a
result of any official administrative pronouncement
or judicial decision interpreting or applying such
laws or regulations, which amendment or change is
effective or which pronouncement or decision is
announced on or after March 17, 1999, there is more
than an insubstantial risk that (x) the Trust is, or
will be within 90 days of the date of such opinion,
subject to United States Federal income tax with
respect to income received or accrued on the
Subordinated Debentures, (y) the interest payable by
the Company on the Subordinated Debentures is not, or
within 90 days of the date of such opinion will not
be, deductible by the Company, in whole or in part,
for United States Federal income tax purposes, or (z)
the Trust is, or will be within 90 days of the date
of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental
charges; and (2) such risk cannot be and could not
have been avoided either (a) by dissolution of the
Trust and distribution of the Subordinated Debentures
to
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<PAGE> 7
Holders in accordance with Section 8.1(a)(iii) of the
Trust Agreement or (b) by the Trust or the Sponsor
taking some ministerial action, such as filing a form
or making an election, or pursuing some other similar
reasonable measure that has no adverse effect on the
Trust, the Sponsor or the Holders.
(iii) Notice of any redemption will be mailed at
least 30 days but not more than 60 days before the Redemption
Date to each Holder of the Subordinated Debentures to be
redeemed. Unless the Company defaults in payment of the
Redemption Price, on and after the Redemption Date, interest
will cease to accrue on the Subordinated Debentures or
portions thereof called for redemption. If less than all of
the Subordinated Debentures are to be redeemed, the
Subordinated Debentures (or portions thereof) to be redeemed
shall be selected by the Trustee by such method as the Trustee
shall deem fair and appropriate, provided that if, at the time
of redemption, the Subordinated Debentures are registered as a
Global Debenture, the Depositary shall determine the principal
amount of such Subordinated Debentures held by each Holder to
be redeemed in accordance with its procedures.
(k) Form. Attached hereto as Exhibit A is a specimen form of
the Subordinated Debentures, including the Certificate of
Authentication. The terms of the Subordinated Debentures are specified
therein as well as in this Officers' Certificate.
(l) Registered Debentures in Book-Entry Form. The Subordinated
Debentures will be issuable and transferable in fully registered form,
without coupons, in denominations of $25 and integral multiples
thereof. The Subordinated Debentures may be issued in book-entry form
("Book-Entry Debentures") and represented by one or more global
Debentures (the "Global Debentures") in fully registered form, without
coupons. The initial Depository with respect to the Global Debentures
will be The Depository Trust Company, as Depository for the accounts of
its participants. So long as the Depository for a Global Debenture, or
its nominee, is the registered owner of the Global Debenture, the
Depositary or its nominee, as the case may be, will be considered the
sole owner or holder of the Subordinated Debentures in book-entry form
represented by such Global Debenture for all purposes under the
Indenture. Book-Entry Debentures will not be exchangeable for
Subordinated Debentures in definitive form ("Definitive Debentures")
except as provided in Section 2.11 of the Indenture.
(m) Limitation of Transactions. If Subordinated Debentures are
issued to the Trust or a trustee of the Trust and (i) there shall have
occurred any event that would constitute an Event of Default or (ii)
the Company shall be in default with respect of its payment or other
obligations under the Preferred Securities Guarantee Agreement, dated
as of March 17, 1999, between the Company and The Chase Manhattan Bank,
as Preferred Securities Guarantee Trustee, or (iii) the Company shall
have given notice of its election to defer payments of interest on the
Subordinated Debentures by extending the
7
<PAGE> 8
interest payment period as provided in paragraph (f), then the Company
will not (A) declare or pay any dividend on, or make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock, (B) make any payment
of principal of or premium, if any, or interest on, or repay,
repurchase or redeem any debt securities of the Company which rank pari
passu with or junior to the Subordinated Debentures or (C) make any
guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee
ranks pari passu with or junior to the Subordinated Debentures;
provided, that, none of the foregoing limitations apply to restrict the
Company's ability to take the certain permitted actions specified in
Section 4.02 of the Indenture.
(n) Agreement to Subordinate. The Company covenants and
agrees, and each Holder of Subordinated Debentures issued under the
Indenture by such Holder's acceptance thereof likewise covenants and
agrees, that all Subordinated Debentures shall be issued subject to the
provisions of Article 10 of the Indenture; and each Holder of a
Subordinated Debenture, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions.
(o) Register; Paying Agent. The Register for the Subordinated
Debentures will be initially maintained at the Capital Markets
Fiduciary Services office of the Trustee. The Company hereby appoints
the Trustee as the initial Paying Agent.
