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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): July 27, 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 July 27, 1999, Hercules Incorporated ("Hercules") and Hercules Trust II
(the "Trust"), a wholly-owned subsidiary of Hercules, issued $350,000,000
aggregate liquidation amount of CRESTS Units, each consisting of one preferred
security of the Trust and one warrant to purchase shares of common stock of
Hercules, at a public offering price of $1,000 per CRESTS Unit. The preferred
security components of the CRESTS Units are guaranteed by Hercules based on
several obligations. The Trust used the proceeds from the sale of the preferred
security components of the CRESTS Units, together with the proceeds from the
sale of its common securities to Hercules, to purchase from Hercules
$267,537,304.50 aggregate initial principal amount of Series A Junior
Subordinated Deferrable Interest Debentures of Hercules. The warrant component
of each CRESTS Unit is immediately exercisable for 23.4192 shares of Hercules
common stock at an exercise price initially equal to $1,000 (equivalent to
$42.70 per share).
On July 27, 1999, Hercules issued 5,000,000 shares of common stock,
without par value ($25/48 stated value), at a public offering price of $35 per
share.
The CRESTS Units were issued in a firm commitment underwritten public
offering pursuant to an underwriting agreement, dated July 21, 1999, among
Hercules, the Trust and Banc of America Securities LLC, Salomon Smith Barney
Inc., Chase Securities Inc., Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc. (the "Underwriters"). Pursuant to the terms of the offering,
Hercules and the Trust granted the Underwriters an option to purchase an
additional 50,000 CRESTS Units to cover over-allotments, which may be exercised
at any time within 30 days after the offering.
The shares of common stock were issued in a firm commitment underwritten
public offering pursuant to an underwriting agreement, dated July 21, 1999,
between Hercules and Banc of America Securities LLC, as representative of the
several underwriters (the "Representative"). Pursuant to the terms of the
offering, Hercules granted the Representative an option to purchase an
additional 750,000 shares to cover over-allotments, which may be exercised at
any time within 30 days after the offering.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
1.1 CRESTS Units Underwriting Agreement, dated July 21, 1999, among
Hercules Incorporated, Hercules Trust II and the Underwriters named
therein.
1.2 Common Stock Underwriting Agreement, dated July 21, 1999, between
Hercules Incorporated and the representative of the underwriters
named therein.
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4.1 Officers' Certificate, dated as of July 27, 1999, pursuant to the Junior
Subordinated Debenture Indenture between Hercules Incorporated and The
Chase Manhattan Bank, as trustee.
4.2 Amended and Restated Trust Agreement of Hercules Trust II dated as of
July 27, 1998, together with Annex I thereto.
4.3 Unit Agreement, dated July 27, 1999, among Hercules Incorporated, Hercules
Trust II and The Chase Manhattan Bank, as unit agent.
4.4 Warrant Agreement, dated July 27, 1999, between Hercules Incorporated and
The Chase Manhattan Bank, as warrant agent.
4.5 Form of Series A Junior Subordinated Deferrable Interest Debentures
(included in Exhibit 4.1).
4.6 Form of Trust II Preferred Securities (included in Exhibit 4.2).
4.7 Form of CRESTS Unit (included in Exhibit 4.3).
4.8 Form of Warrant (included in Exhibit 4.4).
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
July 27, 1999 By: /s/ ISRAEL J. FLOYD
-------------------------------
Israel J. Floyd
Corporate Secretary and
Assistant General Counsel
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EXHIBIT INDEX
Number Exhibit
- ------ -------
1.1 CRESTS Units Underwriting Agreement, dated July 21, 1999, among
Hercules Incorporated, Hercules Trust II and the Underwriters named
therein.
1.2 Common Stock Underwriting Agreement, dated July 21, 1999, between
Hercules Incorporated and the representative of the underwriters named
therein.
4.1 Officers' Certificate, dated as of July 27, 1999, pursuant to the
Junior Subordinated Debenture Indenture between Hercules Incorporated
and The Chase Manhattan Bank, as trustee.
4.2 Amended and Restated Trust Agreement of Hercules Trust II dated as
of July 27, 1998, together with Annex I thereto.
4.3 Unit Agreement, dated July 27, 1999, among Hercules Incorporated,
Hercules Trust II and The Chase Manhattan Bank, as unit agent.
4.4 Warrant Agreement, dated July 27, 1999, between Hercules Incorporated
and The Chase Manhattan Bank, as warrant agent.
4.5 Form of Series A Junior Subordinated Deferrable Interest Debentures
(included in Exhibit 4.1).
4.6 Form of Trust II Preferred Securities (included in Exhibit 4.2).
4.7 Form of CRESTS Unit (included in Exhibit 4.3).
4.8 Form of Warrant (included in Exhibit 4.4).
8.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding tax
matters.
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Exhibit 1.1
HERCULES TRUST II
Preferred Securities
HERCULES INCORPORATED
Warrants to Purchase Common Stock
UNDERWRITING AGREEMENT
July 21, 1999
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
Hercules Trust II (the "Trust"), a statutory business trust formed
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 each of you (collectively, the "Underwriters," which term shall
also include any underwriter substituted as provided in Section 10 hereof) with
respect to the issuance and sale by the Company and the Trust and the purchase
by the Underwriters, acting severally and not jointly, of 350,000 CRESTS Units
(scheduled liquidation amount of $1,000 per unit) of the Company and the Trust
(the "CRESTS Units"), each CRESTS Unit consisting of one preferred security of
the Trust (each, a "Preferred Security") and one warrant to purchase 23.4192
shares of the Company's common stock, without par value ($25/48 stated value)
(the "Common Stock"), at an exercise price initially equal to $1,000 per warrant
(each, a "Warrant") in the respective numbers specified in said Schedule A
hereto (the "Initial CRESTS Units").
The Company will guarantee the Preferred Securities of the Trust to
the extent described in the Prospectus (as defined below) (the "Preferred
Securities Guarantee"). In addition, the Trust will issue 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 purchase price received
by the Trust in respect of the Preferred Securities and the Common Securities
will be used to purchase the Company's Series A Junior Subordinated Deferrable
Interest Debentures (the "Debt Securities").
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The CRESTS Units will be issued pursuant to the Unit Agreement, to be
dated as of the Closing Time (as defined in Section 2(c)) (the "Unit
Agreement"), among the Company, the Trust and The Chase Manhattan Bank, as unit
agent (the "Unit Agent").
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 the Closing Time (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 the 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 the
Closing Time (the "Common Securities Guarantee Agreement", and, together with
the Preferred Securities Guarantee Agreement, the "Guarantee Agreements"),
between the Company and The Chase Manhattan Bank, as guarantee trustee. The Debt
Securities will be issued pursuant to a Junior Subordinated Debentures
Indenture, dated as of March 17, 1999 (the "Indenture"), as supplemented by the
First Supplemental Indenture, to be dated as of the Closing Time (the "First
Supplemental Indenture"), between the Company and The Chase Manhattan Bank, as
debt securities trustee (the "Debt Securities Trustee"), and an Officers'
Certificate, to be dated as of the Closing Time (the "Officers' Certificate")
pursuant to the Indenture and the First Supplemental Indenture.
The Warrants will be issued pursuant to the Warrant Agreement, to be
dated as of the Closing Time (the "Warrant Agreement"), between the Company and
The Chase Manhattan Bank, as warrant agent (the "Warrant Agent").
The CRESTS Units, the Preferred Securities, the Preferred Securities
Guarantee, the Debt Securities and the Warrants are referred to collectively as
the "Securities." Shares of Common Stock issuable upon exercise of the Warrants
are referred to as "Warrant Shares." The Unit Agreement, the Trust Agreement,
the Guarantee Agreements, the Indenture, the First Supplemental Indenture, the
Warrant Agreement and this Underwriting Agreement are referred to collectively
as the "Operative Agreements."
The Company, the Trust and certain other trusts sponsored by the
Company (the "Other Hercules Trusts") 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
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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 CRESTS Units, in the form first
furnished to the Underwriters by the Trust and the Company for use in connection
with the offering of the Preferred Securities and the Warrants, 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
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 and to the Independent Underwriter
(as defined below) as of the date hereof, as of the Closing Time and, if
applicable, as of each Date of Delivery (as defined below) (in each case, a
"Representation Date"), as follows:
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(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 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.
At the respective times the 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 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 Banc of America Securities LLC ("Banc of America") 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 CRESTS Units
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
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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 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 (which dividends include
amounts, sometimes called "dividend equivalents," paid under the
Company's employee benefit and compensation plans on the Common Stock
and grants (whether options, restricted stock or other) under
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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, 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, taken as a whole.
(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, the Debt Securities,
the Warrants as part of the CRESTS Units and the Warrant Shares and to
enter into and perform its obligations under, or as contemplated
under, the Operative Agreements 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 entity 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 or
other entity 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 number of authorized, issued and
outstanding shares of capital stock of the Company is as set forth in
the column entitled "Actual" under the "Capitalization" section of the
Prospectus. 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
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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) Authorization of the CRESTS Units. As of the Closing Time,
the CRESTS Units will have been duly authorized for issuance by the
Trust, in respect of the Preferred Security component of the CRESTS
Units, and the Company in respect of the Warrant component of the
CRESTS Units, and, when issued and delivered against payment therefor
as provided in this Underwriting Agreement, will be, in the case of
the Preferred Securities, validly issued and fully paid and
nonassessable undivided preferred beneficial interests in the assets
of the Trust and, in the case of the Warrants, 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 at law or in equity).
(10) 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 as part of the CRESTS Units 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.
(11) Authorization of the 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.
(12) Authorization of the Preferred Securities. As of the Closing
Time, the Preferred Securities will have been duly authorized for
issuance by the Trust pursuant to the Trust Agreement and, when issued
and delivered against payment therefor as specified in the Prospectus,
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 or of complete
CRESTS Units will be entitled to the benefits of, the Trust Agreement.
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(13) Authorization of the Trust Agreement. The Trust Agreement
has been duly authorized, and (as of the Closing Time) executed and
delivered, by the Company and the Administrative Trustees and,
assuming due authorization, execution and delivery of the Trust
Agreement by the Trustees other than the Administrative 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).
(14) Authorization of the Guarantee Agreements. Each of the
Guarantee Agreements has been duly authorized, and (as of the Closing
Time) executed and delivered, by the Company and, assuming due
authorization, execution and delivery of the Guarantee Agreements 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).
(15) 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.
(16) Authorization of the Warrants. The Warrants have been duly
authorized for issuance by the Company pursuant to the Warrant
Agreement and, when issued and delivered against payment therefor as
specified in the Prospectus, 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 at law or in equity). The
Warrants will be in the form contemplated by, and each registered
holder thereof or of complete CRESTS Units will be entitled to the
benefits of, the Warrant Agreement.
(17) Authorization of the Warrant Agreement. The Warrant
Agreement has been duly authorized, and (as of the Closing Time)
executed and delivered, by the Company and, assuming due
authorization, execution and delivery of the Warrant Agreement by the
Warrant Agent, the Warrant 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
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(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).
(18) Authorization of the Warrant Shares. The Warrant Shares
issuable upon exercise of the Warrants pursuant to the Warrant
Agreement have been duly authorized and reserved for issuance by the
Company. The Warrant Shares, when issued in accordance with the
Warrant Agreement, will be validly issued by the Company and will be
fully paid and non-assessable. The issuance of the Warrant Shares is
not and will not be subject to preemptive or other similar rights of
any securityholder of the Company. The form of certificate used to
evidence the Warrant Shares will comply in all material respects with
all applicable statutory requirements, requirements of the Company's
Certificate of Incorporation and By-Laws and requirements of the New
York Stock Exchange.
(19) Authorization of the Unit Agreement. The Unit Agreement has
been duly authorized, and (as of the Closing Time) executed and
delivered, by the Company and the Trust and, assuming due
authorization, execution and delivery of the Unit Agreement by the
Unit Agent, the Unit Agreement will constitute a valid and binding
agreement of the Company and the Trust, enforceable against the
Company and the Trust 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).
(20) Authorization of this Underwriting Agreement. This
Underwriting Agreement has been duly authorized, executed and
delivered by each of the Trust and the Company.
(21) Authorization of the Indenture. The Indenture has been duly
authorized, executed and delivered, by the Company and, assuming due
authorization, execution and delivery of the Indenture by the Debt
Securities Trustee, the Indenture constitutes 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).
(22) Authorization of the First Supplemental Indenture. The First
Supplemental Indenture has been duly authorized, and (as of the
Closing Time), executed and delivered, by the Company and, assuming
due authorization, execution and delivery by the Debt Securities
Trustee, the First Supplemental 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,
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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).
(23) Authorization of Debt Securities. The Debt Securities have
been duly authorized by the Company for issuance pursuant to the
Indenture, the First Supplemental Indenture and the Officers'
Certificate. The Debt Securities, when issued and authenticated in the
manner provided for in the Indenture and delivered against payment
therefor as specified in the Prospectus, 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 or, if the Debt Securities have been
distributed to holders of the Preferred Securities, of complete CRESTS
Units, will be entitled to the benefits of, the Indenture, the First
Supplemental Indenture and the Officers' Certificate.
(24) Descriptions of the Securities and the Operative Agreements.
The Securities and the Operative Agreements, as of each Representation
Date, conform and will conform, and the Warrant Shares, when issued
upon exercise of the Warrants pursuant to the Warrant Agreement 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.
(25) 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.
(26) Noncontravention. The issuance of the Securities and the
Warrant Shares and the execution, delivery and performance by the
Trust or the Company, as applicable, of the Operative Agreements and
any other agreement or instrument entered into or issued or to be
entered into or issued by the Trust or 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 Trust or
the Company, as applicable, with its obligations hereunder and
thereunder (A) do not
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and 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.
(27) 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.
(28) 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.
(29) 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 or the Warrant Shares, for the due authorization, execution
and delivery by the Trust or the Company of
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the Operative Agreements or for the performance by the Trust or the
Company of the transactions contemplated under the Prospectus or the
Operative Agreements, except such as have been already made, obtained
or rendered, as applicable.
(30) Stock Exchange Listing. All Warrant Shares to be issued
hereunder have been or, prior to such issuance, will be approved for
inclusion or listing on the principal national securities exchange or
automated quotation system on which the Common Stock are listed or
quoted, subject only to official notice of issuance.
(31) Price Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action designed
to, or that could be reasonably expected to cause or result in,
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of any Warrants. Notwithstanding the
foregoing, the repurchase by the Company from time to time pursuant to
a share repurchase program authorized by the Board of Directors of the
Company, if conducted in accordance with applicable law (including,
without limitation, Regulation M and Rule 10b-18 under the 1934 Act),
shall not be deemed or considered to be such stabilization or
manipulation.
(32) 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.
(33) 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.
(34) Investment Company Act. Neither the Trust nor the Company
is, and upon the issuance and sale (as applicable) of the Securities
or the Warrant Shares as
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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").
(35) 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;
(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;
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(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 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, the Independent Underwriter or to counsel for the
Underwriters in connection with the offering of the CRESTS Units 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 CRESTS Units. On the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the Trust and the Company agree to sell to each
Underwriter, severally and not jointly, and each Underwriter, severally and not
jointly, agrees to purchase from the Trust and the Company, at the initial
public
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offering price per Initial CRESTS Unit set forth in Schedule C, the
number of Initial CRESTS Units set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial CRESTS Units which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Option CRESTS Units. On the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the Trust and the Company hereby grant an option to
the Underwriters, severally and not jointly, to purchase 50,000 additional
CRESTS Units (the "Option CRESTS Units") at a price per Option CRESTS Unit equal
to the price per Initial CRESTS Unit. 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 CRESTS
Units upon notice by Banc of America to the Trust and the Company setting forth
the number of Option CRESTS Units as to which the several Underwriters are then
exercising the option and the time, date and place of payment and delivery for
such Option CRESTS Units. Any such time and date of payment and delivery (each,
a "Date of Delivery") shall be determined by Banc of America, the Trust and the
Company, 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 Banc of America, the Trust and the Company. If the option is
exercised as to all or any portion of the Option CRESTS Units, each of the
Underwriters, severally and not jointly, will purchase that proportion of the
total number of Option CRESTS Units then being purchased which the number of
Initial CRESTS Units each such Underwriter has severally agreed to purchase
bears to the total number of Initial CRESTS Units, subject to such adjustments
as Banc of America in its discretion shall make to eliminate any sales or
purchases of a fractional number of Option CRESTS Units.
(c) Payment. Payment of the purchase price for, and delivery of, the
Initial CRESTS Units shall be made at the offices of Ballard Spahr Andrews &
Ingersoll, LLP, or at such other place as shall be agreed upon by Banc of
America, the Trust and the Company, 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 Banc of
America, the Trust and the Company (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
CRESTS Units, payment of the purchase price for, and delivery of such Option
CRESTS Units, 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 Banc
of America, the Trust and the Company, on the relevant Date of Delivery as
specified in the notice from Banc of America to the Trust and the Company.
Payment shall be made to the Trust, in respect of the Preferred
Securities, and the Company, in respect of the Warrants, by wire transfer of
immediately available funds to designated bank accounts, against delivery to
Banc of America for the respective accounts of the Underwriters of the CRESTS
Units to be purchased by them. It is understood that each Underwriter has
authorized Banc of America, for its account, to accept delivery of, receipt for,
and make payment of the purchase price for, the CRESTS Units which it has
severally agreed to
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purchase. Banc of America, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the CRESTS Units 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.
(d) Denominations; Registration. The CRESTS Units shall be in such
denominations and registered in such names as Banc of America 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 CRESTS Units will be made available
for examination and, if applicable, packaging by Banc of America 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 a portion of the proceeds of
the sale of the CRESTS Units 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 Banc of America, for the respective
accounts of the Underwriters, in immediately available funds, the commission per
CRESTS Unit to be delivered 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 Janney Montgomery Scott Inc.
("Janney"), and Janney hereby confirms its 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 CRESTS Units. Janney, solely in its capacity as qualified independent
underwriter and not otherwise, is referred to herein as the "Independent
Underwriter."
(g) Sales Restricted to Qualified Institutional Buyers. The
Underwriters will comply with the provisions of Rule 2810 of the Conduct Rules
of the NASD, including, without limitation, Sections (b)(2)(B) and (b)(3)(D)
thereof.
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 Banc of America
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
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<PAGE> 17
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.
(b) Filing of Amendments. The Trust and the Company will give Banc of
America 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 Banc of America with copies of any such document that could reasonably
relate to an investment decision for the CRESTS Units 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 Banc of America or counsel for the
Underwriters shall reasonably object in writing within three days of receipt
thereof.
(c) Delivery of Registration Statements. The Trust and the Company
have furnished or will deliver to Banc of America 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 Banc of America,
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.
(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 CRESTS Units 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
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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) Compliance with Blue Sky Laws. The Trust and the Company will
cooperate with the Underwriters and use their best efforts to qualify or
register the Securities and the Warrant Shares for sale under (or obtain
exemptions from the application of) the state securities or blue sky laws of
those jurisdictions designated by the Underwriters, will comply with such laws
and shall continue such qualifications, registrations and exemptions in effect
so long as required for the distribution of the Securities and the Warrant
Shares. Neither the Trust nor the Company will be required to qualify as a
foreign corporation or to take any action that would subject it to general
service of process in any such jurisdiction where it is not presently qualified
or where it would as a result of such action be subject to taxation as a foreign
corporation. The Trust and the Company will advise the Underwriters promptly of
the suspension of the qualification or registration of (or any exemption
therefrom with respect to) any Securities or Warrant Shares for offering, sale
or trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Trust and the Company shall each
use its best efforts to obtain the withdrawal thereof at the earliest possible
moment.
(g) 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.
(h) DTC. The Trust and the Company will cooperate with the
Underwriters and use their best efforts to permit the CRESTS Units, the
Preferred Securities and the Warrants to be eligible for clearance and
settlement through the facilities of DTC.
(i) 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.
(j) Restriction on Sale of Securities. For 90 days from the date of
this Underwriting Agreement, neither the Trust nor the Company will, without the
prior written consent of Banc of
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America, directly or indirectly, sell, offer, contract or grant any option to
sell, pledge, transfer, establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the 1934 Act or otherwise dispose of or transfer,
or announce the offering of, or file any registration statement under the 1933
Act in respect of, any shares of Common Stock, options or warrants to acquire
shares of Common Stock or securities exchangeable or exercisable for or
convertible into shares of Common Stock, the Preferred Securities, any
securities convertible into or exchangeable for the Preferred Securities or any
securities substantially similar to the Preferred Securities, or any guarantee
of such securities, or any subordinated debt securities, or any securities
convertible into or exchangeable for such subordinated debt securities, that are
substantially similar to the Debt Securities (except the Preferred Securities
and the Debt Securities offered hereby), subject to the contemplated separate
offering and sale of Common Stock by the Company and the granting of options and
sales of shares and other similar rights under the Company's existing stock
option, compensation and other employee benefit plans.
(k) Lock-up Agreements. At the date of this Underwriting Agreement,
the Underwriters shall have received an agreement or agreements substantially in
the form of Exhibit D hereto signed by the persons on Schedule D hereto.
(l) 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.
(m) Reservation of Warrant Shares. The Company will reserve and keep
available at all times, free of preemptive or other similar rights, liens and
adverse claims, sufficient Warrant Shares to satisfy its obligations to issue
Warrant Shares upon exercise of the Warrants and shall use its best efforts to
take all actions necessary to keep the Registration Statement with respect to
the Warrant Shares effective under the 1933 Act, to deliver a current prospectus
which does not include any 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, to holders
exercising their Warrants and to otherwise comply with its obligations under the
Warrant Agreement.
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 Securities or the Warrant Shares, (iii) the preparation, issuance and
delivery of the CRESTS Units, including the Preferred Securities and the
Warrants, to the Underwriters, including any transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the CRESTS Units to
the Underwriters, as well as the preparation, issuance and delivery of the
Warrant Shares, (iv) the fees and disbursements of the counsel, accountants and
other advisors or agents (including
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transfer agents and registrars) to the Trust and the Company, as well as the
fees and disbursements of the Trustees, the Guarantee Trustee, the Debt
Securities Trustee, the Warrant Agent, the Unit Agent 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, and (vi) the cost of making the CRESTS Units, the Preferred Securities
and the Warrants eligible for clearance and settlement through the facilities of
DTC.