(p) Covenants as to the Trust. For so long as the Trust
Securities remain outstanding, the Company will (i) maintain 100%
direct or indirect ownership of the Common Securities of the Trust;
provided, however, that any permitted successor of the Company under
the Indenture may succeed to the Company's ownership of the Common
Securities, (ii) use its best efforts to cause the Trust (A) to remain
a statutory business trust, except in connection with a distribution of
Subordinated Debentures as provided in the Trust Agreement, the
redemption of all of the Trust Securities or certain mergers,
consolidations or amalgamations, each as permitted by the Trust
Agreement, (B) to continue to be treated as a grantor trust for United
States federal income tax purposes (C) to use its best efforts to cause
each Holder of the Trust Securities to be treated as owning an
undivided beneficial interest in the Subordinated Debentures and (D)
not to cause, as sponsor of the Trust, or to permit, as Holder of the
Common Securities, the dissolution, liquidation or winding-up of the
Trust, except as provided in the Trust Agreement.
(q) Listing on an Exchange. If the Subordinated Debentures are
to be issued as a Global Debenture in connection with the distribution
of the Subordinated Debentures to the Holders of the Preferred
Securities upon a Dissolution Event (as hereinafter defined), the
Company will use its best efforts to list such Subordinated Debentures
on the New York Stock Exchange or on such other exchange as the
Preferred Securities are then listed.
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<PAGE> 9
(r) Payment of Expenses. In connection with the offering, sale
and issuance of the Subordinated Debentures to the Property Trustee in
connection with the sale of the Trust Securities by the Trust, and the
operation of the Trust, the Company shall:
(i) pay all costs and expenses relating to the
offering, sale and issuance of the Subordinated Debentures,
including commissions to the underwriters payable pursuant to
the Underwriting Agreement dated March 12, 1999, among the
Company, the Trust and the underwriters named therein and
compensation of the Trustee under the Indenture in accordance
with the provisions of Section 7.06 of the Indenture;
(ii) pay all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to
the offering, sale and issuance of the Trust Securities
(including commissions to the underwriters in connection
therewith), the fees and expenses of the trustees of the
Trust, the costs and expenses relating to the operation of the
Trust; and
(iii) pay any and all taxes (other than United States
withholding taxes on payments made to holders of the Preferred
Securities) and all liabilities, costs and expenses with
respect to such taxes of the Trust.
(s) Dissolution Event. "Dissolution Event" means that as a
result of an election by the Company, the Trust is to be dissolved in
accordance with the Trust Agreement and the Subordinated Debentures
held by the Property Trustee are to be distributed to the Holders of
the Trust Securities pro rata in accordance with the Trust Agreement.
In connection with a Dissolution Event:
(i) Definitive Debentures may be presented to the
Trustee by the Property Trustee in exchange for a Global
Debenture in an aggregate principal amount equal to all
Definitive Debentures outstanding to be registered in the name
of the Depositary, or its nominee, and delivered by the
Trustee to the Depositary for crediting to the accounts of its
participants pursuant to the instructions of the
Administrative Trustees. The Company upon any such
presentation shall execute a Global Debenture in such
aggregate principal amount and deliver the same to the Trustee
for authentication and delivery in accordance with the
Indenture and this Officers' Certificate. Payments on the
Subordinated Debentures issued as a Global Debenture will be
made to the Depositary; and
(ii) if any Preferred Securities are held in non
book-entry certificated form, Definitive Debentures may be
presented to the Trustee by the Property Trustee and any
Preferred Security Certificate which represents Preferred
Securities other than Preferred Securities held by the
Depositary or its nominee ("Non Book-Entry Preferred
Securities") will be deemed to represent beneficial interests
in Subordinated Debentures presented to the Trustee by the
Property
9
<PAGE> 10
Trustee having an aggregate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Preferred Securities until
such Preferred Security Certificate is presented to the Registrar
for transfer or reissuance at which time such Preferred Security
Certificate will be canceled and a Subordinated Debenture registered
in the name of the Holder of the Preferred Security Certificate or
the transferee of the Holder of such Preferred Security Certificate
as the case may be, with an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Security Certificate
canceled will be executed by the Company and delivered to the
Trustee for authentication and delivery in accordance with the
Indenture and this Officers' Certificate. On issue of such
Subordinated Debentures, Subordinated Debentures with an equivalent
aggregate principal amount that were presented by the Property
Trustee to the Trustee will be deemed to have been canceled.
4. No Default. No Default or Event of Default has occurred and is
continuing.