(b) Termination of Agreement. If this Underwriting Agreement is
terminated by Banc of America 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 CRESTS Units 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, the performance
by the Trust and the Company of their covenants and other obligations hereunder,
and the following further conditions:
(a) Effectiveness of Registration Statement. The 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 CRESTS Units, 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 the Closing Time, the
Underwriters shall have received opinions, dated as of the 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, P.A., counsel for the Trust, each in form and substance reasonably
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
the Closing Time, the Company, the Trust and Underwriters shall have received an
opinion, dated as of the 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 U.S. Federal Income Tax Consequences" does not
purport to discuss all possible United States federal
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income tax consequences of the purchase, ownership and disposition of the
Preferred Security and Warrant components of the CRESTS Units, 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 CRESTS Units 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.
(d) Opinion of Counsel for The Chase Manhattan Bank. At the Closing
Time, the Underwriters shall have received an opinion, dated as of the 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 the Closing Time, the
Underwriters shall have received an opinion, dated as of the 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 the 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 President and Chief Executive Officer 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 the 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 the 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
officers' or Administrative Trustee's knowledge, are threatened by the
Commission.
(g) Accountants' Comfort Letters. At the time of the execution of this
Underwriting Agreement, the Underwriters shall have received from
PricewaterhouseCoopers LLP 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.
(h) Bring-down Comfort Letter. At the Closing Time, the Underwriters
shall have received from PricewaterhouseCoopers LLP a letter, dated as of the
Closing Time, to the effect
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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 the Closing Time and at any relevant Date of Delivery,
there shall not have occurred since the time of execution of this Underwriting
Agreement a downgrading in, or withdrawal of, the rating assigned to any
securities of the Company by any national rating organization that rates
securities of the Company, and no national rating organization shall have
publicly announced that it has under surveillance or review its rating of any
securities of the Company.
(j) Over-Allotment Option. In the event that the Underwriters exercise
their option to purchase all or any portion of the Option CRESTS Units, 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, Banc of America shall have
received:
(1) A certificate, dated such Date of Delivery, of the President
and Chief Executive Officer 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 remain true and correct as of such Date of Delivery.
(2) The opinions 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, P.A.,
counsel to the Trust, each in form and substance reasonably
satisfactory to the Underwriters, dated such Date of Delivery,
relating to the Option CRESTS Units 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 reasonably satisfactory to the Underwriters, dated such Date
of Delivery, relating to the Option CRESTS Units 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
CRESTS Units and otherwise to the same effect as the opinion required
by Section 5(e) hereof.
(5) A letter from PricewaterhouseCoopers LLP, in form and
substance reasonably 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.
(k) Additional Documents. At the Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may
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<PAGE> 23
reasonably require for the purpose of enabling them to pass upon the issuance
and sale (as applicable) of the Securities and the Warrant Shares 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 and the Warrant Shares as
herein contemplated shall be satisfactory in form and substance to the
Underwriters.
(l) 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 CRESTS Units on a Date of
Delivery after the Closing Time, the obligations of the Underwriters to purchase
the Option CRESTS Units on such Date of Delivery) may be terminated by the
Underwriters by notice to the Trust and the Company 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.
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 Banc of America 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 CRESTS Units 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
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<PAGE> 24
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 Janney 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 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 Banc of
America 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
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<PAGE> 25
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 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 Banc of America 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 the 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
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<PAGE> 26
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, 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 and
the Independent Underwriter, on the other hand, from the offering of the CRESTS
Units 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 and the
Independent Underwriter, 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 and the Independent Underwriter, on the other
hand, in connection with the offering of the CRESTS Units shall be deemed to be
in the same respective proportions as the total proceeds from the offering of
such CRESTS Units (before deducting expenses) received by the Trust and the
Company (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 CRESTS Units as set forth on
such cover page. The benefits received by the Independent Underwriter shall be
limited to the fee it received.
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The relative fault of the Trust and the Company, on the one hand, and
the Underwriters and the Independent Underwriter, 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 CRESTS Units 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 Trust and 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, the Underwriters and the Independent
Underwriter agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
Underwriters and the Independent Underwriter 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 CRESTS Units 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 CRESTS
Units set forth opposite their names in the Schedule A hereto, and not joint.
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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 CRESTS Units.
SECTION 9. Termination.
(a) Termination. The Underwriters 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, (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 as to make it, in the judgment of the Underwriters,
impracticable to market the CRESTS Units or to enforce contracts for the sale of
the CRESTS Units, (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.
28
<PAGE> 29
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 CRESTS Units which it or they are
obligated to purchase under this Underwriting Agreement (the "Defaulted
Securities"), then Banc of America 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, Banc of America 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 CRESTS Units 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 CRESTS Units 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 CRESTS Units on a Date of Delivery after the
Closing Time, the obligations of the Underwriters to purchase, and the
Company to sell, such Option CRESTS Units 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, the Company and the Trust with respect to the related Option
CRESTS Units, as the case may be, either Banc of America or the Company and the
Trust shall have the right to postpone the Closing Time or the relevant Date of
Delivery, as the case may be, for a 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 Banc of America at 600 Montgomery Street, San
Francisco, California 94111, attention of Jeffrey R. Lapic, 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.
29
<PAGE> 30
SECTION 12. Parties. This Underwriting Agreement shall inure to the
benefit of and be binding upon each of 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 CRESTS Units 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.
30
<PAGE> 31
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 INCORPORATED,
as Sponsor
By: /s/ GEORGE MACKENZIE
--------------------------------
Name: George MacKenzie
Title: Senior Vice President and
Chief Financial Officer
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:
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
By: BANC OF AMERICA SECURITIES LLC
By: /s/ TARLTON H. LONG
-----------------------------------
Authorized Signatory
On behalf of itself and the other several
Underwriters
31
<PAGE> 32
Schedule A
Number of
Initial
CRESTS
Underwriter Units
- ----------- -----
Banc of America Securities LLC ............................ 192,501
Salomon Smith Barney Inc. ................................. 87,500
Chase Securities Inc. ..................................... 23,333
Deutsche Bank Securities Inc. ............................. 23,333
J.P. Morgan Securities Inc. ............................... 23,333
-------
Total .......................................... 350,000
-------
A-1
<PAGE> 33
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.
Hercules International Limited
BetzDearborn, Inc.
BetzDearborn Europe, Inc.
DRC, Ltd.
BL Technologies, Inc.
BLI Holdings, Inc.
BetzDearborn Paper Process Group, Inc.
Hercules Investments Global, Ltd.
Hercules Overseas Corporation
BetzDearborn International, Inc.
Hercules Trust I
Hercules International Trade Corporation Limited
Hercules Holding BV / BVBA
Curtis Bay Insurance Co., Ltd.
Hercules Europe BVBA
FiberVisions A/S
Hercules Canada Inc.
Hercules Beringen BVBA
Hercules Doel BVBA
Aqualon France BV
Pomosin GmbH
Hercules BV
Hercules Limited
Hercules GmbH
Copenhagen Pectin A/S
BetzDearborn Canada, Inc.
Hercules Deutschland GmbH
B-1
<PAGE> 34
Schedule C
Title: CRESTS Units, each consisting of one
Preferred Security of the Trust and
one Warrant to purchase Common Stock
of the Company.
Distribution Rate: 6.5% per annum of the scheduled
liquidation amount of $1,000 per
Preferred Security, from July 27,
1999, except that on and after a reset
date, if any, distributions on the
Preferred Securities will be payable
at the annual distribution rate on the
accreted liquidation amount
established in the remarketing of the
Preferred Securities.
Distribution Payment Dates: March 31, June 30, September 30 and
December 31, commencing September 30,
1999.
Liquidation Amount: Initially $741.86 per Preferred
Security, which will accrete to $1,000
on June 30, 2029 unless the Preferred
Securities are remarketed upon the
occurrence of a reset event.
Redemption Provisions: The Trust will redeem the Preferred
Securities when the Debentures are
paid at maturity on June 30, 2029 or,
if applicable, on the date that is one
year following a reset date, if any.
Exercise Price: Each Warrant will entitle the holder
to purchase 23.4192 shares of Common
Stock at an exercise price initially
equal to $1,000 (or $42.70 per share),
except that, on and after a reset
event, the exercise price will be
reduced to the accreted liquidation
amount of a Preferred Security plus
accumulated distributions, if any, to
the reset date. The exercise price
will be subject to adjustment upon the
occurrence of certain other events
described in the Warrant Agreement.
Exercise Date of Warrants: The Warrants may be exercised at any
time prior to March 31, 2029 (the
"Expiration Date"). However, upon the
occurrence of a reset event, the
Company may accelerate the Expiration
Date to the date that is 15 business
days following the reset date related
to the reset event.
Initial Public Offering Price: $1,000 per CRESTS Unit.
Allocation of Initial Purchase Price: $1,000 per CRESTS Unit, $741.86 of
which will be paid for the Preferred
Security and $258.14 of which will be
paid for the Warrant.
Underwriters Compensation: $27.50 per CRESTS Unit.
Form: The CRESTS Units, the Preferred
Securities and the Warrants will be
represented by one or more global
securities that will be deposited with
and registered in the name of, DTC or
its nominee.
C-1
<PAGE> 35
Schedule D
Persons Subject to Lock-Up
June B. Barry Alan R. Hirsig John P. Murta
David L. Chester Hans H. Hjorth J. Frank Raboud
Thomas A Ciconte, Jr. Edith E. Holiday Larry V. Rankin
Vincent J. Corbo Robert G. Jahn Monika Riese Martin
Richard G. Dahlen Bruce W. Jester Michael J. Scott
Dominick W. DiDonna Vikram Jog Stuart C. Shears
John G. Drosdick Gaynor N. Kelley John A. H. Shober
R. Keith Elliott Jan M. King David A. Simpson
Richard M. Fairbanks, III Ralph L. MacDonald, Jr. Paula A. Sneed
Israel J. Floyd George MacKenzie Matthias Sonneveld
Thomas W. Fredericks H. Eugene McBrayer Harry J. Tucci
Robert E. Gallant Peter McCausland
D-1
<PAGE> 36
EXHIBIT A
Form of Opinion of Israel J. Floyd
July 27, 1999
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
c/o Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Issuance and Sale of 350,000 CRESTS Units
Ladies and Gentlemen:
I am Assistant General Counsel of Hercules Incorporated (the
"Company"), a Delaware corporation, and I am familiar with Hercules Trust II
(the "Trust"), a Delaware statutory business trust, and the plans of the Company
and the Trust to (i) issue 350,000 CRESTS Units, each consisting of one
preferred security of the Trust and one warrant to purchase shares of common
stock of the Company (the "Underwritten Securities"), (ii) sell the Underwritten
Securities to the underwriters named in the Underwriting Agreement dated July
21, 1999 (the "Underwriting Agreement"), among the Company, the Trust and Banc
of America Securities LLC, Salomon Smith Barney Inc., Chase Securities Inc.,
Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. (the
"Underwriters") and (iii) grant to the Underwriters the option to purchase an
additional 50,000 CRESTS Units to cover over-allotments (collectively with the
Underwritten Securities, the "CRESTS Units").
This opinion is being delivered pursuant to Section 5(b)(i) of the
Underwriting Agreement. Unless otherwise indicated, capitalized terms used
herein without definition shall have the respective meanings set forth in the
Underwriting Agreement.
For the purposes hereof, I have examined or have had examined by
members of the Company's legal staff, on whom you and I are justified in
relying, the following: (i) a signed counterpart of the Underwriting Agreement;
(ii) a signed copy of a registration statement on Form S-3 (Registration No.
333-63423), filed by the Company and the Trust with the Commission on September
15, 1998, for the registration of the Preferred Security components of
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<PAGE> 37
the CRESTS Units, the Warrant components of the CRESTS Units and the Warrant
Shares underlying the Warrants under the 1933 Act, Pre-effective Amendment No. 1
to the registration statement on Form S-3 filed with the Commission under the
1933 Act on October 29, 1998, and Post-effective Amendment No. 1 to the
registration statement on Form S-3 filed with the Commission under the 1933 Act
on November 9, 1998; (iii) the opinions of Ballard Spahr Andrews & Ingersoll,
LLP dated the date hereof; and (iv) the opinion of Richards, Layton & Finger,
P.A. dated the date hereof. Such registration statement, as amended, initially
became effective under the 1933 Act on October 30, 1998, and the post-effective
amendment thereto became effective on November 9, 1998, and such registration
statement, as amended, is hereinafter referred to as the "Registration
Statement"; and the prospectus dated October 30, 1998, and the related
prospectus supplement dated July 21, 1999 with respect to the CRESTS Units, as
filed pursuant to Rule 424(b) of the 1933 Act, are hereinafter referred to
collectively as the "Prospectus."
In making my examination of documents executed by parties other than
the Company or the Trust, I have assumed that such parties had the power,
corporate or other, to enter into and perform all obligations thereunder and I
have also assumed the due authorization of all requisite action, corporate or
other, and execution and delivery by such parties of such documents and the
validity and binding effect thereof.
In addition, I have examined or have had examined by members of the
Company's legal staff, on whom you and I are justified in relying, the
originals, or copies certified or otherwise identified to my satisfaction, of
the Company's Certificate of Incorporation, as restated and amended, By-Laws, as
revised and amended, and such records, documents, certificates, and other
information as in my judgment are necessary or appropriate to enable me to
render the opinions expressed below and relied as to matters of fact, to the
extent I have deemed proper, on certificates of responsible officers of the
Company and certificates and statements or other written statements of officials
of jurisdictions having custody of documents respecting the corporate existence,
qualification or good standing of the Company and its Material Subsidiaries.
The opinions set forth herein are based on and limited to the laws of
the State of Delaware and the federal laws of the United States and I am not
admitted to practice law in the State of New York.
Based on and subject to the foregoing, I am of the opinion that:
A-2
<PAGE> 38
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company is duly qualified as a foreign corporation and is in
good standing under the laws of each other jurisdiction where its ownership,
lease, licensing or operation of property or the conduct of its business
requires such qualification, other than in such jurisdiction or jurisdictions
where the failure to be so qualified and in good standing could not reasonably
be expected to result in a Material Adverse Effect.
3. The Company has all corporate power and authority and the legal
right to (a) own, lease, license and operate its properties, (b) conduct the
business in which it is currently engaged and (c) enter into, and perform its
obligations under, or as contemplated under, the Underwriting Agreement.
4. Neither the Company nor any of its Material Subsidiaries is in
violation of its Charter or By-Laws or other constitutive documents or is in
default under any Existing Instrument, except for such defaults as could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. The execution, delivery and performance by the Company of the
Underwriting Agreement, the consummation of the transactions therein
contemplated and the compliance by the Company with its obligations thereunder
(i) do not and will not result in any violation of the provisions of the
Certificate of Incorporation or By-Laws or other constitutive documents of the
Company or any Material Subsidiary, (ii) do not and will not conflict with or
constitute a breach of, default or a Debt Repayment Trigger Event under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
assets, properties or operations of the Company or any of its Material
Subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, defaults, liens,
charges or encumbrances (other than liens, charges or encumbrances created by or
contemplated in the Credit Agreement (as defined below) as in effect on the date
hereof), or failure to obtain consent as would not, individually or in the
aggregate, result in a Material Adverse Effect and (iii) 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 governmental body having
jurisdiction over the Company or any of its Material Subsidiaries or any of
their respective assets, properties or operations the result of which could
result in a Material Adverse Effect.
5. Each Material Subsidiary of the Company is a duly and validly
existing entity and is in good standing under the laws of the jurisdiction of
its incorporation or
A-3
<PAGE> 39
organization, has all corporate power and authority to own, lease, license and
operate its properties and conduct its business as currently conducted. Each
Material Subsidiary is duly qualified as a foreign entity in good standing in
each other jurisdiction, where its ownership, lease, license or operation of
property or the conduct of its business requires such qualification, other than
in such jurisdiction or jurisdictions where the failure to be so qualified and
be in good standing could not reasonably be expected to result in a Material
Adverse Effect. Except as otherwise stated in the Registration Statement and the
Prospectus, all of the issued and outstanding capital stock of each Material
Subsidiary has been duly authorized and validly issued, is 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 (other than
liens created by or contemplated in the Amended and Restated Credit Agreement
dated as of April 19, 1999, among the Company and NationsBank, N.A., as
Administrative Agent, and the lenders party thereto as in effect on the date
hereof (the "Credit Agreement")), encumbrance, claim or equity other than of the
Company or its subsidiaries or, to the best of my knowledge, any pending or
threatened claim. There are no preemptive or other similar rights of any
securityholder (other than the Company and its subsidiaries) with respect to the
outstanding shares of capital stock of any such Material Subsidiary.
6. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus Supplement under the caption "Capitalization"
(other than for subsequent issuances, if any, pursuant to employee benefit or
compensation plans described or incorporated by reference in the Prospectus or
upon exercise of outstanding options or warrants described or incorporated by
reference in the Prospectus). Such shares of capital stock have been duly
authorized and validly issued by the Company and are fully paid and
non-assessable and, to the best of my knowledge, have been issued in compliance
with federal and state securities laws. Such shares of capital stock conform in
all material respects to the description thereof contained or incorporated by
reference in the Prospectus. None of the outstanding shares of capital stock was
issued in violation of preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. Other
than as described in the Prospectus, no stockholder of the Company or any other
person has any preemptive right, right of first refusal or other rights to
subscribe for or purchase securities of the Company arising (a) by operation of
the Certificate of Incorporation or By-Laws of the Company or the General
Corporation Law of the State of Delaware or (b) to the best of my knowledge,
otherwise.
7. The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus (other than the
financial statements and supporting schedules therein or omitted therefrom, as
to which I express no opinion), at the time they were
A-4
<PAGE> 40
filed with the Commission, complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations.
8. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
9. The statements in or incorporated by reference in the Prospectus
under the captions "Legal Proceedings," "Business--Litigation" and
"--Environmental Matters," insofar as such statements constitute matters of law,
summaries of legal matters, the Company's Certificate of Incorporation or By-Law
provisions, documents or legal proceedings, or legal conclusions, have been
reviewed by me and fairly present and summarize, in all material respects, the
matters referred to therein.
10. The Company and the Trust meet the requirements for use of Form
S-3 under the 1933 Act. We have been advised by the staff of the Commission that
the Registration Statement has been declared effective by the Commission under
the 1933 Act. To the best of my knowledge, the Company and the Trust 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 is in effect and no proceedings for
such purpose have been instituted or are pending or, to my knowledge, are
contemplated or threatened by the Commission.
11. To the best of my knowledge, there are no actions, suits,
proceedings, inquiries or investigations before or brought by any legal or
governmental agency or body now pending or, to the best of my knowledge,
threatened against or affecting the Company, the Trust or any of the Company's
Material Subsidiaries which are required to be disclosed in the Registration
Statement and the Prospectus, other than those disclosed therein.
12. To the best of my knowledge, there are no Existing Instruments
required to be described or referred to in the Registration Statement or the
Prospectus or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto;
and the descriptions thereof and references thereto are correct in all material
respects.
13. Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
(i) to the best of my knowledge, there has been no material adverse change, or
development that could reasonably
A-5
<PAGE> 41
be expected to result in a material adverse change, in the condition, financial
or otherwise, in or affecting the earnings, business, operations or financial
position, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity, (ii) to
the best of my knowledge, there have been no transactions entered into by the
Company or any of its Material Subsidiaries, other than those arising in the
ordinary course of business, which are, individually or in the aggregate,
material with respect to the Company and its subsidiaries, considered as one
enterprise and (iii) 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, 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.
14. There are no persons with registration or other similar rights to
have any equity or debt securities registered for sale under the Registration
Statement, except for such rights as have been duly waived.
In addition, I have participated in conferences with officers and other
representatives of the Company, representatives of the independent public or
certified public accountants for the Company and others at which the contents of
the Registration Statement and the Prospectus, and any amendments thereto, and
related matters were discussed, and although I am not passing upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (other than
as specified above), and any amendments thereto, on the basis of the foregoing,
nothing has come to my attention which would lead me to believe that either the
Registration Statement or any amendments thereto, at the time the Company filed
its Annual Report on Form 10-K for the year ended December 31, 1998 with the
Commission or at the date of the Underwriting Agreement, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date or as of the date of this opinion, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that I express no opinion with respect to the financial statements
and the notes thereto and schedules
A-6
<PAGE> 42
and other financial or statistical information derived therefrom included or
incorporated by reference in the Registration Statement or the Prospectus).
This letter is furnished solely for the information of the Underwriters
in connection with the offering and sale of the CRESTS Units and may not be
relied upon by any other person without my prior written consent in each
instance.
Very truly yours,
Israel J. Floyd
Assistant General Counsel and
Corporate Secretary
A-7
<PAGE> 43
EXHIBIT B
Form of Opinion of Ballard Spahr Andrews & Ingersoll, LLP
July 27, 1999
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
c/o Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Issuance and Sale of 350,000 CRESTS Units of
Hercules Incorporated and Hercules Trust II
Ladies and Gentlemen:
We have acted as special counsel to Hercules Incorporated, a Delaware
corporation (the "Company"), and Hercules Trust II, a Delaware statutory
business trust (the "Trust"), in connection with (i) the execution and delivery
of the Underwriting Agreement dated July 21, 1999 (the "Underwriting
Agreement"), among the Company, the Trust and Banc of America Securities LLC,
Salomon Smith Barney Inc., Chase Securities Inc., Deutsche Bank Securities Inc.
and J.P. Morgan Securities Inc. (the "Underwriters"), (ii) the issuance and sale
by the Company and the Trust of 350,000 CRESTS Units, each consisting of one
preferred security of the Trust and one warrant to purchase shares of common
stock of the Company, and (iii) the preparation of the Company's and the Trust's
registration statement on Form S-3 (Registration No. 333-63423) filed with the
Commission under the 1933 Act on September 15, 1998, Pre-effective Amendment No.
1 to the Company's registration statement on Form S-3 filed with the Commission
under the 1933 Act on October 29, 1998 and Post-effective Amendment No. 1 to the
Company's registration statement on Form S-3 filed with the Commission under the
1933 Act on November 9, 1998. Such registration statement, as amended, is
hereinafter referred to as
B-1
<PAGE> 44
the "Registration Statement," and the prospectus dated October 30, 1998, and the
related prospectus supplement with respect to the CRESTS Units dated July 21,
1999, as filed pursuant to Rule 424(b) of the 1933 Act, are hereinafter referred
to collectively as the "Prospectus."
This opinion is being delivered to you pursuant to Section 5(b)(ii) of
the Underwriting Agreement. Unless defined in this opinion, capitalized terms
are used herein as defined in the Underwriting Agreement.
In our capacity as special counsel, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of the
Underwriting Agreement, the Registration Statement, the Prospectus, the
Indenture, the First Supplemental Indenture, the Unit Agreement, the Trust
Agreement, the Warrant Agreement, the Preferred Securities Guarantee, the Common
Securities Guarantee, the Officers' Certificate under the Indenture, the
specimen certificate representing the CRESTS Units, the specimen certificate
representing the Preferred Securities, the specimen certificate representing the
Common Securities, the specimen certificate representing the Warrants, the
minutes of corporate proceedings of the Company and such corporate records of
the Company, and other agreements, documents and instruments, and such
certificates or comparable documents of public officials, officers and
representatives of the Company and other persons, and have made such inquiries
of such officers, representatives and other persons and have considered such
matters of law as we have deemed appropriate as the basis for the opinions
hereinafter set forth. While we have reviewed the Company's reports filed under
the 1934 Act, which are incorporated by reference in the Registration Statement,
we did not participate in the preparation of all such reports. In all cases, we
have assumed the legal capacity and competence of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of documents submitted to
us as certified, conformed, photostatic or facsimile copies and the accuracy and
completeness of all corporate records and other information made available to us
by the Company.
We have also assumed, without verification, (i) that the parties to the
Underwriting Agreement and the other instruments and documents executed in
connection therewith, other than the Company and the Trust, have the power
(including, without limitation, corporate power where applicable) and authority
to enter into and perform the Underwriting Agreement and such other instruments
and documents, (ii) the due authorization, execution and delivery by such other
parties of the Underwriting Agreement and such other instruments and documents,
and (iii) that the Underwriting Agreement and such other instruments and
documents constitute legal, valid and binding obligations of each such other
party, enforceable against each such other party in accordance with their
respective terms.
B-2
<PAGE> 45
As to questions of fact material to this opinion, we have relied upon
the accuracy of the representations and warranties made by the Company and the
Trust in the Underwriting Agreement and on the certificates of and other
comparable documents submitted to us by officers and representatives of the
Company, Administrative Trustees of the Trust and other persons, upon statements
made to us in discussions with the Company's management and with members of the
staff of the Division of Corporation Finance of the Commission and upon
certificates of public officials.
When an opinion or confirmation is given to our knowledge or to the
best of our knowledge or with reference to matters of which we are aware or
which are known to us, or with another similar qualification, the relevant
knowledge or awareness is limited to the actual knowledge or awareness of the
individual lawyers in this firm who have participated in the specific
transaction to which this opinion relates and without any special or additional
investigation undertaken for the purposes of this opinion, except as otherwise
noted herein.
Based upon the foregoing and subject to the assumptions, exceptions,
limitations and qualifications set forth herein, we are of the opinion that:
1. Each of the Indenture and the First Supplemental Indenture
have been duly authorized, executed and delivered by the Company. The
Trust Agreement has been duly authorized, executed and delivered by the
Company and the Administrative Trustees. Each of the Unit Agreement,
the Warrant Agreement, the Preferred Securities Guarantee and the
Common Securities Guarantee has been duly authorized, executed and
delivered by, and is a valid and binding obligation of, the Company,
enforceable against the Company in accordance with its terms. To the
extent that the Trust Agreement or the Indenture is governed by the
laws of the State of New York, each of the Trust Agreement and the
Indenture is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
2. The Debt Securities have been duly authorized, executed and
delivered by the Company. The Debt Securities, when issued and
authenticated in the manner provided for in the Indenture and delivered
against payment therefor, will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with
their terms. The Debt Securities are in the form contemplated by the
Indenture, the First Supplemental Indenture and the Officers'
Certificate, and each registered holder thereof will be entitled to the
benefits of the Indenture and the First Supplemental Indenture.
B-3
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3. The CRESTS Units have been duly authorized for issuance by
the Company in respect of their Warrant components and, when issued and
delivered against payment therefor as provided in the Underwriting
Agreement, in respect of the Warrant components, will constitute valid
and binding obligations of the Company, enforceable against the Company
in accordance with their terms. The CRESTS Units conform in all
material respects to the statements relating thereto contained in the
Prospectus and are in substantially the form filed or incorporated by
reference, as the case may be, as an exhibit to the Registration
Statement.
4. The Warrants have been duly authorized for issuance by the
Company pursuant to the Warrant Agreement and, when issued and
delivered by the Company pursuant to the Underwriting Agreement against
payment of the consideration set forth therein, will constitute valid
and binding obligations of the Company, enforceable against the Company
in accordance with their terms. The Warrants are in the form
contemplated by the Warrant Agreement.
5. The Warrant Shares issuable upon exercise of the Warrants
pursuant to the Warrant Agreement have been duly authorized and
reserved for issuance by the Company. The Warrant Shares, when issued
in accordance with the Warrant Agreement against payment of the
consideration set forth therein, will be validly issued, fully paid and
non-assessable. The issuance of the Warrant Shares is not and will not
be subject to preemptive or other similar rights of any securityholder
of the Company and in the Delaware General Corporation Law, the
Company's Amended and Restated Certificate of Incorporation or, to our
knowledge, otherwise.
6. The Registration Statement has been declared effective
under the 1933 Act. Any required filing of the Prospectus pursuant to
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b). To the best of our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
initiated or threatened by the Commission.
7. The Registration Statement and the Prospectus, including
the documents incorporated by reference therein, and each amendment to
the Registration Statement and the Prospectus, including the documents
incorporated by reference therein, as of their respective effective or
issue dates (other than the financial statements and supporting
schedules included therein or omitted therefrom and each Trustee's
Statement of Eligibility on Form T-1, as to which we express no
opinion) comply as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
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8. The information (A) included or incorporated by reference
in the Prospectus under the captions "Description of Capital Stock,"
"Description of the Securities to be Offered," "Description of Debt
Securities," "Description of Warrants," "Description of Trust Preferred
Securities" and "Description of Guarantees," and (B) in Item 15 of the
Registration Statement, insofar as such statements constitute matters
of law, summaries of legal matters, the Company's Certificate of
Incorporation or By-Law provisions, documents or legal proceedings, or
legal conclusions, have been reviewed by us and fairly present and
summarize, in all material respects, the matters referred to therein.
9. No consent, approval, authorization, order, registration,
qualification or filing of or with any court or governmental agency or
body is necessary or required for the due authorization, execution or
delivery by the Company and the Trust of the Underwriting Agreement or
for the performance by the Company and the Trust of the transactions
contemplated under the Prospectus, the Underwriting Agreement, the
Indenture, the Trust Agreement or the Preferred Securities Guarantee,
the Unit Agreement or the Warrant Agreement, other than under the 1933
Act, the 1933 Act Regulations, the 1939 Act and the 1939 Act
Regulations, which have already been made, obtained or rendered, as
applicable.
10. The Indenture, the Trust Agreement and the Preferred
Securities Guarantee have been duly qualified under the 1939 Act.
11. The Company is not, and upon the issuance and sale of the
CRESTS Units as contemplated in the Underwriting Agreement and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
12. The Trust will be classified as a grantor trust for United
States federal income tax purposes and not as an association taxable as
a corporation.
13. The Debt Securities will be classified as indebtedness for
United States federal income tax purposes.
14. The statements made in the Prospectus under the caption
"Certain U.S. Federal Income Tax Consequences," to the extent they
constitute matters of law or legal conclusions, have been reviewed by
us and are accurate, complete and correct and fairly present the
information set forth therein.
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<PAGE> 48
The opinions set forth above are subject to the following exceptions,
qualifications and limitations:
(a) Our opinion is subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent
transfer, marshalling or similar laws affecting creditors' rights and remedies
generally; general principles of equity, including without limitation, concepts
of materiality, reasonableness, good faith and fair dealing (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
and limitations on enforceability of rights to indemnification by federal or
state securities laws or regulations or by public policy;
(b) We express no opinion as to the enforceability of any choice of law
provision in any document; and
(c) We express no opinion concerning the laws of any jurisdiction other
than the federal law of the United States of America, the laws of the State of
New York and the Delaware General Corporation Law, and we express no opinion on
the state securities or "Blue Sky" law of any state.
* * * * * * *
In addition, although we have not undertaken, except as otherwise
indicated in this opinion, to determine independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements in
the Registration Statement, we have participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants for the Company and others at which the contents of the
Registration Statement and the Prospectus and related matters were reviewed and
discussed. On the basis of our participation in such conferences, we do not
believe that the Registration Statement, at the time the Company filed its
Annual Report on Form 10-K for the year ended December 31, 1998 with the
Commission or at the date of the Underwriting Agreement, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus, as of its date or as of the date hereof, as the case may
be, contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that we express no view with respect to the
financial statements and the notes thereto and schedules and other financial or
statistical data derived therefrom included or incorporated by reference in the
Registration Statement or the Prospectus).
B-6
<PAGE> 49
* * * * * * *
This opinion is furnished solely for the information of the
Underwriters in connection with the offering and sale of the CRESTS Units and
may not be relied upon by any other person without our prior written consent.
This opinion is limited to the matters expressly stated herein. No
implied opinion may be inferred to extend this opinion beyond the matters
expressly stated herein. We do not undertake to advise you or anyone else of any
changes in the opinions expressed herein resulting from changes in law, changes
in facts or any other matters that hereafter might occur or be brought to our
attention.
Very truly yours,
B-7
<PAGE> 50
EXHIBIT C
Form of Opinion of Richards, Layton & Finger, P.A.
July 27, 1999
Banc of America Securities LLC
Salomon Smith Barney Inc.
Chase Securities Inc.
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
c/o Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Hercules Trust II
Ladies and Gentlemen:
We have acted as special Delaware counsel for Hercules
Incorporated, a Delaware corporation ("Hercules"), and Hercules Trust II, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of September
14, 1998 (the "Certificate"), as filed in the office of the Secretary of State
of the State of Delaware (the "Secretary of State") on September 14, 1998;
(b) The Trust Agreement of the Trust, dated as of September 14,
1998, among Hercules, as sponsor, and the trustees of the Trust named therein;
(c) The Amended and Restated Trust Agreement of the Trust, dated
as of July 27, 1999 (including Annex I and Exhibits A-1 and A-2 thereto) (the
"Trust Agreement"), among
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Hercules, as sponsor, the trustees of the Trust named therein (the "Trustees")
and the holders, from time to time, of undivided beneficial interests in the
assets of the Trust;
(d) The Underwriting Agreement, dated July 21, 1999 (the
"Underwriting Agreement"), among Hercules, the Trust and Banc of America
Securities LLC, Salomon Smith Barney Inc., Chase Securities Inc., Deutsche Bank
Securities Inc. and J.P. Morgan Securities Inc.;
(e) The Unit Agreement, dated as of July 27, 1999 (the "Unit
Agreement"), by and among Hercules, the Trust and The Chase Manhattan Bank, as
unit agent;
(f) The Indenture, dated as of March 17, 1999 (the "Original
Indenture"), as supplemented by the First Supplemental Indenture, dated as of
July 27, 1999 (as so supplemented, the "Indenture"), each by and between
Hercules and The Chase Manhattan Bank, pursuant to which the Series A Junior
Subordinated Deferrable Interest Debentures (the "Debentures") will be issued by
Hercules to the Property Trustee of the Trust;
(g) Resolutions adopted by the Board of Directors of Hercules on
February 3, 1993 (Standby Resolution for Empowered Persons), August 27, 1998
(and the related Finance Committee Resolutions of the same date) and June 24,
1999;
(h) The Officer's Certificate of Hercules, dated July 27, 1999,
relating to the issuance of the Debentures;
(i) The Prospectus, dated October 30, 1998, and the Prospectus
Supplement, dated July 21, 1999 (jointly, the "Prospectus"), relating to the
Trust Preferred Securities of the Trust, representing undivided beneficial
interests in the assets of the Trust (each, a "Preferred Security" and
collectively, the "Preferred Securities"); and
(j) A Certificate of Good Standing for the Trust, dated July 27,
1999, obtained from the Secretary of State.
Capitalized terms used herein and not otherwise defined are used
as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed or referred to in paragraphs (a) through (j)
above. In particular, we have not
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<PAGE> 52
reviewed any document (other than the documents listed or referred to in
paragraphs (a) through (j) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation, and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, that each of the parties to the
documents examined by us has been duly created, formed, or organized, as the
case may be, and is validly existing in good standing under the laws of the
jurisdiction governing its creation, formation or organization, (iii) the legal
capacity of each natural person who is a party to the documents examined by us,
(iv) except to the extent set forth in paragraph 3 below, that each of the
parties to the documents examined by us has the power and authority to execute
and deliver, and to perform its obligations under, such documents, (v) except to
the extent provided in paragraphs 4 and 8 below, that each of the parties to the
documents examined by us has duly authorized, executed and delivered such
documents, (vi) the receipt by each Person to whom a Preferred Security is to be
issued by the Trust (the "Preferred Security Holders") of a Preferred Securities
Certificate (substantially in the form attached to the Trust Agreement as
Exhibit A-1) for the Preferred Security and the payment for the Preferred
Security acquired by it, in accordance with the Trust Agreement, and as
described in the Prospectus, (vii) that the Preferred Securities are issued and
sold to the Preferred Security Holders in accordance with the Trust Agreement,
and as described in the Prospectus, (viii) the receipt by the Person (the
"Common Security Holder") to whom a Common Security of the Trust representing
common undivided beneficial interests in the assets of the Trust (each, a
"Common Security" and collectively, the "Common Securities") is to be issued by
the Trust of a Common Securities certificate (substantially in the form attached
to the Trust Agreement as Exhibit A-2) for the Common Security and the payment
for the Common Security acquired by it, in accordance with the Trust Agreement,
and as described in the Prospectus, (ix) that the Common Securities are issued
and sold to the Common Security Holder
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<PAGE> 53
in accordance with the Trust Agreement, and as described in the Prospectus, (x)
that the Trust derives no income from or connected with sources within the State
of Delaware and has no assets, activities (other than having a Delaware trustee
as required by the Business Trust Act and filing documents with the Secretary of
State) or employees in the State of Delaware, (xi) that the Trust is treated as
a grantor trust for federal income tax purposes, and (xii) that the Supplemental
Indenture was adopted in accordance with the terms of the Original Debenture. We
have not participated in the preparation of the Prospectus and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Business Trust Act, and all filings
required under the laws of the State of Delaware with respect to the creation
and valid existence of the Trust as a business trust have been made.
2. Under the Business Trust Act and the Trust Agreement, the
Trust has the trust power and authority to own property and conduct its
business, all as described in the Prospectus.
3. Under the Business Trust Act and the Trust Agreement, the
Trust has the trust power and authority (a) to execute and deliver, and to
perform its obligations under, the Underwriting Agreement and the Unit Agreement
and (b) to issue and perform its obligations under the Preferred Securities and
the Common Securities.
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<PAGE> 54
4. Under the Business Trust Act and the Trust Agreement, the
execution and delivery by the Trust of the Underwriting Agreement and the Unit
Agreement, and the performance by the Trust of its obligations thereunder, have
been duly authorized by all necessary trust action on the part of the Trust.
5. The Trust Agreement constitutes a valid and binding
obligation of Hercules and the Trustees, and is enforceable against Hercules and
the Trustees, in accordance with its terms. The Indenture constitutes a valid
and binding obligation of Hercules, and is enforceable against Hercules, in
accordance with its terms. The Unit Agreement constitutes a valid and binding
obligation of the Trust, and is enforceable against the Trust, in accordance
with its terms.
6. The Preferred Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and nonassessable undivided
beneficial interests in the assets of the Trust. Under the Business Trust Act,
the Trust Agreement and the Unit Agreement, the issuance by the Trust of the
CRESTS Units has been duly authorized by the Trust, in respect of the Preferred
Security component of the CRESTS Units. Under the Business Trust Act and the
Trust Agreement, the issuance of the Preferred Securities is not subject to
preemptive rights. The Preferred Security Holders will be entitled to the
benefits of the Trust Agreement and, as beneficial owners of the Trust, are
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware. We note that the Preferred Security Holders may be
obligated, pursuant to the Trust Agreement, to (a) provide indemnity and/or
security in connection with and pay a sum sufficient to cover taxes or
governmental charges arising from transfers or exchanges of Preferred Securities
certificates and the issuance of replacement Preferred Securities certificates
and (b) provide security and/or indemnity in connection with requests of or
directions to the Property Trustee to exercise its rights and powers under the
Trust Agreement. Under the Business Trust Act and the Trust Agreement, the
issuance of the Preferred Securities is not subject to preemptive or other
similar rights.
7. The Common Securities have been duly authorized by the Trust
Agreement and are duly and validly issued and fully paid undivided beneficial
interests in the
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<PAGE> 55
assets of the Trust. Under the Business Trust Act and the Trust Agreement, the
issuance of the Common Securities is not subject to preemptive or other similar
rights.
8. The Debentures have been duly authorized by the Indenture
and, when duly executed, authenticated, issued and delivered in accordance with
the Indenture against payment of the purchase price therefor as provided in the
Indenture, will be validly issued and outstanding and will constitute valid and
binding obligations of Hercules, entitled to the benefits of the Indenture and
enforceable against Hercules, in accordance with their terms.
9. The issuance and sale by the Trust of the Preferred
Securities and the Common Securities, the purchase by the Trust of the
Debentures, the execution, delivery and performance by the Trust of the
Underwriting Agreement and the Unit Agreement, the consummation by the Trust of
the transactions contemplated therein and the compliance by the Trust with its
obligations thereunder do not violate (a) any of the provisions of the
Certificate or the Trust Agreement or (b) any applicable Delaware law or
Delaware administrative regulation.
10. No filing or registration with, or authorization, approval,
consent, license, order, qualification or decree of, any Delaware court or
Delaware governmental authority or Delaware agency is required to be obtained by
the Trust solely as a result of the issuance and sale of the Preferred
Securities, the purchase by the Trust of the Debentures, the execution, delivery
and performance by the Trust of the Underwriting Agreement and the Unit
Agreement, the consummation by the Trust of the transactions contemplated in the
Underwriting Agreement and the Unit Agreement, or the compliance by the Trust of
its obligations thereunder.
11. The Preferred Security Holders (other than those Preferred
Security Holders who reside or are domiciled in the State of Delaware) will have
no liability for income taxes imposed by the State of Delaware solely as a
result of their participation in the Trust, and the Trust will not be liable for
any income tax imposed by the State of Delaware.
The opinions expressed in paragraphs 5 and 8 above are subject,
as to enforcement, to the effect upon the Trust Agreement, the Unit Agreement,
the Indenture and the Debentures of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance or transfer and
other similar laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties
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<PAGE> 56
(regardless of whether considered and applied in a proceeding in equity or at
law), and (iii) the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution. To the extent that
Section 14.2 of the Trust Agreement provides that the Trust Agreement is
governed by laws other than the laws of the State of Delaware, we express no
opinion concerning Section 14.2 of the Trust Agreement or the effect of Section
14.2 of the Trust Agreement on the Trust Agreement. We express no opinion
concerning the Indenture and the Debentures to the extent that they are governed
by laws other than laws of the State of Delaware. We express no opinion
concerning the enforceability of the Warrant Agreement and the Warrants or the
effect their enforceability has on the Unit Agreement or the issuance of the
CRESTS Units.
We consent to your relying as to matters of Delaware law upon
this opinion in connection with the Underwriting Agreement. We also consent to
Brown & Wood LLP's and Ballard Spahr Andrews & Ingersoll, LLP's relying as to
matters of Delaware law upon this opinion in connection with opinions to be
rendered by them on the date hereof pursuant to the Underwriting Agreement. In
addition, we consent to The Chase Manhattan Bank's and Chase Manhattan Bank
Delaware's relying as to matters of Delaware law upon this opinion in connection
with the matters set forth herein. Except as stated above, without our prior
written consent, this opinion may not be furnished or quoted to, or relied upon
by, any other Person for any purpose.
Very truly yours,
BJK/CDR
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<PAGE> 57
EXHIBIT D
July 13, 1999
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Re: Proposed Public Offering of CRESTS Units
----------------------------------------
Dear Sir/Madam:
As a stockholder, director and/or executive of Hercules Incorporated
("Hercules"), I understand understands that you propose to enter into an
Underwriting Agreement (the "Underwriting Agreement") with Hercules and the
other parties named therein providing for the public offering of CRESTS Units,
consisting of preferred securities of Hercules Trust II (the "Trust") and
warrants to purchase shares of Hercules' common stock, without par value ($25/48
stated value). In recognition of the benefit that such an offering will confer
upon me and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, I agree with each underwriter to
be named in the Underwriting Agreement that, during a period from the date that
the said public offering is priced (which date is estimated to be July 20 or 21,
1999) until ninety (90) days thereafter (which date is estimated to be October
20 or 21, 1999) I will not, without the prior written consent of Banc of America
Securities LLC (which consent may be withheld in its sole discretion), directly
or indirectly, sell, offer, contract or grant any option to sell (including,
without limitation, any short sale), pledge, transfer, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
and Exchange Act of 1934 or otherwise dispose of any CRESTS Units, any shares of
Hercules' common stock, any preferred securities of Hercules Trust II or
warrants of Hercules owned either of record or beneficially by me, or publicly
announce the intention to do any of the foregoing.
Very truly yours,
Signature:
-------------------------
Name Printed:
----------------------
Title:
-----------------------------
D-1
<PAGE> 1
Exhibit 1.2
HERCULES INCORPORATED
Common Stock
UNDERWRITING AGREEMENT
July 21, 1999
BANC OF AMERICA SECURITIES LLC
as Representative of the several Underwriters
listed in Schedule A
c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
Hercules Incorporated, a Delaware corporation (the "Company") confirms
its agreement (this "Underwriting Agreement") with the Representative named
above (the "Representative") 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 Company and the purchase by the
Underwriters, acting severally and not jointly, of the respective number of
shares of common stock totaling 5,000,000, without par value ($25/48 stated
value), of the Company (the "Common Stock") set forth in said Schedule A hereto,
and with respect to the grant by the Company to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of 750,000 additional shares of Common Stock to cover
over-allotments, if any. The aforesaid 5,000,000 shares of Common Stock (the
"Initial Securities") to be purchased by the Underwriters and all or any part of
the 750,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "Option Securities") are hereinafter called, collectively, the
"Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representative deems advisable after
this Agreement has been executed and delivered.
The Company has 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 the Company filed a post-effective
amendment thereto on November 9, 1998
<PAGE> 2
and such other 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 Securities, in the
form first furnished to the Underwriters by the Company for use in connection
with the offering of the 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 the applicable final
prospectus and the final prospectus supplement were first furnished to the
Underwriters by the Company; and provided, further, that if the Company files 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 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 Company.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company, as to
itself and its subsidiaries, represents and warrants to each Underwriter as of
the date hereof, as of the Closing Time (as defined in Section 2(c)) 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 Company meets
the requirements for use of Form S-3 under the 1933 Act. The
Registration Statement has become effective under the 1933 Act. The
Company has complied to the Commission's satisfaction with all
requests of the Commission for additional or supplemental
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information. No stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of
the Company, are contemplated or threatened by the Commission.