Pursuant to Section 13.05 of the Indenture, we hereby state: that we
have read the covenants and conditions (and the definitions relating thereto) in
the Indenture with respect to the proposed action of the Trustee in
authenticating and delivering the Subordinated Debentures; that we have examined
such documents relating to the issuance of the Subordinated Debentures and have
made such other examination or investigation as is necessary to enable each of
us to express an informed opinion as to whether such covenants or conditions
have been complied with; and that in our opinion all such covenants and
conditions have been complied with.
[Signatures on the following page.]
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<PAGE> 11
IN WITNESS WHEREOF, the undersigned have hereunto signed this
certificate on behalf of the Company as of this 17th day of March, 1999.
By: /s/ R. Keith Elliott
----------------------------------------
Name: R. Keith Elliott
Title: Chief Executive Officer
By: /s/ Stuart C. Shears
----------------------------------------
Name: Stuart C. Shears
Title: Assistant Treasurer
<PAGE> 1
EXHIBIT 4.2
[FORM OF PREFERRED SECURITY CERTIFICATE]
THIS PREFERRED SECURITY IS A GLOBAL PREFERRED SECURITY WITHIN THE MEANING OF THE
TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") OR A NOMINEE OF THE DEPOSITORY. THIS
PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND NO TRANSFER OF THIS PREFERRED
SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Certificate Number PS- Number of Preferred Securities
---- ------------
CUSIP No. 427 097 209
Certificate Evidencing Preferred Securities
of
HERCULES TRUST I
9.42% Trust Originated Preferred SecuritiesSM
(liquidation amount $25 per Preferred Security)
HERCULES TRUST I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that CEDE & CO. (the
"Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated as the 9.42% Trust Originated Preferred Securities (liquidation
amount $25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer.
<PAGE> 2
The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Preferred Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Trust Agreement of the Trust dated as of March 17, 1999, as the same
may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of the Preferred Securities as set forth in Annex I to
the Trust Agreement. Capitalized terms used but not defined herein shall have
the respective meanings given them in the Trust Agreement. The Sponsor will
provide a copy of the Trust Agreement, the Preferred Securities Guarantee and
the Indenture to a Holder without charge upon written request to the Trust at
its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder and to the benefits of the
Preferred Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Subordinated Debentures as indebtedness and the
Preferred Securities as evidence of indirect beneficial ownership in the
Subordinated Debentures.
2
<PAGE> 3
IN WITNESS WHEREOF, the Trust has executed this certificate.
Dated:
HERCULES TRUST I
By:__________________________
Name: Stuart C. Shears
Title: Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Trust Agreement.
THE CHASE MANHATTAN BANK,
as Property Trustee
By: __________________________
Authorized Signatory
<PAGE> 4
[FORM OF REVERSE OF PREFERRED SECURITY]
Distributions on this Preferred Security will be payable at a rate per
annum of 9.42% (the "Distribution Rate") of the Liquidation Amount of $25 per
Preferred Security (the "Liquidation Amount"), such rate being the rate of
interest payable on the Subordinated Debentures to be held by the Property
Trustee. Distributions not paid when due will themselves accumulate
distributions at the annual rate of 9.42% (to the extent permitted by law). The
term "Distributions," as used herein, includes any such additional distributions
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Subordinated Debentures held by the Property
Trustee and to the extent the Property Trustee has funds on hand legally
available therefor.
Distributions on the Preferred Securities will be cumulative, will
accumulate from and including the most recent date on which Distributions have
been paid or, if no Distributions have been paid, from and including the date of
issuance, to but excluding the relevant Distribution Date (as defined below) or
any date fixed for redemption (a "Redemption Date"), and will be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each, a "Distribution Date"), commencing on June 30, 1999, except as
otherwise described below and in the Trust Agreement. The amount of
Distributions payable for any quarterly period shall be computed on the basis of
a 360-day year consisting of twelve 30-day months. The Distributions payable for
any partial period will be computed on the basis of the actual number of days
elapsed in such period. "Distribution Period" means the period from and
including the immediately preceding Distribution Date (or March 17, 1999, in the
case of the first Distribution Period) to but excluding the applicable
Distribution Date or Redemption Date. If a Distribution Date is not a Business
Day, then such Distribution will be made on the next succeeding Business Day,
except if such Business Day is in the next succeeding calendar year, such
Distribution will be made on the immediately preceding Business Day.