At the respective times the 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 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 Company in writing by any Underwriter through the
Representative 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 the 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.
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(4) Financial Statements. The financial statements of the Company
included in the Registration Statement and the Prospectus, together
with the related schedules and 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 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 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
Company and its subsidiaries considered as one enterprise or (C)
except for regular dividends on the Company's Common Stock (which
dividends include amounts, sometimes called "dividend equivalents,"
paid under the Company's employee benefit and compensation plans on
the Common Stock and 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,
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
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consolidated basis) of the Company and its subsidiaries or (iii) is
otherwise necessary for the ongoing business operations of the Company
or its subsidiaries, taken as a whole.
(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 Securities and to enter into and
perform its obligations under, or as contemplated under, this
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 entity 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 or
other entity 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 number of authorized, issued and
outstanding shares of capital stock of the Company is as set forth in
the column entitled "Actual" under the "Capitalization" section of the
Prospectus. 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) Authorization of the Securities. As of the Closing Time, the
Securities will have been duly authorized for issuance by the Company,
and, when issued and delivered against payment therefor as provided in
this Underwriting Agreement, will be validly issued and fully paid and
nonassessable.
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(10) Authorization of this Underwriting Agreement. This
Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(11) Descriptions of the Securities and this Agreement. The
Securities and this Agreement, as of each Representation Date, conform
and will conform 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.
(12) Absence of Defaults and Conflicts. Neither Company nor 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 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 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.
(13) Noncontravention. The issuance of the Securities and the
execution, delivery and performance by the Company of this Agreement
and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company 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 will not result in
any violation of the provisions of the Certificate of Incorporation or
By-Laws or other constitutive documents of the Company or any Material
Subsidiary, (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 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 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 Company or any of the Material Subsidiaries.
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<PAGE> 7
(14) 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
Company threatened, against or affecting 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 Company of its obligations hereunder and thereunder. The aggregate
of all pending legal or governmental proceedings to which 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.
(15) 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.
(16) 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
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 Company of the Securities, for the due
authorization, execution and delivery by the Company of this Agreement
or for the performance by the Company of the transactions contemplated
under the Prospectus or this Agreement, except such as have been
already made, obtained or rendered, as applicable.
(17) Stock Exchange Listing All Securities to be issued hereunder
have been approved for listing on The New York Stock Exchange, subject
only to official notice of issuance.
(18) Price Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action designed
to, or that could be reasonably expected to cause or result in,
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of any Securities. Notwithstanding the
foregoing, the repurchase by the Company from time to time pursuant to
a share repurchase program authorized by the Board of Directors of the
Company, if conducted in accordance with applicable law (including,
without limitation, Regulation M and Rule 10b-18 under the 1934 Act),
shall not be deemed or considered to be such stabilization or
manipulation.
(19) 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
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<PAGE> 8
Intellectual Property, which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
(20) 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.
(21) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus the Company will not be, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "1940
Act").
(22) 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;
(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;
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(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 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
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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 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 Securities
shall be deemed a representation and warranty by the Company 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 Securities. On the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, at the initial public offering price per
security set forth in Schedule C, the number of Initial Securities set forth in
Schedule A opposite the name of such Underwriter, plus any additional number of
Initial Securities which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof.
(b) Option Securities. On the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to 750,000 additional shares of Common Stock at
a price per Option Security equal to the price per Initial Security, less an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
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 Securities upon notice by the Representative to
the Company setting forth the number of Option 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 Securities. Any such time and date of
payment and delivery (each, a "Date of Delivery") shall be determined by the
Representative, the Company, 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 the Representative , the Company. If the
option is exercised as to all or any portion of the Option Securities, each of
the Underwriters, severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities each such Underwriter has severally agreed to purchase bears
to the total number of Initial Securities, subject to such adjustments as Banc
of America Securities LLC ("Banc of America") in its discretion shall make to
eliminate any sales or purchases of a fractional number of Option Securities.
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(c) Payment. Payment of the purchase price for, and delivery of, the
Initial Securities shall be made at the offices of Ballard Spahr Andrews &
Ingersoll, LLP, or at such other place as shall be agreed upon by Banc of
America and the Company, 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 Banc of America and the
Company (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 Securities, payment of the
purchase price for, and delivery of such Option 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 Banc of America and the Company, on the
relevant Date of Delivery as specified in the notice from Banc of America to the
Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a designated bank account, against delivery to Banc of
America for the respective accounts of the Underwriters of the Securities to be
purchased by them. It is understood that each Underwriter has authorized Banc of
America, for its account, to accept delivery of, receipt for, and make payment
of the purchase price for, the Securities which it has severally agreed to
purchase. Banc of America, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the 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.
(d) Denominations; Registration. The Securities shall be in such
denominations and registered in such names as Banc of America 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 Securities will be made available for
examination and, if applicable, packaging by Banc of America 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, the Company hereby agrees to pay at the Closing Time or
the relevant Date of Delivery, as the case may be, to Banc of America, for the
respective accounts of the Underwriters, in immediately available funds, a
commission per Security to be delivered at the Closing Time or the relevant Date
of Delivery, as the case may be, as is specified in Schedule C hereto.
SECTION 3. Covenants. The Company covenants with each Underwriter as
follows:
(a) Compliance with Securities Regulations and Commission Requests.
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 Banc of America 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
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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 Company will
promptly effect the filings necessary pursuant to Rule 424 and will take such
steps as it deems 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, it will promptly file the Prospectus. The
Company will use its 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.
(b) Filing of Amendments. The Company will give Banc of America notice
of its intention to file or prepare any amendment to the Registration Statement
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 Banc
of America with copies of any such document that could reasonably relate to an
investment decision for the 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 Banc of America or counsel for the Underwriters shall
reasonably object in writing within three days of receipt thereof.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to Banc of America 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 Banc of America, 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.
(d) Delivery of Prospectuses. The Company will deliver to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. 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 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 Securities
as contemplated in this Underwriting Agreement and in the Registration Statement
and the Prospectus. If at any time when the
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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
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 Company will
furnish to the Underwriters, without charge, such number of copies of such
amendment or supplement as such Underwriters may reasonably request.
(f) Compliance with Blue Sky Laws. The Company will cooperate with the
Underwriters and use their best efforts to qualify or register the Securities
for sale under (or obtain exemptions from the application of) the state
securities or blue sky laws of those jurisdictions designated by the
Underwriters, will comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the distribution
of the Securities. The Company will not be required to qualify as a foreign
corporation or to take any action that would subject it to general service of
process in any such jurisdiction where it is not presently qualified or where it
would as a result of such action be subject to taxation as a foreign
corporation. The Company will advise the Underwriters promptly of the suspension
of the qualification or registration of (or any exemption therefrom with respect
to) any Securities for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the event of
the issuance of any order suspending such qualification, registration or
exemption, the Company shall use its best efforts to obtain the withdrawal
thereof at the earliest possible moment.
(g) Earnings Statement. 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.
(h) Use of Proceeds. The Company will use the proceeds referred to in
the Prospectus under "Use of Proceeds" in the manner described therein.
(i) Restriction on Sale of Securities. For 90 days from the date of
this Underwriting Agreement, the Company will not, without the prior written
consent of Banc of America, directly or indirectly, sell, offer, contract or
grant any option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the 1934 Act, or otherwise
dispose of or transfer, or announce the offering of, or file any registration
statement under the 1933 Act in respect of, any shares of Common Stock, options
or warrants to acquire shares of Common Stock or securities exchangeable or
exercisable for or convertible into shares of
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Common Stock, subject to the contemplated separate offering and sale of CRESTS
Units by the Company and Hercules Trust II, and the granting of options and
sales of shares and other similar rights under the Company's existing stock
option, compensation and other employee benefit plans.
(j) Lock-up Agreements. At the date of this Underwriting Agreement,
the Underwriters shall have received an agreement or agreements substantially in
the form of Exhibit C hereto signed by the persons on Schedule D hereto.
(k) Reporting Requirements. 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 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 Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the Securities to the Underwriters, including any transfer taxes and
any stamp or other duties payable upon the sale, issuance or delivery of the
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 Company, and (v) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, and the Prospectus and
any amendments or supplements thereto.
(b) Termination of Agreement. If this Underwriting Agreement is
terminated by Banc of America 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 Securities pursuant to this
Underwriting Agreement are subject to the accuracy of the representations and
warranties of the Company contained in Section 1 hereof or in certificates of
any officer of the Company or any of its subsidiaries delivered pursuant to the
provisions hereof, the performance by the Company of its covenants and other
obligations hereunder, and the following further conditions:
(a) Effectiveness of Registration Statement. The 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
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<PAGE> 15
description of the 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 the Closing Time, the
Underwriters shall have received opinions, dated as of the Closing Time, of (i)
Israel J. Floyd, Assistant General Counsel of the Company and (ii) Ballard Spahr
Andrews & Ingersoll, LLP, counsel for the Company, each in form and substance
reasonably satisfactory to the Underwriters, to the effect set forth in Exhibits
A and B 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 Counsel for Underwriters. At the Closing Time, the
Underwriters shall have received an opinion, dated as of the 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 and of public
officials.
(d) Officers' Certificate. At the 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 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 President and Chief Executive Officer or a Vice President of
the Company and the chief financial officer or chief accounting officer of the
Company, dated as of the 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 Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the 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
officers' knowledge, are threatened by the Commission.
(e) Accountants' Comfort Letters. At the time of the execution of this
Underwriting Agreement, the Underwriters shall have received from
PricewaterhouseCoopers LLP 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.
(f) Bring-down Comfort Letter. At the Closing Time, the Underwriters
shall have received from PricewaterhouseCoopers LLP a letter, dated as of the
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.
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<PAGE> 16
(g) Over-Allotment Option. In the event that the Underwriters exercise
their option to purchase all or any portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by 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, Banc of America shall have received:
(1) A certificate, dated such Date of Delivery, of the President
and Chief Executive Officer or a Vice President of the Company and the
chief financial officer or chief accounting officer of the Company,
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(f) hereof remains true and correct as of such Date of
Delivery.
(2) The opinions of (i) Israel J. Floyd, Assistant General
Counsel of the Company and (ii) Ballard Spahr Andrews & Ingersoll,
LLP, counsel for the Company, each in form and substance reasonably
satisfactory to the Underwriters, dated such Date of Delivery,
relating to the Option Securities and otherwise to the same effect as
the opinions required by Section 5(b) hereof.
(3) The opinion of Brown & Wood LLP, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the opinion required by
Section 5(e) hereof.
(4) A letter from PricewaterhouseCoopers LLP, in form and
substance reasonably 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.
(5) 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 Securities or any other securities of the
Company 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 Securities or any
other securities of the Company.
(h) Additional Documents. At the 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 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.
(i) 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
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<PAGE> 17
to the Underwriters' exercise of the over-allotment option for the purchase of
Option Securities on a Date of Delivery after the Closing Time, the obligations
of the Underwriters to purchase the Option Securities on such Date of Delivery)
may be terminated by the Representative by notice to the Company 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.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees 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, the
Company shall not 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 Company in
writing by any Underwriter through the Representative expressly for use therein;
and provided, further, that the Company shall not 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
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 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.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company 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
17
<PAGE> 18
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 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 Company in
writing by such Underwriter through the Representative 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 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
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<PAGE> 19
separate firm for the Underwriters and controlling persons of the Underwriters
shall be designated in writing by Banc of America and any such separate firm for
the Company, its directors, its officers who sign the Registration Statement and
controlling persons of the Company shall be designated in writing by the
Company.
The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for 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, 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 Company, on the one hand, and the Underwriters, on the other
hand, from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Underwriters, on the other 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.
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<PAGE> 20
The relative benefits received by the Company, on the one hand, and
the Underwriters, on the other hand, in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the total
proceeds from the offering of such Securities (before deducting expenses)
received by the Company (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 Securities as set
forth on such cover page.
The relative fault of 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 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 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 Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the 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 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 and each person, if any, who controls the
20
<PAGE> 21
Company 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. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of the Initial 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 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 Company, and shall survive
delivery of and payment for the Securities.
SECTION 9. Termination.
(a) Termination. The Representative may terminate this Underwriting
Agreement, by notice to 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 Company and its subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of business,
(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 as to
make it, in the judgment of the Representative, impracticable to market the
Securities or to enforce contracts for the sale of the Securities, (iii) trading
in any securities of 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 Securities which it or they are
obligated to purchase under this Underwriting Agreement (the "Defaulted
Securities"), then Banc of America 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
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<PAGE> 22
amounts as may be agreed upon and upon the terms herein set forth; if, however,
Banc of America 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 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 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 Securities on a Date of Delivery after the Closing
Time, the obligations of the Underwriters to purchase, and the Company
to sell, such Option 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 Securities, as
the case may be, either Banc of America 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 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 Banc of America at 600 Montgomery Street, San
Francisco, California 94111, attention of Jeffrey R. Lapic, with a copy to
Edward F. Petrosky, Esq., Brown & Wood LLP, One World Trade Center, New York,
New York 10281; and notices to 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 inure to the
benefit of and be binding upon each of 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 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
22
<PAGE> 23
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 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.
23
<PAGE> 24
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Underwriting Agreement, along with all counterparts, will become a binding
agreement among the Underwriters and the Company in accordance with its terms.
Very truly yours,
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:
BANC OF AMERICA SECURITIES LLC
as Representative of the several Underwriters
By: BANC OF AMERICA SECURITIES LLC
By: /s/ TARLTON H. LONG
----------------------------------
Authorized Signatory
On behalf of itself and the other several
Underwriters
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<PAGE> 25
Schedule A
Number of
Initial
Underwriter Securities
----------- ----------
Banc of America Securities LLC ...................... 3,760,000
Chase Securities Inc. ............................... 155,000
Deutsche Bank Securities Inc. ....................... 155,000
Goldman, Sachs & Co. ................................ 155,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated... 155,000
J.P. Morgan Securities Inc. ......................... 155,000
Morgan Stanley & Co. Incorporated ................... 155,000
Salomon Smith Barney Inc. ........................... 155,000
The Robinson-Humphrey Company, LLC .................. 155,000
---------
Total ................................ 5,000,000
---------
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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.
Hercules International Limited
BetzDearborn, Inc.
BetzDearborn Europe, Inc.
DRC, Ltd.
BL Technologies, Inc.
BLI Holdings, Inc.
BetzDearborn Paper Process Group, Inc.
Hercules Investments Global, Ltd.
Hercules Overseas Corporation
BetzDearborn International, Inc.
Hercules Trust I
Hercules International Trade Corporation Limited
Hercules Holding BV/BVBA
Curtis Bay Insurance Co., Ltd.
Hercules Europe BVBA
FiberVisions A/S
Hercules Canada Inc.
Hercules Beringen BVBA
Hercules Doel BVBA
Aqualon France BV
Pomosin GmbH
Hercules BV
Hercules Limited
Hercules GmbH
Copenhagen Pectin A/S
BetzDearborn Canada, Inc.
Hercules Deutschland GmbH
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Schedule C
HERCULES INCORPORATED
5,000,000 Shares of Common Stock
(Without Par Value ($25/48 stated value))
1. The initial public offering price per share for the Securities, determined as
provided in Section 2, shall be $35.00.
2. The purchase price per share for the Securities to be paid by the several
Underwriters shall be $34.30, being an amount equal to the initial public
offering price set forth above less $ 0.70 per share.
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Schedule D
Persons Subject to Lock-Up
June B. Barry Alan R. Hirsig J. Frank Raboud
David L. Chester Hans H. Hjorth Larry V. Rankin
Thomas A Ciconte, Jr. Edith E. Holiday Monika Riese-Martin
Vincent J. Corbo Robert G. Jahn John P. Murta
Richard G. Dahlen Bruce W. Jester Michael J. Scott
Dominick W. DiDonna Vikram Jog Stuart C. Shears
John G. Drosdick Gaynor N. Kelley John A. H. Shober
R. Keith Elliott Jan M. King David A. Simpson
Richard M. Fairbanks, III Ralph L. MacDonald, Jr. Paula A. Sneed
Israel J. Floyd George MacKenzie Matthias Sonneveld
Thomas W. Fredericks H. Eugene McBrayer Harry J. Tucci
Robert E. Gallant Peter McCausland
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<PAGE> 29
EXHIBIT A
Form of Opinion of Israel J. Floyd
July 27, 1999
Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Issuance and Sale of 5,000,000 Shares of Common Stock
Ladies and Gentlemen:
I am Assistant General Counsel of Hercules Incorporated (the
"Company"), a Delaware corporation, and I am familiar with the Company's plans
to (i) issue 5,000,000 shares of common stock, without par value ($25/48 stated
value) (the "Underwritten Securities"), (ii) sell the Underwritten Securities
to the underwriters named in the Underwriting Agreement dated July 21, 1999
(the "Underwriting Agreement"), between the Company and Banc of America
Securities LLC, as representative of the several underwriters named in Schedule
A thereto (the "Underwriters"), and (iii) grant to the Underwriters the option
to purchase up to an additional 750,000 shares of common stock to cover
over-allotments (collectively with the Underwritten Securities, the "Common
Stock").
This opinion is being delivered pursuant to Section 5(b)(i) of the
Underwriting Agreement. Unless otherwise indicated, capitalized terms used
herein without definition shall have the respective meanings set forth in the
Underwriting Agreement.
For the purposes hereof, I have examined or have had examined by
members of the Company's legal staff, on whom you and I are justified in
relying, the following: (i) a signed counterpart of the Underwriting Agreement;
(ii) a signed copy of a registration statement on Form S-3 (Registration No.
333-63423), filed by the Company with the Commission on September 15, 1998, for
the registration of the Common Stock under the 1933 Act, Pre-effective
Amendment No. 1 to the registration statement on Form S-3 filed with the
Commission under the 1933 Act on October 29, 1998, and Post-effective Amendment
No. 1 to the registration statement on Form S-3 filed with the Commission under
the 1933 Act on November 9, 1998; and (iii) the opinion of Ballard Spahr
Andrews & Ingersoll, LLP dated the date hereof. Such registration statement, as
amended, initially became effective under the 1933 Act on October 30, 1998, and
the post-effective amendment thereto became effective on November 9, 1998. Such
registration statement, as amended, is hereinafter referred to as the
"Registration Statement" and the
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prospectus dated October 30, 1998, and the related prospectus supplement dated
July 21, 1999 with respect to the Common Stock, as filed pursuant to Rule
424(b) of the 1933 Act, are hereinafter referred to collectively as the
"Prospectus."
In making my examination of documents executed by parties other than
the Company, I have assumed that such parties had the power, corporate or
other, to enter into and perform all obligations thereunder and I have also
assumed the due authorization of all requisite action, corporate or other, and
execution and delivery by such parties of such documents and the validity and
binding effect thereof.
In addition, I have examined or have had examined by members of the
Company's legal staff, on whom you and I are justified in relying, the
originals, or copies certified or otherwise identified to my satisfaction, of
the Company's Certificate of Incorporation, as restated and amended, By-Laws,
as revised and amended, and such records, documents, certificates, and other
information as in my judgment are necessary or appropriate to enable me to
render the opinion expressed below and relied as to matters of fact, to the
extent I have deemed proper, on certificates of responsible officers of the
Company and certificates and statements or other written statements of
officials of jurisdictions having custody of documents respecting the corporate
existence, qualification or good standing of the Company and its Material
Subsidiaries.
The opinions set forth herein are based on and limited to the laws of
the State of Delaware and the federal laws of the United States and I am not
admitted to practice law in the State of New York.
Based on and subject to the foregoing, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company is duly qualified as a foreign corporation and is in
good standing under the laws of each other jurisdiction where its ownership,
lease, licensing or operation of property or the conduct of its business
requires such qualification, other than in such jurisdiction or jurisdictions
where the failure to be so qualified and in good standing could not reasonably
be expected to result in a Material Adverse Effect.
3. The Company has all corporate power and authority and the legal
right to (a) own, lease, license and operate its properties, (b) conduct the
business in which it is currently
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engaged and (c) enter into, and perform its obligations under, or as
contemplated under, the Underwriting Agreement.
4. Neither the Company nor any of its Material Subsidiaries is in
violation of its Charter or By-Laws or other constitutive documents or is in
default under any Existing Instrument, except for such defaults as could not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect. The execution, delivery and performance by the Company
of the Underwriting Agreement, the consummation of the transactions therein
contemplated and the compliance by the Company with its obligations thereunder
(i) do not and will not result in any violation of the provisions of the
Certificate of Incorporation or By-Laws or other constitutive documents of the
Company or any Material Subsidiary, (ii) do not and will not conflict with or
constitute a breach of, default or a Debt Repayment Trigger Event under, or
result in the creation or imposition of any lien, charge or encumbrance upon
any assets, properties or operations of the Company or any of its Material
Subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, defaults, liens,
charges or encumbrances (other than liens, charges or encumbrances created by
or contemplated in the Credit Agreement (as defined below) as in effect on the
date hereof), or failure to obtain consent as would not, individually or in the
aggregate, result in a Material Adverse Effect and (iii) 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 governmental body having
jurisdiction over the Company or any of its Material Subsidiaries or any of
their respective assets, properties or operations the result of which could
result in a Material Adverse Effect.
5. Each Material Subsidiary of the Company is a duly and validly
existing entity and is in good standing under the laws of the jurisdiction of
its incorporation or organization, has all corporate power and authority to
own, lease, license and operate its properties and conduct its business as
currently conducted. Each Material Subsidiary is duly qualified as a foreign
entity in good standing in each other jurisdiction, where its ownership, lease,
license or operation of property or the conduct of its business requires such
qualification, other than in such jurisdiction or jurisdictions where the
failure to be so qualified and be in good standing could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise stated in
the Registration Statement and the Prospectus, all of the issued and
outstanding capital stock of each Material Subsidiary has been duly authorized
and validly issued, is 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 (other than liens created by or contemplated
in the Amended and Restated Credit Agreement dated as of April 19, 1999, among
the Company and NationsBank, N.A., as Administrative Agent, and the lenders
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party thereto as in effect on the date hereof (the "Credit Agreement")),
encumbrance, claim or equity other than the Company's or its subsidiaries or,
to the best of my knowledge, any pending or threatened claim. There are no
preemptive or other similar rights of any securityholder (other than the
Company and its subsidiaries) with respect to the outstanding shares of capital
stock of any such Material Subsidiary.
6. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus Supplement under the caption "Capitalization"
(other than for subsequent issuances, if any, pursuant to employee benefit or
compensation plans described or incorporated by reference in the Prospectus or
upon exercise of outstanding options or warrants described or incorporated by
reference in the Prospectus). Such shares of capital stock have been duly
authorized and validly issued by the Company and are fully paid and
non-assessable and, to the best of my knowledge, have been issued in compliance
with federal and state securities laws. Such shares of capital stock conform in
all material respects to the description thereof contained or incorporated by
reference in the Prospectus. None of the outstanding shares of capital stock,
including the Underwritten Securities, was issued in violation of preemptive
rights, rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. Other than as described in the Prospectus,
no stockholder of the Company or any other person has any preemptive right,
right of first refusal or other rights to subscribe for or purchase, securities
of the Company arising (a) by operation of the Certificate of Incorporation or
By-Laws of the Company or the General Corporation Law of the State of Delaware
or (b) to the best of my knowledge, otherwise.
7. The Underwritten Securities to be sold by the Company pursuant to
the Underwriting Agreement have been duly authorized and will be validly
issued, fully paid and non-assessable when issued and paid for as contemplated
by the Underwriting Agreement.
8. The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus (other than the
financial statements and supporting schedules therein or omitted therefrom, as
to which I express no opinion), at the time they were filed with the
Commission, complied as to form in all material respects with the requirements
of the 1934 Act and the 1934 Act Regulations.
9. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
10. The statements in or incorporated by reference in the Prospectus
under the captions "Legal Proceedings," "Business--Litigation" and
"--Environmental Matters," insofar as
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such statements constitute matters of law, summaries of legal matters, the
Company's Certificate of Incorporation or By-Law provisions, documents or legal
proceedings, or legal conclusions, have been reviewed by me and fairly present
and summarize, in all material respects, the matters referred to therein.
11. The Company meets the requirements for use of Form S-3 under the
1933 Act. We have been advised by the staff of the Commission that the
Registration Statement has been declared effective by the Commission under the
1933 Act. To the best of my knowledge, the Company has 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 is in effect and no proceedings for such purpose have
been instituted or are pending or, to my knowledge, are contemplated or
threatened by the Commission.
12. To the best of my knowledge, there are no actions, suits,
proceedings, inquiries or investigations before or brought by any legal or
governmental agency or body now pending or, to the best of my knowledge,
threatened against or affecting the Company or any of its Material Subsidiaries
which are required to be disclosed in the Registration Statement and the
Prospectus, other than those disclosed 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 Company or the Trust of their
respective obligations hereunder and thereunder.
13. To the best of my knowledge, there are no Existing Instruments
required to be described or referred to in the Registration Statement or the
Prospectus or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto;
and the descriptions thereof and references thereto are correct in all material
respects.
14. Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
(i) to the best of my knowledge, there has been no material adverse change, or
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, in or affecting the earnings,
business, operations or financial position, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity, (ii) to the best of my knowledge, there
have been no transactions entered into by the Company or any of its Material
Subsidiaries, other than those arising in the ordinary course of business,
which are, individually or in the aggregate, material with respect to the
Company and its subsidiaries, considered as one enterprise and (iii) except for
regular dividends on the
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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, 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.
15. There are no persons with registration or other similar rights to
have any equity or debt securities registered for sale under the Registration
Statement, except for such rights as have been duly waived.
In addition, I have participated in conferences with officers and other
representatives of the Company, representatives of the independent public or
certified public accountants for the Company and others at which the contents
of the Registration Statement and the Prospectus, and any amendments thereto,
and related matters were discussed, and although I am not passing upon and do
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (other
than as specified above), and any amendments thereto, on the basis of the
foregoing, nothing has come to my attention which would lead me to believe that
either the Registration Statement or any amendments thereto, at the time the
Company filed its Annual Report on Form 10-K for the year ended December 31,
1998 with the Commission or at the date of the Underwriting Agreement,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, as of its date or as of the date of this
opinion, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that I express no opinion with
respect to the financial statements and the notes thereto and schedules and
other financial or statistical information derived therefrom included or
incorporated by reference in the Registration Statement or the Prospectus).
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<PAGE> 35
This letter is furnished solely for the information of the Underwriters in
connection with the offering and sale of the Common Stock and may not be relied
upon by any other person without my prior written consent in each instance.
Very truly yours,
Israel J. Floyd
Assistant General Counsel and
Corporate Secretary
A-7
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EXHIBIT B
Form of Opinion of Ballard Spahr Andrews & Ingersoll, LLP
July 27, 1999
Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Issuance and Sale of 5,000,000 Shares of
Common Stock of Hercules Incorporated
Ladies and Gentlemen:
We have acted as special counsel to Hercules Incorporated, a
Delaware corporation (the "Company"), in connection with (i) the execution and
delivery of the Underwriting Agreement dated July 21, 1999 (the "Underwriting
Agreement"), between the Company and Banc of America Securities LLC, as
representative of the several underwriters named in Schedule A thereto (the
"Underwriters), (ii) the issuance and sale by the Company of 5,000,000 shares
of common stock of the Company, without par value ($25/48 stated value) (the
"Common Stock"), and (iii) the preparation of the Company's registration
statement on Form S-3 (Registration No. 333-63423) filed with the Commission
under the 1933 Act on September 15, 1998, Pre-effective Amendment No. 1 to the
Company's registration statement on Form S-3 filed with the Commission under
the 1933 Act on October 29, 1998 and Post-effective Amendment No. 1 to the
Company's registration statement on Form S-3 filed with the Commission under
the 1933 Act on November 9, 1998. Such registration statement, as amended, is
hereinafter referred to as the "Registration Statement," and the prospectus
dated October 30, 1998, and the related prospectus supplement with respect to
the Common Stock dated July 21, 1999, as filed pursuant to Rule 424(b) of the
1933 Act, are hereinafter referred to collectively as the "Prospectus."
This opinion is being delivered to you pursuant to Section
5(b)(ii) of the Underwriting Agreement. Unless defined in this opinion,
capitalized terms are used herein as defined in the Underwriting Agreement.
B-1
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In our capacity as special counsel, we have examined
originals or copies, certified or otherwise identified to our satisfaction, of
the Underwriting Agreement, the Registration Statement, the Prospectus, the
specimen certificate representing the Common Stock, the minutes of corporate
proceedings of the Company and such corporate records of the Company, and other
agreements, documents and instruments, and such certificates or comparable
documents of public officials, officers and representatives of the Company and
other persons, and have made such inquiries of such officers, representatives
and other persons and have considered such matters of law as we have deemed
appropriate as the basis for the opinions hereinafter set forth. While we have
reviewed the Company's reports filed under the 1934 Act, which are incorporated
by reference in the Registration Statement, we did not participate in the
preparation of all such reports. In all cases, we have assumed the legal
capacity and competence of all natural persons, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of documents submitted to us as certified,
conformed, photostatic or facsimile copies and the accuracy and completeness of
all corporate records and other information made available to us by the
Company.
We have also assumed, without verification, (i) that the
parties to the Underwriting Agreement and the other instruments and documents
executed in connection therewith, other than the Company, have the power
(including, without limitation, corporate power where applicable) and authority
to enter into and perform the Underwriting Agreement and such other instruments
and documents, (ii) the due authorization, execution and delivery by such other
parties of the Underwriting Agreement and such other instruments and documents,
and (iii) that the Underwriting Agreement and such other instruments and
documents constitute legal, valid and binding obligations of each such other
party, enforceable against each such other party in accordance with their
respective terms.
As to questions of fact material to this opinion, we have
relied upon the accuracy of the representations and warranties made by the
Company in the Underwriting Agreement and on the certificates of and other
comparable documents submitted to us by officers and representatives of the
Company and other persons, upon statements made to us in discussions with the
Company's management and with members of the staff of the Division of
Corporation Finance of the Commission and upon certificates of public
officials.
When an opinion or confirmation is given to our knowledge or
to the best of our knowledge or with reference to matters of which we are aware
or which are known to us, or with another similar qualification, the relevant
knowledge or awareness is limited to the actual knowledge or awareness of the
individual lawyers in this firm who have participated in the
B-2
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specific transaction to which this opinion relates and without any special or
additional investigation undertaken for the purposes of this opinion.
Based upon the foregoing and subject to the assumptions,
exceptions, limitations and qualifications set forth herein, we are of the
opinion that:
1. The Common Stock being sold pursuant to the Underwriting
Agreement (A) conforms in all material respects to the statements
relating thereto contained in the Prospectus and is in substantially the
form filed or incorporated by reference, as the case may be, as an exhibit
to the Registration Statement and (B) has been duly authorized, and when
issued and delivered to the Underwriters against payment therefor and in
accordance with such terms will be validly issued, fully paid and
non-assessable and will not be subject to preemptive or other similar
rights of any securityholder of the Company under the Delaware General
Corporation Law, the Company's Amended and Restated Certificate of
Incorporation or, to our knowledge, otherwise.
2. The Registration Statement has been declared effective under
the 1933 Act. Any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required by
Rule 424(b). To the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933
Act and no proceedings for that purpose have been initiated or threatened
by the Commission.
3. The Registration Statement and the Prospectus, including the
documents incorporated by reference therein, and each amendment to
the Registration Statement and the Prospectus, including the documents
incorporated by reference therein, as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included therein or omitted therefrom, as to which we express no opinion)
comply as to form in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations.
4. The information (A) included or incorporated by reference in
the Prospectus under the captions "Description of Capital Stock" and
"Description of the Securities to be Offered" and (B) in Item 15 of the
Registration Statement, insofar as such statements constitute matters of
law, summaries of legal matters, the Company's Certificate of
Incorporation or By-Law provisions, documents or legal proceedings, or
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<PAGE> 39
legal conclusions, have been reviewed by us and fairly present and
summarize, in all material respects, the matters referred to therein.
5. No consent, approval, authorization, order, registration,
qualification or filing of or with any court or governmental agency
or body is necessary or required for the due authorization, execution or
delivery by the Company of the Underwriting Agreement or for the
performance by the Company of the transactions contemplated under the
Prospectus and the Underwriting Agreement, other than under the 1933 Act
and the 1933 Act Regulations, which have already been made, obtained or
rendered, as applicable.
6. The Company is not, and upon the issuance and sale of the
Common Stock as contemplated in the Underwriting Agreement and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940 and the rules and regulations of the Commission
thereunder.
The opinions set forth above are subject to the following exceptions,
qualifications and limitations:
(a) Our opinion is subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent
transfer, marshalling or similar laws affecting creditors' rights and remedies
generally; general principles of equity, including without limitation, concepts
of materiality, reasonableness, good faith and fair dealing (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
and limitations on enforceability of rights to indemnification by federal or
state securities laws or regulations or by public policy;
(b) We express no opinion as to the enforceability of any choice of
law provision in any document; and
(c) We express no opinion concerning the laws of any jurisdiction
other than the federal law of the United States of America and the Delaware
General Corporation Law, and we express no opinion on the state securities or
"Blue Sky" law of any state.
* * * * * * *
B-4
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In addition, although we have not undertaken, except as
otherwise indicated in this opinion, to determine independently, and do not
assume any responsibility for, the accuracy, completeness or fairness of the
statements in the Registration Statement, we have participated in conferences
with officers and other representatives of the Company, representatives of the
independent public accountants for the Company and others at which the contents
of the Registration Statement and the Prospectus and related matters were
reviewed and discussed. On the basis of our participation in such conferences,
we do not believe that the Registration Statement, at the time the Company
filed its Annual Report on Form 10-K for the year ended December 31, 1998 with
the Commission or at the date of the Underwriting Agreement, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus, as of its date or as of the date hereof, as
the case may be, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that we express no view with respect
to the financial statements and the notes thereto and schedules and other
financial or statistical data derived therefrom included or incorporated by
reference in the Registration Statement or the Prospectus).
* * * * * * *
This opinion is furnished solely for the information of the
Underwriters in connection with the offering and sale of the Common Stock and
may not be relied upon by any other person without our prior written consent.
This opinion is limited to the matters expressly stated
herein. No implied opinion may be inferred to extend this opinion beyond the
matters expressly stated herein. We do not undertake to advise you or anyone
else of any changes in the opinions expressed herein resulting from changes in
law, changes in facts or any other matters that hereafter might occur or be
brought to our attention.
Very truly yours,
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<PAGE> 41
EXHIBIT C
July 13,1999
BANC OF AMERICA SECURITIES LLC
as Representative of the several Underwriters
listed in Schedule A of the Underwriting Agreement
c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Re: Proposed Public Offering of Common Stock
Dear Sir/Madam:
As a stockholder, director and/or executive of Hercules Incorporated
("Hercules"), I understand that Banc of America Securities LLC as representative
of the several underwriters listed in the Underwriting Agreement proposes to
enter into an Underwriting Agreement (the "Underwriting Agreement") with
Hercules Incorporated and the other parties named therein providing for the
public offering of common stock of Hercules, without par value ($25/48 stated
value) (the "Common Stock"). In recognition of the benefit that such an offering
will confer upon me and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, I agree with each underwriter
to be named in the Underwriting Agreement that during a period from the date
that the said public offering is priced (which date is estimated to be July 20
or 21, 1999), until ninety (90) days thereafter (which date is estimated to be
October 20 or 21, 1999), I will not without the prior written consent of Banc of
America Securities LLC (which consent may be withheld at its sole discretion),
directly or indirectly, sell, offer, contract or grant any option to sell
(including, without limitation, any short sale), pledge, transfer, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934 or otherwise dispose of any shares of Hercules
common stock owned either of record or beneficially by me or publicly announce
my intention to so any of the foregoing.
Very truly yours,
Signature:
---------------------------------
Name Printed:
------------------------------
Title:
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C-1
<PAGE> 1
EXHIBIT 4.1
HERCULES INCORPORATED
Officers' Certificate
Pursuant to Sections 2.01 and 2.03 of Indenture
Hercules Incorporated, a Delaware corporation (the "Company"), and
Hercules Trust II, a Delaware statutory business trust (the "Trust"), have
offered to the public in an underwritten offering 350,000 CRESTS Units at a
purchase price of $1,000 per CRESTS Unit. Each CRESTS Unit consists of one
preferred security of the Trust and one warrant to purchase 23.4192 shares of
common stock of the Company. The preferred securities of the Trust represent
undivided beneficial interests in the assets of the Trust (the "Preferred
Securities"). The $350,000,000 aggregate purchase price for the CRESTS Units
will be allocated 74.146% ($259,511,000) to the purchase of the Preferred
Securities. The Preferred Securities will have an aggregate Scheduled
Liquidation Amount (as defined in the Trust Agreement) of $350,000,000.
The Trust proposes to invest the $259,511,000 it receives (its portion
of the proceeds from the CRESTS Units offering), together with the
$8,026,304.50 it receives from the Company for the issuance and sale by the
Trust to the Company of 10,825 of its Common Securities having an aggregate
Scheduled Liquidation Amount of $10,825,000 (the "Common Securities" and,
together with the Preferred Securities, the "Trust Securities"), in the
Subordinated Debentures referred to below having an aggregate principal amount
at maturity (the "Scheduled Principal Amount") of $360,825,000, issued under
the Junior Subordinated Debentures Indenture, dated as of March 17, 1999, as
supplemented by the First Supplemental Indenture, dated as of July 27, 1999 (as
so supplemented, 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 July 27, 1999
(the "Trust Agreement"), among the Administrative Trustees (as defined
therein), the Property Trustee (as defined therein), the Delaware Trustee (as
defined therein) and the Company. Pursuant to the terms of the Underwriting
Agreement, dated July 21, 1999 (the "Underwriting Agreement"), by and among the
Company, the Trust and Banc of America Securities LLC, Salomon Smith Barney
Inc., Chase Securities Inc., Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc. (the "Underwriters"), the Underwriters have an option to
purchase up to 50,000 additional CRESTS Units for an aggregate purchase price
of $50,000,000, of which an aggregate of $37,073,000 will be allocated to the
purchase of additional Preferred Securities. If such over-allotment option is
exercised in full, the aggregate purchase price of the Preferred Securities
will be $296,584,000 (with a Scheduled Liquidation Amount of $400,000,000), the
aggregate purchase price of the Common Securities will be $9,173,343.12 (with a
Scheduled Liquidation Amount of $12,372,000) and the aggregate Scheduled
Principal Amount of the Subordinated Debentures will be $412,372,000.
Capitalized terms used herein and not otherwise defined herein have
the meanings specified in the Indenture.
<PAGE> 2
Pursuant to Section 2.01 and Section 2.03 of the Indenture, the
undersigned President, Chief Executive Officer and Chief Operating Officer and
the undersigned 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 June 24, 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
Series A Junior Subordinated Deferrable Interest Debentures (the
"Subordinated Debentures").
(b) Aggregate Scheduled Principal Amount. The aggregate
Scheduled 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 $412,372,000. Such Scheduled Principal Amount includes
the $51,547,000 issuable upon exercise of the over-allotment option
described in the introductory paragraph to this Officers' Certificate.
Each Subordinated Debenture shall have an initial Accreted Principal
Amount (as hereinafter defined) of $741.46 per $1,000 of Scheduled
Principal Amount and such Accreted Principal Amount shall increase to
the Scheduled Principal Amount on June 30, 2029 as provided herein.
(c) Stated Maturity. The Scheduled Principal Amount of
$360,825,000 ($412,372,000 if the over-allotment option is exercised
in full) of the Subordinated Debentures will be payable on June 30,
2029 (the "Maturity Date"), subject to adjustment as set forth in
paragraph (j) below. The Maturity Date may be extended if the Reset
Date in connection with a successful Remarketing (as hereinafter
defined) is after July 1, 2028.
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<PAGE> 3
(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 6 1/2% per annum on the Scheduled Principal
Amount, except that on and after a Reset Date (as hereinafter
defined), if any, the Subordinated Debentures will bear
interest at a rate equal to the annual distribution rate on
the Accreted Principal Amount established in the Remarketing
of the Preferred Securities (or, if the Subordinated
Debentures are distributed to the holders of the Trust
Securities in a Security Exchange as provided for in the
Indenture, the interest rate established in the Remarketing
of the Subordinated Debentures) (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 September 30, 1999, and on the Redemption Date
(as hereinafter defined). In respect of any Subordinated
Debentures of which the Property Trustee is the 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 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 July 27, 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 July 27, 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 or the Redemption Date, as the case may be.
(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. 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
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<PAGE> 4
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 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 or extend beyond the
Maturity Date or any Redemption Date. 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
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<PAGE> 5
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
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 Debentures 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).
(g) Issue Date. The issue date for the Subordinated
Debentures is July 27, 1999.
(h) Denominations. The Subordinated Debentures are issuable
in denominations of $1,000 and integral multiples thereof.
(i) Place of Payment; Registration of Transfer and Exchange;
Notices to Company. Payment of the principal of and interest
(including Additional Sums, if any) 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 Scheduled 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
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<PAGE> 6
so long as the 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 sinking fund payments. No partial redemption of the
Subordinated Debentures shall occur.
(i) Redemption Upon a Reset Event. The Subordinated
Debentures will be redeemed by the Company on the Redemption
Date. A Redemption Date will be established if a Reset Event
(as hereinafter defined) occurs and a Remarketing of the
Preferred Securities (or, if a Security Exchange has
occurred, a Remarketing of the Subordinated Debentures)
occurs.
(ii) Notice. 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.
(iii) Redemption Price. On the Redemption Date, the
Redemption Price of each Subordinated Debenture will be equal
to the Accreted Principal Amount of the Subordinated
Debentures on the Reset Date, plus accrued and unpaid
interest on the Accreted Principal Amount from and after the
Reset Date at the rate determined by the Remarketing until
the Accreted Principal Amount is duly paid or made available
for payment on the Redemption Date. 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.
(k) Reset and Remarketing of the Preferred Securities (or the
Subordinated Debentures).
(i) Definitions. As used in this Officers'
Certificate, the following terms have the following meanings.
(A) "Accreted Principal Amount" means, at
any date, the sum of $741.46 per $1,000 of the
Scheduled Principal Amount plus the accrued discount
(i.e., the difference between the Scheduled
Principal Amount and $741.46 per $1,000), calculated
from July 27, 1999 to the
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date of calculation on a quarterly bond equivalent
yield basis using a 360- day year of twelve 30-day
months until such sum equals $1,000 on June 30,
2029. However, if a Remarketing occurs, then at all
times on and after the Reset Date, the term
"Accreted Principal Amount" shall mean the Accreted
Principal Amount, calculated pursuant to the
preceding sentence, as of the Reset Date.
(B) "Acquisition Reset Event" shall occur
if: (i) all of the shares of the Company's common
stock are acquired by a third party and all or a
portion of the consideration for such acquisition is
cash and (ii) the total consideration per share of
the Company's common stock exceeds the Exercise
Price Per Share (after giving effect to the
reduction of the Warrant Exercise Price (as defined
in the Warrant Agreement) as contemplated in Section
6.3 of the Warrant Agreement upon the occurrence of
a Reset Event).
(C) "Expiration Date" has the meaning set
forth in the Warrant Agreement.
(D) "Exercise Price Per Share" means the
purchase price per share of the Company's common
stock to be paid upon the exercise of a Warrant as
determined in accordance with the terms of the
Warrant Agreement.
(E) "Failed Remarketing" means the
inability to remarket all of the Preferred
Securities to be remarketed at the minimum price
referred to under "Remarketing" below prior to the
close of business on the fifth Business Day
following the Reset Date or the failure (without
waiver or modification) to satisfy any of the
conditions precedent to the Remarketing.
(F) "Redemption Date" means, in the event
of a Remarketing, the redemption date of the
Preferred Securities, and the corresponding maturity
of the Debentures, which shall be adjusted to the
first anniversary of the Reset Date; provided that
if such date is not a Business Day, the Redemption
Date shall be the next succeeding Business Day.
(G) "Remarketing Agent" means a nationally
recognized investment banking firm to be selected by
the Company to Remarket the Preferred Securities
(or, if a Security Exchange has occurred, the
Subordinated Debentures).
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(H) "Remarketing Agreement" means an
agreement to be entered into upon a Reset Event
among the Company, the Trust (if no Security
Exchange has occurred) and the Remarketing Agent.
(I) "Remarketing" means the remarketing of
the Preferred Securities (or, if a Security Exchange
has occurred, the Subordinated Debentures) by the
Remarketing Agent as contemplated by this paragraph
(I).