As long as no Event of Default has occurred and is continuing under the
Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Subordinated Debentures for a period not exceeding 20
consecutive periods (each, an "Extension Period"), provided that an Extension
Period must end on an interest payment date for the Subordinated Debentures and
may not extend beyond the stated maturity date or redemption date for the
Subordinated Debentures. As a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accumulate with additional distributions thereon (to the extent permitted by
law but not at a rate greater than the rate at which interest is then accruing
on the Subordinated Debentures) at the Distribution Rate then in effect
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions, may
not exceed 20 consecutive quarterly periods, must end on an interest payment
date for the Subordinated Debentures and may not extend beyond the stated
maturity date or redemption date of the Subordinated Debentures. At the end of
the Extension Period, all
4
<PAGE> 5
accumulated and unpaid Distributions (but only to the extent payments are made
in respect of the Subordinated Debentures held by the Property Trustee and to
the extent the Property Trustee has funds available therefor) will be payable to
the Holders as they appear on the books and records of the Trust on the record
date immediately preceding the end of the Extension Period. Upon the termination
of any Extension Period (or any extension thereof) and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements.
Subject to other conditions set forth in the Trust Agreement and the
Indenture, the Property Trustee may, at the direction of the Sponsor, dissolve
the Trust at any time and cause the Subordinated Debentures to be distributed to
the Holders of the Preferred Securities in liquidation of the Trust or,
simultaneously with any redemption of the Subordinated Debentures, cause a Like
Amount of the Preferred Securities to be redeemed by the Trust.
These Preferred Securities shall be redeemable as provided in the Trust
Agreement.
5
<PAGE> 6
_______________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________
________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _________________________________________________ agent
to transfer this Preferred Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date:_____________________
Signature: __________________________________________________
(Sign exactly as your name appears on the
other side of this Preferred Security Certificate)
Signature Guarantee(1):
(1) Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
6
<PAGE> 1
EXHIBIT 4.3
[FORM OF SUBORDINATED DEBENTURE]
[KEEP IF THIS BECOMES A GLOBAL DEBENTURE.] [THIS SUBORDINATED DEBENTURE IS A
GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") OR
A NOMINEE OF THE DEPOSITORY. THIS SUBORDINATED DEBENTURE IS EXCHANGEABLE FOR
SUBORDINATED DEBENTURES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND NO TRANSFER OF THIS SUBORDINATED DEBENTURE (OTHER THAN A TRANSFER
OF THIS SUBORDINATED DEBENTURE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SUBORDINATED DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SUBORDINATED DEBENTURE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
Registered No. SD-001 Principal Amount $373,711,350
CUSIP No. 427 058 AT3
HERCULES INCORPORATED
9.42% JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES DUE 2029
HERCULES INCORPORATED, a Delaware corporation (the "Company"), which
term includes any successor corporation under the Indenture hereinafter referred
to, for value received, hereby promises to pay to The Chase Manhattan Bank, as
Property Trustee for Hercules Trust I or registered assigns, the principal sum
of Three Hundred Seventy-Three Million Seven Hundred Eleven Thousand Three
Hundred Fifty Dollars ($373,711,350) on March 31, 2029 (the "Maturity Date"),
unless redeemed prior thereto in accordance with the provisions hereof, and to
pay interest thereon at the interest rate per annum of 9.42% (the "Interest
Rate"), quarterly in arrears on March 31, June 30, September 30 and December 31
of each year (each, an "Interest Payment Date"), commencing on June 30, 1999, to
the Holder of this Subordinated Debenture as of the
<PAGE> 2
close of business on the Regular Record Date (as hereinafter defined), with
respect to such Interest Payment Date, until the principal hereof is paid or
duly made available for payment.
Interest payments for this Subordinated Debenture will be
computed on the basis of a 360-day year of twelve 30-day months. The interest
payable for any partial period will be computed on the basis of the actual
number of days elapsed in such period. Interest payable on this Subordinated
Debenture on any Interest Payment Date will include interest accrued from and
including the immediately preceding Interest Payment Date in respect of which
interest has been paid or duly provided for, or, if no interest has been paid or
duly provided for, March 17, 1999, to but excluding such Interest Payment Date.
If any Interest Payment Date or the Redemption Date (as hereinafter defined) or
the Maturity Date falls on a day that is not a Business Day (as defined below),
the required payment of principal and interest with respect to such Interest
Payment Date, Redemption Date or Maturity Date, as the case may be, will be paid
on the next succeeding Business Day with the same force and effect as if it were
paid on the date such payment was due, and no interest shall accrue on the
amount so payable for the period from and after such Interest Payment Date,
Redemption Date or Maturity Date, as the case may be. However, if the next
Business Day in respect of an Interest Payment Date is in the next calendar
year, the required payment of interest will be made on the immediately preceding
Business Day. "Business Day" means each day except Saturday, Sunday and any day
on which banking institutions in The City of New York or Wilmington, Delaware
are authorized or required by law, regulation or executive order to close.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will be paid to the Person in whose name this
Subordinated Debenture is registered in the Register as of the close of business
on the "Regular Record Date" for such interest payment, which shall be the date
one (1) Business Day preceding the Interest Payment Date, whether or not a
Business Day, if this Subordinated Debenture is held by the Property Trustee or
if this Subordinated Debenture is in book-entry only form. Notwithstanding the
foregoing sentence, if the Preferred Securities of the Trust are no longer in
book-entry only form or if this Subordinated Debenture is no longer held by the
Property Trustee under the Trust or in book-entry only form, such Regular Record
Date shall be the close of business on the 15th day of the calendar month in
which such Interest Payment Date occurs, whether or not a Business Day.
Except as otherwise provided in the Indenture, any interest
not punctually paid or duly provided for on any Interest Payment Date (herein
called "Defaulted Interest") will forthwith cease to be payable to the Holder on
the Regular Record Date with respect to such Interest Payment Date by virtue of
having been such Holder and may either (a) be paid to the Person in whose name
this Subordinated Debenture is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee (as defined below), notice of which shall be given to Holders of the
Subordinated Debentures not less than 10 days prior to such Special Record Date,
or (b) be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Subordinated Debentures may
be listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.
2
<PAGE> 3
The principal of this Subordinated Debenture payable on the
Maturity Date or the Redemption Date will be paid against presentation of this
Subordinated Debenture at the Capital Markets Fiduciary Services office of the
Trustee maintained for that purpose in Philadelphia, Pennsylvania in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts. Payment of interest on an
Interest Payment Date may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Register; provided,
however, that the Holder of this Subordinated Debenture shall be entitled to
receive payments of interest on this Subordinated Debenture by wire transfer of
immediately available funds if the Holder owns at least $10,000,000 aggregate
principal amount of the Subordinated Debentures and if appropriate wire transfer
instructions have been received in writing by the Trustee not less than l5 days
prior to the applicable Interest Payment Date; and provided, further, that so
long as the Holder of this Subordinated Debenture is the Property Trustee, the
payment of the principal of and interest on this Subordinated Debenture will be
made at such place and to such account as may be designated by the Property
Trustee.
The indebtedness evidenced by this Subordinated Debenture is,
to the extent provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness, and this
Subordinated Debenture is issued subject to the provisions of the Indenture with
respect thereto. Each Holder of this Subordinated Debenture, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so provided and (c)
appoints the Trustee its attorney-in-fact for any and all such purposes. Each
Holder hereof, by its acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such Holder upon said provisions.
This Subordinated Debenture is one of the duly authorized
securities (collectively, the "Debentures") of the Company to be issued under
Junior Subordinated Debentures Indenture between the Company and The Chase
Manhattan Bank, as trustee (herein called the "Trustee," which term includes any
successor trustee thereunder), dated as of March 17, 1999 (the "Indenture,"
which term, for the purpose of this Subordinated Debenture shall include the
Officers' Certificate dated March 17, 1999, delivered pursuant to Section 2.01
of the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Debentures and the terms upon which the
Debentures are, and are to be, authenticated and delivered. This Subordinated
Debenture is one of the duly authorized series of Debentures designated as
"9.42% Junior Subordinated Deferrable Interest Debentures Due 2029"
(collectively, the "Subordinated Debentures"), and the aggregate principal
amount of Subordinated Debentures to be issued under such series is limited to
$373,711,350 (except for Subordinated Debentures authenticated and delivered
upon transfer of, or in exchange for, or in lieu of other Subordinated
Debentures). All
3
<PAGE> 4
terms used but not defined or specified in this Subordinated Debenture shall
have the meanings assigned to such terms in the Indenture.
The Subordinated Debentures are issuable as Registered
Debentures, without coupons, in denominations of $25 and any amount in excess
thereof which is an integral multiple of $25.
(i) Optional Redemption: The Subordinated Debentures will be
redeemable at the option of the Company, in whole or, on or after March 17,
2004, in part, before their maturity: (A) on one or more occasions any time on
or after March 17, 2004; or (B) before March 17, 2004, upon the occurrence of a
Special Event. If Hercules decides to redeem Subordinated Debentures in these
circumstances, the Redemption Price of each Subordinated Debenture redeemed will
be equal to 100% of the principal amount of such Subordinated Debenture plus
accrued and unpaid interest on such Subordinated Debenture to the date of
redemption.
Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the Redemption Date to each Holder of the
Subordinated Debentures to be redeemed. Unless the Company defaults in payment
of the Redemption Price, on and after the Redemption Date, interest will cease
to accrue on the Subordinated Debentures or portions thereof called for
redemption. If less than all of the Subordinated Debentures are to be redeemed,
the Subordinated Debentures (or portions thereof) to be redeemed will be
selected by the Trustee by such method as the Trustee shall deem fair and
appropriate; provided that if, at the time of redemption, the Subordinated
Debentures are registered as a Global Debenture, the Depositary shall determine
the principal amount of such Subordinated Debentures held by each owner of a
beneficial interest to be redeemed in accordance with its procedures.
All notices of redemption shall state (a) the Redemption Date,
(b) the Redemption Price, (c) that payment of the Redemption Price of the
Subordinated Debentures called for redemption will be made only upon surrender
of the Subordinated Debenture to the Paying Agent, (d) if fewer than all the
outstanding Subordinated Debentures are to be redeemed, the identification (and,
in the case of partial redemption, the principal amounts) of the particular
Subordinated Debentures to be redeemed, (e) that on the Redemption Date the
Redemption Price will become due and payable upon each Subordinated Debenture,
or portion thereof, to be redeemed, and (f) that, unless the Company defaults in
paying the Redemption Price, interest on each Subordinated Debenture, or portion
thereof, called for redemption will cease to accrue on and after the Redemption
Date.
In the event of redemption of this Subordinated Debenture in
part only, a new Subordinated Debenture or Debentures of like tenor for the
unredeemed portion hereof will be issued in authorized denominations in the name
of the Holder hereof upon the cancellation hereof.
4
<PAGE> 5
For all purposes of this Subordinated Debenture and the
Indenture, unless the context otherwise requires, all provisions relating to the
redemption by the Company of this Subordinated Debenture shall relate, in the
case that this Subordinated Debenture is redeemed or to be redeemed by the
Company only in part, to that portion of the principal amount of this
Subordinated Debenture that has been or is to be redeemed.
If an Event of Default with respect to the Subordinated
Debentures shall occur and be continuing, the principal of the Subordinated
Debentures may be declared due and payable in the manner and with the effect
provided in the Indenture.
With the consent of the Holders of a majority in aggregate
principal amount of the Debentures of each series adversely affected thereby at
the time outstanding the Indenture permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Debentures of
each such series. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Debentures of any series
affected and at the time outstanding, on behalf of the Holders of all Debentures
of such series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Subordinated
Debenture shall be conclusive and binding upon such Holder and upon all future
Holders of this Subordinated Debenture and of any Subordinated Debenture issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Subordinated Debenture.
No reference herein to the Indenture and no provision of this
Subordinated Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of and
interest on this Subordinated Debenture at the time, place and rate, and in the
coin or currency, herein prescribed.
The Company shall have the right at any time, and from time to
time, during the term of the Subordinated Debentures to extend the interest
payment period of such Subordinated Debentures for up to 20 consecutive
quarterly periods (an "Extended Interest Payment Period"), provided no Event of
Default has occurred and is continuing with respect to the Subordinated
Debentures, and provided, further, that such Extended Interest Payment Period
must end on an Interest Payment Date and may not extend beyond the Maturity Date
or any Redemption Date. At the end of an Extended Interest Payment Period, the
Company shall pay all interest then accrued and unpaid (together with interest
thereon at the rate specified for the Subordinated Debentures to the extent that
payment of such interest is enforceable under applicable law). Before the
termination of any such Extended Interest Payment Period, the Company may
shorten or further extend such Extended Interest Payment Period, provided,
however, that such Extended Interest Payment Period, together with all such
previous and further extensions thereof, shall not exceed 20 consecutive
quarterly periods. At the termination of any such Extended Interest Payment
Period and upon the payment of all accrued and unpaid interest and any
additional amounts then due, the Company may elect a new Extended Interest
Payment Period.
5
<PAGE> 6
As provided in the Indenture, and subject to certain
limitations herein and therein set forth, the transfer of this Subordinated
Debenture may be registered in the Register of the Company upon surrender of
this Subordinated Debenture for registration of transfer at the office or agency
of the Company in the Borough of Manhattan, The City of New York, duly endorsed
by, or accompanied by this Subordinated Debenture and a written instrument of
transfer in form satisfactory to the Company duly executed by the Holder hereof
or by its attorney duly authorized in writing and thereupon one or more new
Subordinated Debentures, in authorized denominations, having the same terms and
conditions and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain
limitations herein and therein set forth, the Subordinated Debentures are
exchangeable for a like aggregate principal amount of the Subordinated
Debentures of like tenor of any authorized denomination, as requested by the
Holder surrendering the same, upon surrender of the Subordinated Debenture to be
exchanged at any office or agency described below where the Subordinated
Debentures may be presented for registration of transfer.