(J) "Remarketing Rate" means the annual
distribution rate (or, if the Security Exchange has
occurred, the rate of interest per annum) that
enables the Preferred Securities (or the
Subordinated Debentures) to be remarketed at a price
that would result in payment of 100.25% of the
Accreted Liquidation Amount per Preferred Security
(or Accreted Principal Amount per Debenture), plus
accrued distributions (or interest) thereon, if any,
as of the Reset Date to the holders of Preferred
Securities (or Debentures) that elected to
participate in such Remarketing, after provision for
payment of the fees of the Remarketing Agent.
(K) "Reset Date" means (i) in the case of a
Trading Reset Event described in clause (A) of the
definition of such term or an Acquisition Reset
Event, a date selected by the Company or (ii) in the
case of a Trading Reset Event described in clause
(B) of the definition of such term, the date 15
Business Days prior to the Expiration Date of the
Warrants. The Company shall give the holders of the
Subordinated Debentures, CRESTS Units, Preferred
Securities and the Warrants notice of the Reset Date
referred to in clause (i) above not less than 30 nor
more than 60 days prior to such Reset Date. Such
notice shall be given to such holders no later than
10 days following a Reset Event.
(L) "Reset Event" means an Acquisition
Reset Event or a Trading Reset Event.
(M) "Trading Day" has the meaning set forth
in the Warrant Agreement.
(N) "Trading Reset Event" shall occur if
(A)(i) on any date after July 27, 2004, the closing
price of the Company's common stock (taking into
account any other capital stock issued in exchange
for the Company's common stock, calculated on an as
adjusted basis for each share of the Company's
common stock) has exceeded $51.24 for at least 20
Trading Days within the immediately preceding 30
Trading Days and (ii) the Company elects, at its
option, to cause the Remarketing of the Preferred
Securities (or, if a Security Exchange has occurred,
the Subordinated
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Debentures) to occur and to accelerate the
expiration date of the Warrants, and gives written
notice of any such election to the Holders of the
Subordinated Debentures and the Trustee and to the
holders of the CRESTS Units, the Preferred
Securities and the Warrants or (B) on January 31,
2029, the closing price of the Company's common
stock (taking into account any other capital stock
issued in exchange for the Company's common stock,
calculated on an as adjusted basis for each share of
the Company's common stock) has exceeded $40.56 for
at least 20 Trading Days within the immediately
preceding 30 Trading Days.
(O) "Warrant Agreement" means the warrant
agreement, dated as of July 27, 1999, between the
Company and The Chase Manhattan Bank, as Warrant
Agent.
(P) "Warrants" means the warrants of the
Company issued pursuant to the Warrant Agreement.
(ii) Remarketing Procedure. (A) In the event a
Security Exchange occurs, and the Subordinated
Debentures are distributed to the holders of the
Trust Securities, the provisions set forth in this
paragraph (k)(ii) shall apply to the Remarketing of
the Subordinated Debentures. In such event,
references to the Preferred Securities shall be
deemed to refer to the Subordinated Debentures,
references to the Accreted Liquidation Amount shall
be deemed to refer to the Accreted Principal Amount,
references to the distribution rate shall be deemed
to refer to the interest rate on the Subordinated
Debentures and references to the Trust Agreement
shall be deemed to refer to the Indenture.
(B) Upon the occurrence of a Reset Event,
the Company shall send a notice to the holders of
the Subordinated Debentures, the Trustees and to the
holders of the CRESTS Units, the Preferred
Securities and the Warrants identifying the type of
Reset Event, the Reset Date, the identity and
address of the Remarketing Agent and the procedures
to be followed for a holder of the Preferred
Securities to participate in the Remarketing.
(C) In order for any Preferred Securities
to be Remarketed and resold, prior to the close of
business on the fifth Business Day preceding the
Reset Date, the holder thereof or of a CRESTS Unit
must (1) notify the Remarketing Agent of such
holder's election to sell the desired number of
Preferred Securities or the Preferred Security
components of CRESTS Units, if any, and (2) tender
such Preferred Securities to the Remarketing Agent.
Proceeds from such sale shall be disbursed by the
Remarketing Agent to holders of the related
Preferred Securities, unless such holder holds a
Preferred Security as part of a CRESTS Unit and is
simultaneously
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exercising the Warrant component of such CRESTS
Unit, in which case a portion of such proceeds will
automatically be applied toward payment of the
Exercise Price of the associated Warrant, less, in
each case, the Remarketing Agent's fee. If the
Preferred Securities or CRESTS Units are held in
book-entry-only form at such time, the notice and
tender requirements must be made in accordance with
the procedures of the Depositary and/or its
participants.
(D) The Accreted Liquidation Amount of the
Preferred Securities, and the corresponding Accreted
Principal Amount of the Subordinated Debentures,
will cease to accrete after the Reset Date in the
event of a Remarketing, and the Scheduled
Liquidation Amount (or the Scheduled Principal
Amount, in the case of the Subordinated Debentures)
will be reset to the Accreted Liquidation Amount (or
Accreted Principal Amount) as of the Reset Date. The
distribution rate on the Accreted Liquidation Amount
of the Preferred Securities, and the corresponding
interest rate on the Accreted Principal Amount of
the Subordinated Debentures, will be reset in the
event of a Remarketing to the Remarketing Rate. The
redemption date of the Preferred Securities, and the
corresponding maturity of the Subordinated
Debentures, will be reset in the event of a
Remarketing to the Redemption Date. Holders of
CRESTS Units or Preferred Securities who do not
follow the procedures set forth in items (1) and (2)
of clause (C) above will be deemed to have elected
to retain their Preferred Securities upon the new
terms described in the three preceding sentences of
this clause (D), effective as of the Reset Date.
(E) There will not be a Remarketing, or
there will not be any proceeds from resales of the
Preferred Securities in a Remarketing, as the case
may be, and the new terms of the Preferred
Securities and the Subordinated Debentures referred
to in clause (C) shall be rescinded in the case of a
Failed Remarketing, and the original terms of the
Preferred Securities, the Subordinated Debentures
and the Warrants shall be deemed to have been in
effect at all times since their original issuance
if:
(1) in the case of a Trading Reset
Event, an event of default under the Trust
Agreement or a deferral of distributions to
holders of the Preferred Securities has
occurred and is continuing;
(2) in the case of a Trading Reset
Event, the closing price of the Company's
common stock on the New York Stock Exchange
(or, if not then listed on such exchange,
any other national securities exchange on
which the Company's common stock is then
listed) as of the fifth Business Day
preceding the
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Reset Date or as of the Reset Date is less
than the Exercise Price Per Share of the
Warrants;
(3) in the case of a Trading Reset
Event, (A) a shelf registration statement
covering the issuance and sale of the
Company's common stock to the holders of
Warrants upon exercise of such Warrants is
not effective under the Securities Act of
1933 as of the Reset Date or (B) the
Company shall have notified the Warrant
Agent, which notice shall not have been
withdrawn by it, that it is unable as of
the Reset Date to deliver a then current
prospectus to exercising Holders; or
(4) a Failed Remarketing occurs.
(F) The Company will promptly give notice
of the consummation of a Remarketing to the holders
of the CRESTS Units, to the holders of the Preferred
Securities and to the Trustee. Such notice shall
include the new distribution rate and the Redemption
Date. The Company will give notice of a Failed
Remarketing to the holders of the CRESTS Units and
to the holders of the Preferred Securities, the
holders of the Subordinated Debentures and the
Trustee prior to the close of business on the sixth
Business Day following the Reset Date. Following a
Failed Remarketing (or the absence of a Remarketing
due to a failure to satisfy any conditions stated
above) (x) in the case of a Trading Reset Event, the
Preferred Securities may be remarketed again in the
manner described under this paragraph (k) if another
Reset Event subsequently occurs and (y) in the case
of an Acquisition Reset Event, the Company will
cause the Preferred Securities to be remarketed on
every fifteenth day thereafter until there has been
a successful Remarketing, in which case the date of
the successful Remarketing will be considered a
"Reset Date".
(G) The Company shall appoint a Remarketing
Agent and use its best efforts (together with the
Remarketing Agent) to facilitate a Remarketing as
provided herein.
(l) 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.
(m) Registered Debentures in Book-Entry Form. The
Subordinated Debentures will be issuable and transferable in fully
registered form, without coupons, in denominations of $1,000 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
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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
Depository 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.
(n) 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 July 27, 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 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.
(o) 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.
(p) 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.
(q) 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; 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
12
<PAGE> 13
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.
(r) Acceleration of the Maturity Date upon an Event of
Default. If an Event of Default has occurred and is continuing in
respect of the Subordinated Debentures, the Accreted Principal Amount
of the Subordinated Debentures at such time may be accelerated by the
Holders of at least 25% in aggregate Accreted Principal Amount of the
Subordinated Debentures or the Trustee or, if such Event of Default
relates to certain events in bankruptcy, insolvency or reorganization
of the Company set forth in Section 6.01 of the Indenture, shall be
automatically be accelerated without further action.
(s) 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 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.
(t) 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:
13
<PAGE> 14
(i) Definitive Debentures may be presented to the
Trustee by the Property Trustee in exchange for a Global
Debenture in an aggregate Scheduled 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 Scheduled 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 Trustee having an aggregate Scheduled Principal
Amount equal to the aggregate Scheduled 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 Scheduled Principal Amount equal to the aggregate
Scheduled 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 Scheduled 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.]
14
<PAGE> 15
IN WITNESS WHEREOF, the undersigned have hereunto signed this
certificate on behalf of the Company as of this 27th day of July, 1999.
By: /s/ VINCENT J. CORBO
------------------------------------------------
Name: Vincent J. Corbo
Title: President, Chief Executive Officer
and Chief Operating Officer
By: /s/ STUART C. SHEARS
------------------------------------------------
Name: Stuart C. Shears
Title: Assistant Treasurer
<PAGE> 16
EXHIBIT A
SPECIMEN SUBORDINATED DEBENTURE
Registered No. SD-001
Accreted Principal Amount as of July 27, 1999: $267,537,304.50
($741.46 per $1,000 of Scheduled Principal Amount)
CUSIP No. 427 056 AU0
HERCULES INCORPORATED
SERIES A JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
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 II or registered assigns, the Scheduled
Principal Amount of Three Hundred Sixty Million Eight Hundred Twenty Five
Thousand Dollars ($360,825,000) on June 30, 2029 (the "Maturity Date"), subject
to adjustment as described herein, and to pay interest thereon at the interest
rate per annum of 6 1/2% (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 September 30, 1999, to the Holder of this
Subordinated Debenture as of the close of business on the Regular Record Date
(as hereinafter defined), with respect to such Interest Payment Date, until the
Scheduled Principal Amount hereof is paid or duly made available for payment on
the Maturity Date; provided, however, that if a Remarketing (as hereinafter
defined) of the Preferred Securities of Hercules Trust II, a Delaware statutory
business trust (the "Trust") occurs, the Company hereby promises to pay to the
registered owner hereof or registered assigns, the Accreted Principal Amount on
the Redemption Date (as hereinafter defined), together with interest on the
Accreted Principal Amount from and after the Reset Date (as hereinafter defined)
(established pursuant to the Indenture) at the rate determined by the
Remarketing until the Accreted Principal Amount is duly paid or made available
for payment on the Redemption Date.
Interest payments for this Subordinated Debenture will be computed on
the basis of a 360-day year of twelve 30-day months. Interest on this
Subordinated Debenture will accrue 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, July 27,
1999, to but excluding the applicable Interest Payment Date, the Redemption Date
or the Maturity Date, as the case may be. If any Interest Payment Date, the
Redemption Date 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 or
other amount 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
A-1
<PAGE> 17
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.
The Scheduled Principal Amount of this Subordinated Debenture payable
on the Maturity Date or the Accreted Principal Amount of this Subordinated
Debenture payable on 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
Scheduled 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.
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<PAGE> 18
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, dated as of March 17, 1999, between the
Company and The Chase Manhattan Bank, as trustee (herein called the "Trustee,"
which term includes any successor trustee thereunder) (the "Indenture," which
term, for the purpose of this Subordinated Debenture, shall include the First
Supplemental Indenture, dated as of July 27, 1999, between the Company and the
Trustee, and the Officers' Certificate dated July 27, 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 "Series A Junior Subordinated Deferrable Interest Debentures"
(collectively, the "Subordinated Debentures"), and the aggregate Scheduled
Principal Amount of Subordinated Debentures to be issued under such series is
limited to $412,372,000 (except for Subordinated Debentures authenticated and
delivered upon transfer of, or in exchange for, or in lieu of other Subordinated
Debentures). All 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 $1,000 and any amount in excess thereof
which is an integral multiple of $1,000.
The Subordinated Debentures will be redeemed in whole by the Company on
the Redemption Date, if any.
As used in this Subordinated Debenture, the following terms have the
following meanings.
(1) "Remarketing" means a remarketing of the Preferred Securities that
occurs upon a Reset Date, following the occurrence of a "Reset Event" (as such
term is defined in the Officers' Certificate dated July 27, 1999 and made a part
of the Indenture). A Remarketing shall
A-3
<PAGE> 19
occur in accordance with the procedures described in the Indenture, pursuant to
a Remarketing Agreement to be entered into upon the occurrence of the Reset
Event among the Company, the Trust and a nationally recognized investment
banking firm selected by the Company. The Preferred Securities will be
"Remarketed" if and when a Remarketing is consummated, and the modifications to
the terms of the Subordinated Debentures described in the Indenture shall occur.
In the event of a Security Exchange in accordance with the terms of the
Indenture and the Trust Agreement of the Trust, the provisions in the Indenture
and the Trust Agreement with respect to a Remarketing shall apply to the
Subordinated Debentures.
(2) "Reset Date" means the date established pursuant to the Indenture
in connection with a Remarketing.
(3) "Redemption Date" means, with respect to a Remarketing, the date
one year after the Reset Date. The Redemption Date may be after the Maturity
Date.
(4) "Redemption Price" means the amount established pursuant to the
Trust Agreement.
(5) "Accreted Principal Amount" shall be, at any date, the sum of
$741.46 per $1,000 of the Scheduled Principal Amount plus the accrued discount
(i.e., the difference between the Scheduled Principal Amount and $741.46 per
$1,000), calculated from July 27, 1999 to the date of calculation on a quarterly
bond equivalent yield basis using a 360-day year of twelve 30- day months until
such sum equals $1,000 on June 30, 2029. However, if a Remarketing occurs, then
at all times on and after the Reset Date, the term "Accreted Principal Amount"
shall mean the Accreted Principal Amount, calculated pursuant to the preceding
sentence, as of the Reset Date.
The Redemption Price of each Subordinated Debenture redeemed will be
equal to the Accreted Principal Amount of such Subordinated Debenture plus
accrued and unpaid interest to the Redemption Date. Payment of accrued and
unpaid interest on the Redemption Date, however, will be subject to the rights
of Holders of the Subordinated Debentures on the close of business on the
Regular Record Date in respect of an Interest Payment Date occurring on or prior
to such Redemption Date.
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.
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) that on the Redemption Date the
Redemption Price will become due and payable upon each Subordinated Debenture to
be redeemed and (e) that, unless the Company defaults in paying the
A-4
<PAGE> 20
Redemption Price, interest on each Subordinated Debenture, or portion thereof,
called for redemption will cease to accrue on and after the Redemption Date.
If an Event of Default with respect to the Subordinated Debentures
shall occur and be continuing, the Accreted Principal Amount 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. For purposes of this Subordinated Debenture, the term "aggregate
principal amount" shall mean, at any time prior to the Maturity Date, the then
applicable Accreted Principal Amount.
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.
A-5
<PAGE> 21
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.
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<PAGE> 22
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: George MacKenzie
Title: Senior Vice President and
Chief Financial Officer
Attest:
By:
------------------------------------
Name: Israel J. Floyd
Title: Corporate Secretary and
Assistant General Counsel
CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Debentures issued under the Indenture
described herein.
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------------
Name: Joseph C. Progar
Title: Authorized Officer
A-7
<PAGE> 23
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.
-------------------------
-------------------------
A-8
<PAGE> 24
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)
A-9
<PAGE> 1
Exhibit 4.2
AMENDED AND RESTATED TRUST AGREEMENT
HERCULES TRUST II
Dated as of July 27, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I.
INTERPRETATION AND DEFINITIONS
<S> <C>
SECTION 1.1 Definitions....................................................................... 2
ARTICLE II.
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.................................................. 10
SECTION 2.2 List of Holders of Securities..................................................... 10
SECTION 2.3 Reports by the Property Trustee................................................... 10
SECTION 2.4 Periodic Reports to Property Trustee.............................................. 11
SECTION 2.5 Evidence of Compliance with Conditions Precedent.................................. 11
SECTION 2.6 Events of Default; Waiver......................................................... 11
SECTION 2.7 Event of Default; Notice.......................................................... 13
ARTICLE III.
ORGANIZATION
SECTION 3.1 Name.............................................................................. 13
SECTION 3.2 Office............................................................................ 13
SECTION 3.3 Purpose........................................................................... 14
SECTION 3.4 Authority......................................................................... 14
SECTION 3.5 Title to Property of the Trust.................................................... 14
SECTION 3.6 Powers and Duties of the Administrative Trustees.................................. 14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.............................. 17
SECTION 3.8 Powers and Duties of the Property Trustee......................................... 18
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee....................... 20
SECTION 3.10 Certain Rights of Property Trustee................................................ 21
SECTION 3.11 Delaware Trustee.................................................................. 24
SECTION 3.12 Execution of Documents............................................................ 24
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities............................ 24
SECTION 3.14 Duration of Trust................................................................. 24
SECTION 3.15 Mergers........................................................................... 25
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE IV.
SPONSOR
<S> <C>
SECTION 4.1 Sponsor's Purchase of Common Securities........................................... 26
SECTION 4.2 Responsibilities of the Sponsor................................................... 27
SECTION 4.3 Right to Proceed.................................................................. 27
ARTICLE V.
TRUSTEES
SECTION 5.1 Number of Trustees; Appointment of Co-Trustee..................................... 27
SECTION 5.2 Delaware Trustee.................................................................. 28
SECTION 5.3 Property Trustee; Eligibility..................................................... 28
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware Trustee
Generally......................................................................... 29
SECTION 5.5 Administrative Trustees........................................................... 29
SECTION 5.6 Delaware Trustee.................................................................. 30
SECTION 5.7 Appointment, Removal and Resignation of Trustees.................................. 30
SECTION 5.8 Vacancies among Trustees.......................................................... 32
SECTION 5.9 Effect of Vacancies............................................................... 32
SECTION 5.10 Meetings.......................................................................... 32
SECTION 5.11 Delegation of Power............................................................... 33
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business....................... 33
SECTION 5.13 Compensation...................................................................... 33
ARTICLE VI.
DISTRIBUTIONS; REMARKETING
SECTION 6.1 Distributions..................................................................... 34
SECTION 6.2 Remarketing....................................................................... 34
ARTICLE VII.
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities........................................... 35
SECTION 7.2 Execution and Authentication...................................................... 36
SECTION 7.3 Form and Dating................................................................... 36
SECTION 7.4 Registrar and Paying Agent........................................................ 38
SECTION 7.5 Paying Agent to Hold Money in Trust............................................... 38
SECTION 7.6 Replacement Securities............................................................ 39
SECTION 7.7 Outstanding Preferred Securities.................................................. 39
SECTION 7.8 Preferred Securities in Treasury.................................................. 39
SECTION 7.9 Temporary Securities.............................................................. 39
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 7.10 Cancellation...................................................................... 40
SECTION 7.11 CUSIP Numbers..................................................................... 40
SECTION 7.12 Amendment to Securities Certificates.............................................. 40
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust.............................................................. 41
ARTICLE IX.
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities............................................................ 42
SECTION 9.2 Transfer Procedures and Restrictions.............................................. 42
SECTION 9.3 Deemed Security Holders........................................................... 45
SECTION 9.4 Book Entry Interests.............................................................. 45
SECTION 9.5 Notices to Clearing Agency........................................................ 46
SECTION 9.6 Appointment of Successor Clearing Agency.......................................... 46
ARTICLE X.
LIMITATION OF LIABILITY OF HOLDERS
OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability......................................................................... 46
SECTION 10.2 Exculpation....................................................................... 47
SECTION 10.3 Fiduciary Duty.................................................................... 47
SECTION 10.4 Indemnification................................................................... 48
SECTION 10.5 Outside Businesses................................................................ 51
ARTICLE XI.
ACCOUNTING
SECTION 11.1 Fiscal Year....................................................................... 51
SECTION 11.2 Certain Accounting Matters........................................................ 51
SECTION 11.3 Banking........................................................................... 52
SECTION 11.4 Withholding....................................................................... 52
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE XII.
AMENDMENTS AND MEETINGS
<S> <C>
SECTION 12.1 Amendments........................................................................ 53
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.................. 55
SECTION 12.3 Power of Attorney................................................................. 56
ARTICLE XIII.
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee................................ 56
SECTION 13.2 Representations and Warranties of Delaware Trustee................................ 57
ARTICLE XIV.