No service charge will be made for any registration of
transfer or exchange of Subordinated Debentures, but the Company may require
payment of a sum sufficient to cover any tax, assessment or other governmental
charge payable in connection therewith (other than exchanges not involving any
transfer).
Prior to due presentment of this Subordinated Debenture for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Subordinated Debenture is
registered as the owner and Holder hereof for all purposes, whether or not this
Subordinated Debenture be overdue, and neither the Company, the Trustee nor any
such agent shall be affected by notice to the contrary.
The Indenture shall be governed by, and construed in
accordance with, the laws of the State of Delaware without regard to its
principles of conflicts of laws, except that the rights, limitations of rights,
obligations, duties and immunities of the Trustee shall be governed by and
construed in accordance with the laws of the State of New York.
Unless the Certificate of Authentication hereon has been
executed by the Trustee under the Indenture, or its duly appointed
authenticating agent, by the manual signature of one of its authorized
signatories, this Subordinated Debenture shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
6
<PAGE> 7
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed, manually or in facsimile, and an imprint or reproduction of
its corporate seal to be made hereon.
Dated:
HERCULES INCORPORATED
[SEAL]
By:_______________________________
Name:
Title:
Attest:
By:______________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures issued under the Indenture described
herein.
THE CHASE MANHATTAN BANK,
as Trustee
By:______________________________
Name:
Title:
<PAGE> 8
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the first page of this instrument, shall be construed as though they were
written out in full according to applicable laws or regulations.
UNIF GIFT MIN ACT - - _______________________________________
(Cust)
Custodian _______________________________________
(Minor)
Under Uniform Gifts to Minors Act
_______________________________________
(State)
TEN COM - - as tenants in common
TEN ENT - - as tenants by the entireties
JT TEN - - as joint tenants with right of survivorship and not as tenants in
common
Additional abbreviations may also be used though not in the
above list.
8
<PAGE> 9
_______________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto:
_______________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________
_______________________________________________________________
(Insert address and zip code of assignee)
the within Subordinated Debenture and all rights thereunder, and hereby and
irrevocably constitutes and appoints _______________________________________
attorney to transfer this Subordinated Debenture on the books of the Company,
with full power of substitution.
Date:______________________
Signature: _____________________________________________
(Sign exactly as your name appears upon the
face of the within Subordinated Debenture)
9
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP]
March 17, 1999
Hercules Incorporated
Hercules Trust I
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
RE: 9.42% TRUST ORIGINATED PREFERRED SECURITIES
OF HERCULES TRUST I
Ladies and Gentlemen:
We have acted as special tax counsel for Hercules
Incorporated, a Delaware corporation (the "Company"), and Hercules Trust I, a
statutory business trust organized under the Business Trust Act of the State of
Delaware (12 Del. Code Ann., tit. 12, Sections 3801, et seq.) (the "Trust"), in
connection with the sale pursuant to an Underwriting Agreement dated March 17,
1999 among the Company, the Trust and the underwriters (the "Underwriters")
named therein (the "Underwriting Agreement") of 14,500,000 9.42% Trust
Originated Preferred Securities (liquidation amount $25 per preferred
security) of the Trust (the "Preferred Securities"), representing undivided
beneficial interests in the assets of the Trust.
The Preferred Securities are guaranteed by the Company with
respect to distributions and payments upon liquidation, redemption, and
otherwise pursuant to the Preferred Securities Guarantee Agreement, dated as of
March 17, 1999 (the "Guarantee Agreement"), between the Company and The Chase
Manhattan Bank, as trustee, for the benefit of the holders of the Preferred
Securities.
In connection with the issuance of the Preferred Securities,
the Trust is also issuing 448,454 9.42 % Common Securities (liquidation amount
$25 per common security) (the "Common Securities"), representing undivided
beneficial interests in the assets of the Trust.
The entire proceeds from the sale of the Preferred Securities
and the Common Securities are to be used by the Trust to purchase an aggregate
principal amount of $373,711,350
<PAGE> 2
Hercules Incorporated
Hercules Trust I
March 17, 1999
Page 2
9.42% Junior Subordinated Deferrable Interest Debentures due 2029 (the
"Subordinated Debentures"), to be issued by the Company. The Preferred
Securities and the Common Securities are to be issued pursuant to the Amended
and Restated Trust Agreement, dated as of March 17, 1999 (the "Trust
Agreement"), among the Company, as sponsor, Chase Manhattan Bank Delaware, as
Delaware trustee (the "Delaware Trustee"), The Chase Manhattan Bank, as property
trustee (the "Property Trustee"), and Israel J. Floyd, Jan M. King, and Stuart
C. Shears, as administrative trustees (the "Administrative Trustees"). The
Subordinated Debentures are to be issued pursuant to the junior subordinated
debentures indenture, dated as of March 17, 1999 (the "Indenture"), between the
Company and The Chase Manhattan Bank, as indenture trustee (the "Indenture
Trustee").
Capitalized terms used but not otherwise defined herein shall
have the respective meanings set forth in the Underwriting Agreement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Prospectus Supplement dated March 12, 1999 (including a Prospectus dated October
30 1998) ; (ii) the Certificate of Trust filed with the Secretary of State of
the State of Delaware as of September 14, 1998, by an Administrative Trustee and
the Delaware Trustee; (iii) an executed copy of the Trust Agreement including
the designation of the terms of the Preferred Securities; (iv) the form of the
Preferred Securities and a specimen certificate thereof; (v) an executed copy of
the Guarantee Agreement; (vi) an executed copy of the Indenture; (vii) the form
of Subordinated Debentures and a specimen certificate thereof; (viii) the form
of Common Securities and a specimen certificate thereof; (ix) an executed copy
of the Underwriting Agreement; and (x) representations from an officer of the
Company dated March 17, 1999. We have also examined originals or copies,
certified or otherwise identified to our satisfaction, of such records of the
Company and the Trust and such agreements, certificates of public officials,
certificates of officers, trustees or other representatives of the Company, the
Trust and others, as applicable, and such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the opinions
set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies, and
the authenticity of the originals of such latter documents. In making our
examination of documents executed, or to be executed by parties other than the
Company or the Trust, we have assumed that such parties had, or will have the
power, corporate or other, to enter into and perform all obligations thereunder
and have also assumed the due authorization by all requisite action, corporate
or other, and execution and delivery by such parties of such
<PAGE> 3
Hercules Incorporated
Hercules Trust I
March 17, 1999
Page 3
documents and that such documents constitute, or will constitute, valid and
binding obligations of such parties. As to any facts material to the opinions
expressed herein which were not independently established or verified, we have
relied upon oral or written statements and representations of officers, trustees
and other representatives of the Company, the Trust and others.
In rendering our opinion, we have participated in the
preparation of the Prospectus Supplement. Our opinion is conditioned on, among
other things, the initial and continuing accuracy of the facts, information,
covenants, and representations set forth in the documents referred to above and
the statements and representations made by the Company and the Trust.
In rendering our opinion, we have considered the provisions of
the Internal Revenue Code of 1986, as amended, Treasury regulations (proposed,
temporary and final) promulgated thereunder, judicial decisions and Internal
Revenue Service rulings all as of the date hereof, and all of which are subject
to change, which changes may be retroactively applied. A change in the
authorities upon which opinion is based could affect our conclusions. There can
be no assurance, moreover, that any opinion expressed herein will be accepted by
the Internal Revenue Service or, if challenged, by a court.
Based solely upon the foregoing, we are of the opinion that
under current United States federal income tax law, although the discussion set
forth in the Prospectus Supplement under the heading "CERTAIN UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES" does not purport to discuss all possible United
States federal income tax consequences of the purchase, ownership, and
disposition of the Preferred Securities, in our opinion such discussion
constitutes, in all material respects, a fair and accurate summary of the United
States federal income tax consequences, to the holders who purchase the
Preferred Securities at their original issuance, of the purchase, ownership, and
disposition of the Preferred Securities.
Except as set forth above, we express no opinion to any party
as to the tax consequences, whether United States federal, state, local or
foreign, of the issuance of the Subordinated Debentures, the Preferred
Securities, the Common Securities, or any transactions related to or
contemplated by such issuance.
We are furnishing this opinion to you solely for your benefit
in connection with the sale of the Preferred Securities pursuant to the
Underwriting Agreement and the opinion is not to be used, circulated, quoted, or
otherwise referred to for any other purpose without our prior written
permission. This opinion is expressed as of the date hereof, and we disclaim any
<PAGE> 4
Hercules Incorporated
Hercules Trust I
March 17, 1999
Page 4
undertaking to advise you of changes of the facts stated or assumed herein or
any subsequent changes in applicable law.
We consent to the filing of this opinion as Exhibit 8.1 to the
Form 8-K of the Company dated March 17, 1999 as filed with the Securities and
Exchange Commission on March 17, 1999, and to the reference to Ballard Spahr
Andrews & Ingersoll, LLP therein under the caption "Legal Matters". In giving
this consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended or the rules or regulations of the Securities and Exchange Commission
promulgated thereunder.
/s/ Ballard Spahr Andrews & Ingersoll, LLP