MISCELLANEOUS
SECTION 14.1 Notices........................................................................... 58
SECTION 14.2 Governing Law..................................................................... 59
SECTION 14.3 Intention of the Parties.......................................................... 59
SECTION 14.4 Headings.......................................................................... 59
SECTION 14.5 Successors and Assigns............................................................ 60
SECTION 14.6 Partial Enforceability............................................................ 60
SECTION 14.7 Counterparts...................................................................... 60
</TABLE>
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Agreement
------------------- ---------
<S> <C>
310(a)................................................................. 5.3(a)
310(b)................................................................. 5.3(c)
310(c)................................................................. Inapplicable
311(a) and (b)......................................................... 2.2(b)
311(c)................................................................. Inapplicable
312(a)................................................................. 2.2(a)
312(b)................................................................. 2.2(b)
313.................................................................... 2.3
314(a)................................................................. 2.4
314(b)................................................................. Inapplicable
314(c)................................................................. 2.5
314(d)................................................................. Inapplicable
314(e)................................................................. 1.1, 2.5
314(f)................................................................. Inapplicable
315(a)................................................................. 3.9(b)
315(b)................................................................. 2.7(a)
315(c)................................................................. 3.9(a)
315(d)................................................................. 3.9(b)
316(a) and (b)......................................................... 2.6 and
Annex I
316(c)................................................................. 3.6(e)
317(a)................................................................. 3.8(h)
317(b)................................................................. 3.8(i)
</TABLE>
---------------
* This Cross-Reference Table does not constitute part of the Agreement
and shall not affect the interpretation of any of its terms or
provisions.
i
<PAGE> 7
AMENDED AND RESTATED
TRUST AGREEMENT
OF
HERCULES TRUST II
AMENDED AND RESTATED TRUST AGREEMENT (the "Agreement") dated
and effective as of July 27, 1999 by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust (as defined herein) to be issued
pursuant to this Agreement;
WHEREAS, the Trustees and the Sponsor established Hercules
Trust II (the "Trust"), a trust created under the Business Trust Act (as defined
herein) pursuant to a Trust Agreement dated as of September 14, 1998 (the
"Original Agreement"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on September 14, 1998, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures of the Debenture Issuer (each as hereinafter defined) and
engaging in only those activities necessary, advisable or incidental thereto;
WHEREAS, the parties hereto desire to amend and restate each
and every term and provision of the Original Agreement; and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust continue as a business trust under the Business Trust Act, that
the Original Agreement be amended and restated in its entirety as provided
herein and that this Agreement constitute the governing instrument of such
business trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Agreement and, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties, intending to be legally bound hereby, agree as follows:
<PAGE> 8
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Agreement but not defined
in the preamble above or elsewhere herein have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Agreement has the same
meaning throughout;
(c) all references to "the Agreement" or "this Agreement" are
to this Agreement and each Annex and Exhibit hereto, as modified,
supplemented or amended from time to time;
(d) all references in this Agreement to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes
and Exhibits to this Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act (as defined
herein) has the same meaning when used in this Agreement unless
otherwise defined in this Agreement or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Accreted Liquidation Amount" means, at any date, the sum of
the initial purchase price of a Preferred Security (i.e. $741.46) plus accrual
of the discount (i.e. the difference between the Scheduled Liquidation Amount of
$1,000 payable in respect of such Preferred Security on June 30, 2029 and such
initial purchase price), calculated from July 27, 1999 to the date of
calculation on a quarterly bond equivalent yield basis using a 360-day year of
twelve 30-day months until such sum equals $1,000 on June 30, 2029; provided,
however, if the Preferred Securities are Remarketed, then, at all times on and
after the Reset Date, the term "Accreted Liquidation Amount" shall mean the
Accreted Liquidation Amount, calculated as described above, as of the Reset
Date.
"Acquisition Reset Event" shall occur if (i) all of the shares
of the Sponsor's common stock are acquired by a third party and all or a portion
of the consideration of such acquisition involves cash and (ii) the total
consideration per share of the Sponsor's common stock exceeds the Exercise Price
Per Share (after giving effect to the reduction of the Warrant Exercise Price as
contemplated in Section 6.3 of the Warrant Agreement upon the occurrence of a
Reset Event).
"Administrative Trustee" has the meaning set forth in Section
5.1.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
2
<PAGE> 9
"Agent" means any Paying Agent or Registrar.
"Agreement" means this Amended and Restated Trust Agreement,
dated as of July 27, 1999, including Annex I and all the exhibits hereto.
"Authorized Officer" of a Person means any other Person that
is authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
Preferred Security registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by such Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, Sunday or
other 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.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time
to time, or any successor legislation.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a global certificate and which
shall undertake to effect book-entry transfers and pledges of the Preferred
Securities.
"Closing Time" means the Closing Time as defined in the
Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if at any time after the
execution of this Agreement such Commission is not existing and performing the
duties now assigned to it under applicable federal securities laws, then the
body performing such duties at such time.
"Common Securities" has the meaning set forth in Section
7.1(a).
"Common Securities Guarantee" means the Common Securities
Guarantee Agreement, dated as of July 27, 1999, of the Sponsor in respect of the
Common Securities.
"Company Indemnified Person" means (a) any Administrative
Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officers,
directors, shareholders, members, partners, employees, representatives or agents
of any Administrative Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates; provided that the term "Company Indemnified Person"
shall not include any Fiduciary Indemnified Person.
3
<PAGE> 10
"Corporate Trust Office" means the office of the Property
Trustee for the conduct of corporate trust business at which matters related to
this Agreement shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at One Liberty
Place, 52nd Floor, 1650 Market Street, Philadelphia, Pennsylvania 19103,
Attention: Capital Markets Fiduciary Services.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.
"CRESTS Unit" means a unit consisting of one Preferred
Security and one Warrant to purchase shares of the Sponsor's common stock in
accordance with the terms of the Warrant Agreement.
"Debenture Issuer" means Hercules Incorporated, a Delaware
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debentures" means the Series A Junior Subordinated Deferrable
Interest Debentures of the Debenture Issuer issued pursuant to the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, a New York
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Default" means an event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Definitive Preferred Securities" has the meaning set forth in
Section 7.3.
"Delaware Trustee" has the meaning set forth in Section 5.1.
"Direct Action" has the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" means, with respect to the Securities, an
Event of Default (as defined in the Indenture) that has occurred and is
continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Exercise Price Per Share" has the meaning specified in the
Warrant Agreement.
"Expiration Date" has the meaning specified in the Warrant
Agreement.
4
<PAGE> 11
"Failed Remarketing" has the meaning set forth in Section 2 of
Annex I hereto.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Preferred Security" has the meaning set forth in
Section 7.3.
"Holder" means a Person in whose name a Security or Successor
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Junior Subordinated Debentures
Indenture, dated as of March 17, 1999, between the Debenture Issuer and the
Debenture Trustee relating to the Debenture Issuer's junior subordinated
debentures, as amended or supplemented from time to time, including the First
Supplemental Indenture thereto, dated as of July 27, 1999.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Like Amount" has the meaning set forth in Section 3 of Annex
I hereto.
"Liquidation Amount" means either the Accreted Liquidation
Amount or the Scheduled Liquidation Amount, as the context requires.
"Liquidation Distribution" has the meaning set forth in
Section 3 of Annex I hereto.
"List of Holders" has the meaning set forth in Section 2.2(a)
hereof.
"Majority in Liquidation Amount" means, with respect to the
Securities, except as provided in the terms of the Preferred Securities or by
the Trust Indenture Act, Holders of outstanding Securities voting together as a
single class or, as the context may require, Holders of outstanding Preferred
Securities or Common Securities voting separately as a class, who are the record
owners of more than 50% of the aggregate Accreted Liquidation Amount (including
the amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President, the Chief
Financial Officer or a Vice President, and
5
<PAGE> 12
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary. Any Officers' Certificate delivered by the Trust shall be signed by
at least one Administrative Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Option Closing Date" means the date of closing of any sale of
Option CRESTS Units (as defined in the Underwriting Agreement).
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of the Sponsor, and who shall be reasonably acceptable to the
Property Trustee, provided, that the General Counsel or Assistant General
Counsel of the Sponsor shall be deemed to be reasonably acceptable to the
Trustee.
"Participants" has the meaning set forth in Section 7.3(a).
"Paying Agent" has the meaning set forth in Section 7.4.
"Payment Amount" has the meaning set forth in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities" has the meaning set forth in Section
7.1(a).
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Securities Guarantee" means the Preferred
Securities Guarantee Agreement, dated as of July 27, 1999, of the Sponsor in
respect of the Preferred Securities.
6
<PAGE> 13
"Property Trustee" has the meaning set forth in Section
5.3(a).
"Property Trustee Account" has the meaning set forth in
Section 3.8(c).
"Prospectus" has the meaning specified in the Warrant
Agreement.
"Quorum" means a majority of the Administrative Trustees or,
if there are only two Administrative Trustees, both of them.
"Redemption Date" has the meaning set forth in Section 4 of
Annex I hereto.
"Redemption Price" has the meaning set forth in Section 4 of
Annex I hereto.
"Registrar" has the meaning set forth in Section 7.4.
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Remarketing" means a remarketing of Preferred Securities at
the Remarketing Rate upon the occurrence of a Reset Event pursuant to the terms
of this Agreement, and "Remarket" and "Remarketed" have related meanings.
"Remarketing Agent" means a nationally recognized investment
banking firm selected by the Sponsor to Remarket the Preferred Securities.
"Remarketing Rate" means, in the event of a Remarketing, the
annual distribution rate that enables a resale of the Preferred Securities at a
price equal to at least 100.25% (after provision for the fee of the Remarketing
Agent) of the Accreted Liquidation Amount thereof as of the Reset Date, plus
accumulated distributions, if any, to the Reset Date.
"Reset Date" has the meaning set forth in Section 2 of Annex I
hereto.
"Reset Event" means an Acquisition Reset Event or a Trading
Reset Event.
"Responsible Officer" means, with respect to the Property
Trustee, any officer within the Corporate Trust Office of the Property Trustee
with direct responsibility for the administration of this Agreement, including
any vice-president, any assistant vice-president, any assistant secretary, any
assistant treasurer or other officer of the Corporate Trust Office of the
Property Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer of the Property Trustee to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Scheduled Liquidation Amount" has the meaning set forth in
Section 2 of Annex I hereto.
7
<PAGE> 14
"Securities" or "Trust Securities" means the Common Securities
and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee
and the Preferred Securities Guarantee.
"Shelf Registration Statement" has the meaning specified in
the Warrant Agreement.
"Sponsor" means Hercules Incorporated, a Delaware corporation,
or any successor entity resulting from any merger, consolidation, amalgamation
or other business combination, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in
Section 5.7(b)(ii).
"Successor Entity" has the meaning set forth in Section
3.15(b)(i).
"Successor Property Trustee" has the meaning set forth in
Section 3.8(f)(ii).
"Successor Securities" has the meaning set forth in Section
3.15(b)(i)(B).
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"10% in Liquidation Amount" means, with respect to the
Securities, except as provided in the terms of the Preferred Securities or by
the Trust Indenture Act, Holders of outstanding Securities voting together as a
single class or, as the context may require, Holders of outstanding Preferred
Securities or Common Securities voting separately as a class, who are the record
owners of 10% or more of the aggregate Accreted Liquidation Amount (including
the amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"Trading Day" means any day on which shares of common stock of
the Sponsor, or other capital stock issuable upon exercise of a Warrant in
accordance with the terms of the Warrant Agreement, are traded on the New York
Stock Exchange or, if such shares are not listed or admitted for trading on the
New York Stock Exchange, on the principal national securities exchange on which
such shares are listed or admitted or, if such shares are not listed or admitted
for trading on any national securities exchange, on the Nasdaq National Market
or, if such shares are not quoted on the Nasdaq National Market, in the
applicable securities market in which such shares are traded.
A "Trading Reset Event" shall occur if (A)(i) on any date
after July 27, 2004, the closing price of the Sponsor's common stock (taking
into account any other capital stock issued in exchange for the Sponsor's common
stock, calculated on an as adjusted basis for each share of the Sponsor's common
stock) has exceeded $51.24 per share for at least 20 Trading Days within the
immediately preceding 30 Trading Days and (ii) the Sponsor elects, at its
option, to cause the remarketing of the Preferred Securities to occur and to
accelerate the
8
<PAGE> 15
expiration date of the Warrants, and gives written notice of any such election
to the holders of the CRESTS Units, the Preferred Securities and the Warrants or
(B) on January 31, 2029, the closing price of the Sponsor's common stock (taking
into account any other capital stock issued in exchange for the Sponsor's common
stock, calculated on an as adjusted basis for each share of the Sponsor's common
stock) has exceeded $40.56 per share for at least 20 Trading Days within the
immediately preceding 30 Trading Days.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" means each Person who has signed this Agreement as a
trustee, so long as such Person shall continue as Trustee of the Trust in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as a Trustee in accordance with
the provisions hereof, and references herein to a Trustee shall refer to such
Person solely in its capacity as trustee hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Underwriting Agreement" means the Underwriting Agreement,
dated July 21, 1999, by and among the Trust, the Sponsor and the underwriters
named therein relating to the CRESTS Units.
"Unit Agreement" means an agreement, dated July 27, 1999,
among the Sponsor, the Trust and The Chase Manhattan Bank, as unit agent, as
amended or supplemented from time to time.
"Warrant Agreement" means the Warrant Agreement, dated as of
July 27, 1999, between the Sponsor and The Chase Manhattan Bank, as warrant
agent.
"Warrant Exercise Price" has the meaning specified in the
Warrant Agreement.
"Warrants" means the warrants to purchase common stock of the
Sponsor issued pursuant to the Warrant Agreement.
ARTICLE II.
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Agreement is subject to the provisions of the Trust Indenture
Act that are required to be part of this Agreement in order for this Agreement
to be qualified under the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee
for the purposes of the Trust Indenture Act.
9
<PAGE> 16
(c) If and to the extent that any provision of this Agreement limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Agreement shall
not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 List of Holders of Securities.
(a) Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide the Property Trustee, unless the Property Trustee is
Registrar for the Securities, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders of the Securities
("List of Holders"), provided that neither the Sponsor nor the Administrative
Trustees on behalf of the Trust shall be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Property Trustee by the Sponsor and the
Administrative Trustees on behalf of the Trust, (i) within 14 days after each
record date for payment of Distributions as of such record date and (ii) at any
other time, within 30 days of receipt by the Trust of a written request from the
Property Trustee for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Property Trustee. The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
its capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after September 1 of each year, commencing
September 1, 1999, the Property Trustee shall provide to the Holders of the
Preferred Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such documents, reports and
information as are required by Section 314 of the Trust Indenture Act (if any)
and the compliance certificate required by Section 314 of the Trust Indenture
Act in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
10
<PAGE> 17
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent provided for in this Agreement that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in Liquidation Amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Agreement shall also not be waivable; or
(ii) requires the consent or vote of holders of a greater than
a majority in aggregate accreted principal amount of the holders of the
Debentures (a "Super Majority") to be waived under the Indenture, the
Event of Default under the Agreement may only be waived by the vote of
the Holders of at least the proportion of the aggregate Accreted
Liquidation Amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate accreted principal amount of the
Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Agreement and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Agreement, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Agreement without any further act, vote, or
consent of the Holders of the Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture (except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Agreement as provided below in this Section
2.6(b)), the Event of Default under the Agreement shall also not be
waivable; or
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(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Agreement as provided below
in this Section 2.6(b), the Event of Default under the Agreement may
only be waived by the vote of the Holders of at least the proportion of
the aggregate Accreted Liquidation Amount of the Common Securities that
the relevant Super Majority represents of the aggregate accreted
principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
all Events of Default with respect to the Common Securities and their
consequences until all Events of Default with respect to the Preferred
Securities have been cured, waived or otherwise eliminated, and until such
Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Preferred Securities and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee in accordance with the terms of
the Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu
of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and
such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are
hereby expressly excluded from this Agreement and the Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee, at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this Agreement.
The foregoing provisions of this Section 2.6(c) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Agreement and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence of
any default with respect to the Securities, transmit by mail, first class
postage prepaid, to the Holders of the Securities and to the Sponsor, notices of
all such defaults actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be a Default as defined in the Indenture, not including any periods
of grace provided for therein and irrespective of the giving of any notice
provided therein); provided that, except for a default in the payment of
principal of or interest on any of the Debentures, the Property Trustee shall be
protected in withholding such notice if and so long as a committee of
Responsible Officers of the Property Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have actual knowledge
of any default except:
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(i) a default under Sections 6.01(a) and 6.01(b) of the
Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of the Agreement shall
have actual knowledge.
(c) Within ten Business Days after the occurrence of any Event of
Default actually known to a Responsible Officer of the Property Trustee, the
Property Trustee shall transmit notice of such Event of Default to the Holders
of the Preferred Securities, the Administrative Trustees and the Sponsor, unless
such Event of Default shall have been cured, waived or otherwise eliminated. The
Sponsor and the Administrative Trustees shall file annually with the Property
Trustee a certification as to whether or not they are in compliance with all the
conditions and covenants applicable to them under this Agreement.
ARTICLE III.
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Hercules Trust II" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Delaware Trustee, the Property Trustee and the Holders of
Securities. The Trust's activities may be conducted under the name of the Trust
or any other name deemed advisable by the Administrative Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o
Hercules Plaza, 1313 North Market Street, Wilmington, Delaware 19894-0001. On
ten Business Days' prior written notice to the Delaware Trustee, the Property
Trustee and the Holders of Securities, the Administrative Trustees may designate
another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities, (b) to use the proceeds from the sale of the
Securities to acquire the Debentures in an aggregate principal amount equal to
the aggregate Scheduled Liquidation Amount of such Securities on the date of
issuance and (c) except as otherwise limited herein, to engage in only those
other activities necessary, advisable or incidental thereto, including without
limitation, those activities specified in Sections 3.6, 3.8, 3.9, 3.10, 3.11
and/or 3.12.
SECTION 3.4 Authority.
Subject to the limitations provided in this Agreement and to
the specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust. An
action taken by one or more of the Administrative Trustees in accordance with
their powers shall constitute the act of and serve to bind the Trust and an
action taken by the Property Trustee on behalf of the Trust in accordance with
its powers
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shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no Person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Agreement.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Property Trustee Account or as otherwise provided in this
Agreement, legal title to all assets of the Trust shall be vested in the Trust.
The Holders shall not have legal title to any part of the assets of the Trust,
but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power,
duty and authority, and are hereby authorized and directed, to cause the Trust
to engage in the following activities:
(a) to execute, deliver, issue and sell the Preferred Securities and
the Common Securities in accordance with this Agreement and the Underwriting
Agreement; provided, however, that (i) the Trust may issue no more than one
series of Preferred Securities and no more than one series of Common Securities,
(ii) there shall be no interests in the Trust other than the Securities and
(iii) the issuance of Securities shall be limited to (A) a simultaneous issuance
of both Preferred Securities and Common Securities at the Closing Time and the
Option Closing Date, if any, and (B) an issuance of replacement Preferred
Securities and Common Securities in accordance with Section 7.12 upon the
occurrence of a Remarketing;
(b) in connection with the issue and sale of the Preferred Securities,
at the direction of the Sponsor, to:
(i) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Preferred Securities in any
State in which the Sponsor has determined to qualify or register such
Preferred Securities or the CRESTS Units for sale;
(ii) execute and deliver letters, documents, or instruments
with DTC and other Clearing Agencies relating to the Preferred
Securities or the CRESTS Units; and
(iii) execute and file any agreement, certificate or other
document which such Administrative Trustee deems necessary or
appropriate in connection with the issuance and sale of the Preferred
Securities or the CRESTS Units;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
Administrative Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of Common Securities;
(d) to enter into such agreements (including the Unit Agreement) and
arrangements as may be necessary or desirable in connection with the issue and
sale of the Preferred Securities
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or the CRESTS Units or the Remarketing of the Preferred Securities and, in each
case, the consummation thereof, and to take all action, and exercise all
discretion, as may be necessary or desirable in connection with the consummation
thereof;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights and redemptions, and to issue relevant notices to
the Holders of Preferred Securities and Holders of Common Securities as to such
actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to comply with the Trust's obligations under the Trust Indenture
Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out any
of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar for the
Securities or to appoint a Paying Agent for the Securities as provided in
Section 7.4 except for such time as such power to appoint a Paying Agent is
vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
Holders of the Securities of any notice received from the Debenture Issuer of
its election to defer payments of interest on the Debentures by extending the
interest payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action (provided that such action does not materially
adversely affect the interests of Holders), not inconsistent with this Agreement
or with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
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(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act; and
(ii) causing the Trust to be classified for United States
Federal income tax purposes as a grantor trust;
(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Administrative Trustees, on behalf of
the Trust; and
(q) to execute and deliver and record, file or register, as applicable,
all documents, certificates, agreements or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary, advisable or incidental to the foregoing.
The Administrative Trustees must exercise the powers set forth
in this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set forth in Section 3.3, and the Administrative Trustees
shall not take any action that is inconsistent with the purposes and functions
of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall
have none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant
to this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust and the Trustees (including the Property Trustee and the
Delaware Trustee) shall not, and the Administrative Trustees shall cause the
Trust not to, engage in any activity other than as required or authorized by
this Agreement. In particular, the Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Agreement and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose or
execute any mortgage in respect of, or pledge, any Trust property;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities;
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(vii) so long as any Debentures are held by the Property
Trustee, the Trustees shall not (A) direct the time, method and place
of conducting any proceeding with respect to any remedy available to
the Debenture Trustee, or exercise any trust or power conferred upon
the Debenture Trustee with respect to the Debentures, (B) waive any
past default that is waivable under the Indenture, (C) exercise any
right to rescind or annul a declaration of acceleration of the maturity
of the principal of the Debentures or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures where
such consent shall be required, without, in each case, obtaining (1)
the prior approval of the Holders of a Majority in Liquidation Amount
of all outstanding Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior approval of each Holder of
Securities and (2) an Opinion of Counsel delivered to the Trust from
tax counsel experienced in such matters to the effect that the Trust
will not be classified as other than a grantor trust for United States
Federal income tax purposes on account of such action;
(viii) revoke any action previously authorized or approved by
a vote of the Holders of Preferred Securities except by subsequent vote
of such Holders;
(ix) revoke any action previously authorized or approved by a
vote of the Holders of Common Securities except by subsequent vote of
such Holders; or
(x) undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States Federal
income tax purposes as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the Property
Trustee in the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.7. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the Holders
of the Securities and, upon the receipt of payments of funds made in
respect of the Debentures held by the Property Trustee, deposit such
funds into the Property Trustee Account and make payments or cause the
Paying Agent to make payments to the Holders of the Preferred
Securities and Holders of the Common Securities from the Property
Trustee Account in accordance with Section
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6.1. Funds in the Property Trustee Account shall be held uninvested until
disbursed in accordance with this Agreement. The Property Trustee Account shall
be an account that is maintained with a banking institution whose long-term
senior unsecured indebtedness is rated at least investment grade by a
"nationally recognized statistical rating organization," as that term is defined
for purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature;
(iii) upon written notice of the distribution of the
Debentures issued by the Administrative Trustees in accordance with the
terms of the Securities, engage in such ministerial activities as shall
be necessary or appropriate to effect the distribution of the
Debentures to Holders of Securities upon the satisfaction of the
conditions specified herein; and
(iv) take such ministerial action as may be requested by the
Administrative Trustees in connection with the winding up of the
affairs of or liquidation of the Trust in accordance with this
Agreement and the preparation, execution and filing of a certificate of
cancellation or other appropriate certificates with the Secretary of
State of the State of Delaware and other appropriate governmental
authorities.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
this Agreement and the Securities.
(e) Subject to Section 3.9, the Property Trustee shall take any Legal
Action which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Property Trustee has actual knowledge or with the
Property Trustee's duties and obligations under this Agreement or the Trust
Indenture Act and, if the Property Trustee shall have failed to take such Legal
Action, the Holders of the Preferred Securities having an aggregate Accreted
Liquidation Amount at least equal to the specified percentage of Holders of
Debentures entitled to take such Legal Action may, to the fullest extent
permitted by law, take such Legal Action without first proceeding against the
Property Trustee or the Trust; provided however, that if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay the principal of or interest on the Debentures on the
date such principal or interest is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Preferred Securities may
directly institute a proceeding for enforcement of payment to such Holder of the
principal of or interest on the Debentures having an accreted principal amount
equal to the aggregate Accreted Liquidation Amount of the Preferred Securities
of such Holder on or after the respective due date specified in the Debentures
(a "Direct Action"). Except as provided in the preceding sentence, the Holders
of Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
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(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities and this Agreement; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7 (a "Successor
Property Trustee").
(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default actually known to a Responsible Officer of the
Property Trustee occurs and is continuing, the Property Trustee shall, for the
benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of the
Securities and this Agreement.
(h) The Property Trustee shall be authorized to undertake any actions
set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such Paying Agent
shall comply with Section 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by the
Property Trustee while the Property Trustee is acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Administrative
Trustees set forth in Section 3.6.
Notwithstanding anything expressed or implied to the contrary
in this Agreement or any Annex or Exhibit hereto, the Property Trustee must
exercise the powers set forth in this Section 3.8 in a manner that is consistent
with the purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing or waiving of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Agreement and in the Securities and no implied covenants or obligations
shall be read into this Agreement against the Property Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
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(b) No provision of this Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, its own bad faith or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Agreement and in the Securities and the Property Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement
and in the Securities, and no implied covenants or obligations
shall be read into this Agreement against the Property
Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Agreement; provided, however, that in the
case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Agreement (but shall not
be required to confirm or investigate the accuracy of
mathematical calculations or other facts stated therein);
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in
Liquidation Amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Agreement;
(iv) no provision of this Agreement shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Agreement or
indemnity reasonably satisfactory to the Property Trustee against such
risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safekeeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Agreement and the
Trust Indenture Act;
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(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of
the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor, and any money held by the Property Trustee
need not be segregated from other funds held by it except in relation
to the Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Sponsor
with their respective duties under this Agreement, nor shall the
Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Agreement may be sufficiently evidenced
by an Officers' Certificate;
(iii) whenever in the administration of this Agreement, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the
Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any re-recording, refiling or re-registration
thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of
such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and, in accordance with such
advice or opinion, such counsel may be counsel to the Sponsor or any of
its Affiliates and may include any of its employees; and the Property
Trustee shall have the right at any time to seek instructions
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concerning the administration of this Agreement from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement at
the request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs, expenses
(including reasonable attorneys' fees and expenses and the expenses of
the Property Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by
the Property Trustee in conducting any proceeding for any remedy
available to the Property Trustee or exercising any trust or power
conferred on the Property Trustee under this Agreement;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and
the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property
Trustee to so act or as to its compliance with any of the terms and
provisions of this Agreement, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Agreement the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion of the Accreted Liquidation Amount of
the Securities as would be entitled to direct the Property Trustee
under the terms of the Securities in respect of such remedy, right or
action, (ii) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received and (iii) shall
be protected in conclusively relying on, or acting in accordance with,
such instructions;
(xi) except as otherwise expressly provided by this Agreement,
the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Agreement;
and
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(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement.
(b) No provision of this Agreement shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
(c) It is expressly understood and agreed by the parties hereto that,
in fulfilling its obligations as Property Trustee hereunder on behalf of the
Trust, (i) any agreements or instruments executed or delivered by The Chase
Manhattan Bank (or any Successor Property Trustee) are executed and delivered
not in its individual capacity but solely as Property Trustee under this
Agreement in the exercise of the powers and authority conferred and vested in
it, (ii) each of the representations, undertakings and agreements herein made on
the part of the Trust is made and intended not as representations, warranties,
covenants, undertakings and agreements by The Chase Manhattan Bank (or any
Successor Property Trustee) in its individual capacity but is made and intended
for the purpose of binding only the Trust and (iii) under no circumstances
(except with respect to funds delivered to it relating to payments in respect of
the Securities) shall The Chase Manhattan Bank (or any Successor Property
Trustee) in its individual capacity be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement except if such breach or failure is due to any
negligence, bad faith or willful misconduct of the Property Trustee.
SECTION 3.11 Delaware Trustee.
(a) Notwithstanding any other provision of this Agreement other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Administrative Trustees or the Property Trustee described in this Agreement
(except as required under the Business Trust Act). Except as set forth in
Section 5.2, the Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Business Trust
Act.
(b) It is expressly understood and agreed by the parties hereto that in
fulfilling its obligations as Delaware Trustee hereunder on behalf of the Trust,
(i) any agreements or instruments executed or delivered by Chase Manhattan Bank
Delaware (or any Successor Delaware Trustee) are executed and delivered not in
its individual capacity but solely as Delaware Trustee under this Agreement in
the exercise of the powers and authority conferred and vested in it, (ii) each
of the representations, undertakings and agreements herein made on the part of
the Trust is made and intended not as representations, warranties, covenants,
undertakings and agreements by Chase Manhattan Bank Delaware (or any Successor
Delaware Trustee) in its individual capacity but is made and intended for the
purpose of binding only the Trust and (iii) under no circumstances shall Chase
Manhattan Bank Delaware (or any Successor Delaware
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Trustee) in its individual capacity be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement except if such breach or failure is due to any
negligence, bad faith or willful misconduct of the Delaware Trustee.
SECTION 3.12 Execution of Documents.
Except as otherwise required by the Business Trust Act or
applicable law, each Administrative Trustee, individually, is authorized to
execute and deliver on behalf of the Trust any documents, agreements,
instruments or certificates that the Administrative Trustees have the power and
authority to execute and deliver pursuant to this Agreement.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Agreement and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Agreement or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless dissolved pursuant to the provisions of
Article VIII hereof, shall have existence until June 30, 2034.
SECTION 3.15 Mergers.
(a) The Trust may not merge with or into, convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any Person, except as
described in Section 3.15(b) and (c) and except with respect to the distribution
of all Debentures to Holders of Securities pursuant to Section 8.1(a)(iii).
(b) The Trust may, at the request of the Sponsor, with the consent of
the Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders of the
Securities, the Delaware Trustee or the Property Trustee, merge with or into,
convert into, consolidate, amalgamate, or be replaced by, or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to, a trust organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Securities (the
"Successor Securities") so long as the
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Successor Securities rank the same as the Securities rank with respect
to Distributions and payments upon liquidation, redemption and
otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property
Trustee with respect to the Debentures;
(iii) the Successor Securities (excluding any securities
substituted for any Common Securities) are listed, quoted or included
for trading, or any Successor Securities will be listed, quoted or
included for trading, upon notification of issuance, on any national
securities exchange or with any other organization on which the
Preferred Securities are then listed, quoted or included, if
applicable;
(iv) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Securities) or the Debentures to be
downgraded or placed under surveillance or review by any nationally
recognized statistical rating organization that publishes a rating on
the Preferred Securities or the Debentures, if applicable;
(v) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders of the Securities
(including the holders of any Successor Securities) in any material
respect (other than with respect to any dilution of the interests of
such Holders or holders, as the case may be, in the Successor Entity);
(vi) the Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Sponsor
has received an opinion of a nationally recognized independent counsel
to the Trust experienced in such matters to the effect that:
(A) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including the holders of any
Successor Securities) in any material respect (other than with
respect to any dilution of the interests of such Holders or
holders, as the case may be, in the Successor Entity); and
(B) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease,
neither the Trust nor the Successor Entity, if any, will be
required to register as an Investment Company; and
(viii) the Sponsor or any permitted successor or assignee owns
all of the common securities of the Successor Entity and guarantees the
obligations of the Successor Entity
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under the Successor Securities at least to the extent provided by the
Preferred Securities Guarantee and the Common Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% of the Accreted Liquidation Amount of the
Securities, merge with or into, convert into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any other Person or permit any
other Person to merge with or into, consolidate, amalgamate, or replace it if
such merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease would cause the Trust or the Successor Entity, if any, not to
be classified as a grantor trust for United States Federal income tax purposes.
ARTICLE IV.
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time and on any Option Closing Date, the
Sponsor will purchase all of the Common Securities then issued by the Trust, in
an amount equal to at least 3% of the total capital of the Trust, at the same
time as the Preferred Securities are issued and sold. The aggregate Accreted
Liquidation Amount of Common Securities at any time shall not be less than 3% of
the aggregate Accreted Liquidation Amount of all Securities of the Trust.
For so long as the Preferred Securities remain outstanding,
the Sponsor covenants (i) to maintain, directly or indirectly, 100% ownership of
the Common Securities; provided, however, that any permitted successor of the
Sponsor under the Indenture may succeed to the Sponsor's interest in the Common
Securities, (ii) to use its best efforts to cause the Trust (a) to remain a
business trust, except in connection with a distribution of Debentures to the
Holders of Securities in liquidation of the Trust, the redemption of all the
Securities or certain mergers, consolidations or amalgamations, each as
permitted by this Agreement, and not to voluntarily dissolve, wind up, liquidate
or be terminated, except as permitted by this Agreement, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes, (iii) to use its best efforts to ensure that the Trust shall not
be an Investment Company for purposes of the Investment Company Act, (iv) to use
its best efforts to cause each Holder of Securities to be treated as owning an
undivided beneficial interest in the Debentures and (v) to take no action which
would cause the dissolution, liquidation or winding up of the Trust, except as
otherwise provided in this Agreement.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust, execute and file with the
Commission the registration statement on Form S-3 pertaining to the Preferred
Securities, including any amendments thereto, and to prepare any required
prospectus in connection with the issue and
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sale of the Preferred Securities or the CRESTS Units or with any Remarketing of
the Preferred Securities;
(b) to determine the jurisdictions in which to take appropriate action
to qualify or register for sale all or part of the Preferred Securities or the
CRESTS Units and to do any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with the applicable
laws of any such jurisdictions; and
(c) to negotiate the terms of, execute, enter into and deliver the
Underwriting Agreement and a remarketing agreement on behalf of the Trust.
SECTION 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of
Preferred Securities to bring one or more Direct Actions under the circumstances
specified in this Agreement.
ARTICLE V.
TRUSTEES
SECTION 5.1 Number of Trustees; Appointment of Co-Trustee.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor may,
by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a Majority in Liquidation
Amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities;
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee shall be a Person meeting the
requirements of Section 5.2 (the "Delaware Trustee"); (2) there shall be at
least one Trustee who is an employee or officer of, or is affiliated with the
Sponsor (an "Administrative Trustee"); and (3) one Trustee shall be the Property
Trustee for so long as this Agreement is required to qualify as an indenture
under the Trust Indenture Act, and such Trustee may also serve as Delaware
Trustee if it meets the applicable requirements. Notwithstanding the above,
unless an Event of Default shall have occurred and be continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust's property may at the
time be located, the Holders of a Majority in Liquidation Amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more Persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of the Trust's property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in such
capacity any property,
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title, right or power deemed necessary or desirable, subject to the provisions
of this Agreement. In case an Event of Default has occurred and is continuing,
the Property Trustee alone shall have power to make any such appointment of a
co-trustee.
SECTION 5.2 Delaware Trustee.
For so long as required by the Business Trust Act, the
Delaware Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law, provided, however, if the Property Trustee has its principal
place of business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Property Trustee shall also be the Delaware Trustee
and Section 3.11 shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee and which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Commission to act as an indenture trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000, and
subject to supervision or examination by federal, state, territorial or
District of Columbia authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to above, then for
the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Agreement for purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
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(e) The initial Property Trustee shall be:
The Chase Manhattan Bank
One Liberty Place, 52nd Floor
1650 Market Street
Philadelphia, Pennsylvania 19103
Attention: Capital Markets Fiduciary Services
Telephone: (215) 988-1317
Telecopier: (215) 972-8372
SECTION 5.4 Certain Qualifications of Administrative Trustees and
Delaware Trustee Generally.
Each Administrative Trustee and the Delaware Trustee (unless
the Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Administrative Trustees.
The initial Administrative Trustees shall be:
Israel J. Floyd
Jan M. King
Stuart C. Shears
c/o Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
Telephone: (302) 594-5000
Telecopier: (302) 594-5210
(a) Except as expressly set forth in this Agreement and except if a
meeting of the Administrative Trustees is called with respect to any matter over
which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) Except as otherwise required by the Business Trust Act or
applicable law, any Administrative Trustee acting alone is authorized to execute
on behalf of the Trust any documents which the Administrative Trustees have the
power and authority to cause the Trust to execute pursuant to this Agreement.
SECTION 5.6 Delaware Trustee.
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street
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Wilmington, Delaware 19801
Attention: Corporate Trust Department
Telephone: (302) 984-3372
Telecopier: (302) 428-4903
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b), Trustees may be appointed or removed at
any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders
of a Majority in Liquidation Amount of the Common Securities voting as
a class at a meeting of the Holders of the Common Securities;
(iii) whether or not an Event of Default shall have occurred
and be continuing after the issuance of the Securities, for cause by
vote of the Holders of a Majority in Liquidation Amount of the
Preferred Securities voting as a class at a meeting of the Holders of
the Preferred Securities (it being understood that in no event will the
Holders of the Preferred Securities have the right to vote, appoint,
remove or replace the Administrative Trustees, which voting rights are
exclusively vested in the Holder of the Common Securities); and
(iv) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, by vote of Holders of
a Majority in Liquidation Amount of the Preferred Securities voting as
a class at a meeting of Holders of the Preferred Securities (it being
understood that in no event will the Holders of the Preferred
Securities have the right to vote, appoint, remove or replace the
Administrative Trustees, which voting rights are exclusively vested in
the Holder of the Common Securities).
(b) (i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.7(a) until a Successor Property Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Administrative Trustees and
the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections
5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the removed Delaware
Trustee, the Property Trustee (if the removed Delaware Trustee is not
also the Property Trustee), the Administrative Trustees and the
Sponsor.
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(c) A Trustee appointed to office shall hold office until his or her
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the other Trustees, the Sponsor and the Trust, which resignation shall take
effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor, the Delaware Trustee (if the resigning
Property Trustee is not also the Delaware Trustee) and the
resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders
of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the Trust,
the Property Trustee (if the resigning Delaware Trustee is not also the
Property Trustee), the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an Event of Default
shall have occurred and be continuing after the issuance of the Securities, the
Holders of the Preferred Securities shall use their best efforts to promptly
appoint a Successor Delaware Trustee or Successor Property Trustee, as the case
may be, if the Property Trustee or the Delaware Trustee delivers an instrument
of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.7 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the
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Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees shall be conclusive evidence of the existence of such
vacancy. The vacancy shall be filled with a Trustee appointed in accordance with
Section 5.7.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to dissolve, terminate or annul the Trust or to
terminate this Agreement. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 5.7, the Administrative
Trustees in office, regardless of their number, shall have all the powers
granted to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Agreement.
SECTION 5.10 Meetings.
If there is more than one Administrative Trustee, meetings of
the Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting. Notice of
any telephonic meetings of the Administrative Trustees or any committee thereof
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Agreement, any action of the Administrative Trustees
may be taken at a meeting by vote of a majority of the Administrative Trustees
present (whether in person or by telephone) and eligible to vote with respect to
such matter, provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Administrative Trustees. In the event there is
only one Administrative Trustee, any and all action of such Administrative
Trustee shall be evidenced by a written consent of such Administrative Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission; and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Administrative Trustees or
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otherwise as the Administrative Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
this Agreement.
SECTION 5.12 Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware
Trustee or any Administrative Trustee that is not a natural person, as the case
may be, may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Property Trustee or the Delaware Trustee, as the case may be, shall be a party,
or any Person succeeding to all or substantially all the corporate trust
business of the Property Trustee or the Delaware Trustee, as the case may be,
shall be the successor of the Property Trustee or the Delaware Trustee, as the
case may be, hereunder, provided such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however, such
successor shall notify the Sponsor and the Trust promptly of its succession.
SECTION 5.13 Compensation.
The Sponsor agrees:
(a) to pay to the Property Trustee and the Delaware Trustee from time
to time such compensation as shall be agreed in writing between the Company and
the Property Trustee and the Delaware Trustee, respectively, for all services
rendered by them hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and
(b) to reimburse the Property Trustee and the Delaware Trustee upon
their request for reasonable expenses, disbursements and advances incurred or
made by the Property Trustee or the Delaware Trustee, respectively, in
accordance with any provision of this Agreement (including the reasonable
compensation and the expenses and advances of its agents and counsel), except
any such expense or advance as may be attributable to their negligence, willful
misconduct or bad faith.
ARTICLE VI.
DISTRIBUTIONS; REMARKETING
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities. Distributions shall be
made on the Preferred Securities and the Common Securities in accordance with
the respective terms and preferences set forth herein and in Annex I. If and to
the extent that the Debenture Issuer makes a payment of interest (including any
compounded interest and additional interest) on and principal of the Debentures
held by the Property Trustee (the amount of any such payment being a "Payment
Amount"), the Property Trustee shall and is directed, to the extent funds are
available for that purpose, to make a
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distribution (a "Distribution") of the Payment Amount to Holders in accordance
with the applicable terms of the Securities.
SECTION 6.2 Remarketing.
(a) Upon the occurrence of a Reset Event, the Sponsor shall send a
written notice to the Holders of the Preferred Securities, the Trustees and the
holders of the CRESTS Units and the Warrants identifying the type of Reset
Event, the Reset Date, the identity and address of the Remarketing Agent and the
procedures to be followed for a Holder of the Preferred Securities to
participate in the Remarketing.
(b) In order for any Preferred Securities to be Remarketed and resold,
prior to the close of business on the fifth Business Day preceding the Reset
Date the Holder thereof or of a CRESTS Unit must (1) notify the Remarketing
Agent of such Holder's election to sell the desired number of Preferred
Securities or Preferred Securities included in CRESTS Units, if any, and (2)
tender such Preferred Securities or CRESTS Units to the Remarketing Agent. In
the event that any such Preferred Security is a component of a CRESTS Unit and
such Holder elects not to exercise the Warrant component of such CRESTS Unit,
then the Remarketing Agent shall be authorized to notify the Unit Agent under
the Unit Agreement to separate such CRESTS Unit in accordance with Section
3.1(b) of the Unit Agreement. Proceeds from the Remarketing of Preferred
Securities, less the Remarketing Agent's fee, shall be disbursed by the
Remarketing Agent to Holders of such Preferred Securities, unless a Holder holds
a Preferred Security as part of a CRESTS Unit and is simultaneously exercising
the Warrant component of such CRESTS Unit, in which case a portion of such
proceeds will automatically be applied toward payment of the Warrant Exercise
Price of such Warrant. In the case of a Global Preferred Security, the notice
and tender requirements shall be governed by the procedures of the Clearing
Agency.
(c) In the case of a Failed Remarketing, the original terms of the
Preferred Securities shall be deemed to have been in effect at all times since
their original issuance under the circumstances referred to in the first
paragraph of Section 2(a) of Annex I hereto.
(d) The Sponsor will promptly give written notice of the completion of
a Remarketing to the Holders of the Preferred Securities and the Trustees. Such
notice shall include the new distribution rate and the Redemption Date. The
Sponsor will give written notice of a Failed Remarketing to all Holders of
Preferred Securities and the Trustees prior to the close of business on the
sixth Business Day following the proposed Reset Date.
(e) The Sponsor shall appoint a Remarketing Agent and use its best
efforts (together with the Remarketing Agent) to facilitate a Remarketing as
provided herein.
ARTICLE VII.
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the Trust issue:
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(i) one class of preferred securities representing undivided
beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Preferred Securities"); and
(ii) one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities").
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Preferred Securities and the Common Securities, and shall
issue such Securities at the Closing Time, on any Option Closing Date and, if
applicable, as required by Section 7.12.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Agreement, the
Securities so issued shall be validly issued, fully paid and non-assessable.
(d) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Agreement, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Agreement.
SECTION 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities shall cease to be such Administrative
Trustee before the Securities so signed shall be delivered by the Trust, such
Securities nevertheless may be delivered as though the Person who signed such
Securities had not ceased to be such Administrative Trustee; and any Securities
may be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Administrative Trustees of the Trust,
although at the date of the execution and delivery of this Agreement any such
person was not an Administrative Trustee.
(b) One Administrative Trustee shall sign the Preferred Securities for
the Trust by manual or facsimile signature.
A Preferred Security shall not be valid until authenticated by
the manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Preferred Security has been
authenticated under this Agreement. A Common Security shall be valid upon
execution by an Administrative Trustee without any act of the Property Trustee.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Preferred Securities for
original issue.
The aggregate number of Preferred Securities outstanding at
any time shall not exceed the number set forth in the terms in Annex I hereto
except as provided in Section 7.6.
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The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Securities. An authenticating
agent may authenticate Preferred Securities whenever the Property Trustee may do
so. Each reference in this Agreement to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee hereunder with respect to the Sponsor or an
Affiliate.
SECTION 7.3 Form and Dating.
The Preferred Securities and the Property Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-1
and the Common Securities shall be substantially in the form of Exhibit A-2,
each of which is hereby incorporated in and expressly made a part of this
Agreement. The Securities may be in definitive or global form and may be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to an Administrative Trustee, as evidenced by the
execution thereof. The Securities may have letters, CUSIP or other numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange or quotation system rule,
agreements to which the Trust is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Trust). An
Administrative Trustee, at the direction of the Sponsor, shall furnish any such
legend not contained in Exhibits A-1 or A-2 to the Property Trustee in writing.
Each Preferred Security shall be dated the date of its authentication. The terms
and provisions of the Securities set forth in Annex I and the forms of
Securities set forth in Exhibits A-1 and A-2 are part of the terms of this
Agreement and to the extent applicable, the Property Trustee and the Sponsor, by
their execution and delivery of this Agreement, expressly agree to such terms
and provisions and to be bound thereby.
The following four paragraphs shall apply only to any Global
Preferred Securities:
The Preferred Securities shall be issued in the form of one or
more permanent global Securities in definitive, fully registered form without
Distribution coupons with the appropriate global legends set forth in Exhibit
A-1 hereto (a "Global Preferred Security"), which shall be deposited on behalf
of the purchasers of the Preferred Securities represented thereby with the
Property Trustee, as custodian for the Clearing Agency, and registered in the
name of the Clearing Agency or a nominee of the Clearing Agency, duly executed
by an Administrative Trustee on behalf of the Trust and authenticated by the
Property Trustee as hereinafter provided. The Global Preferred Security shall
represent such of the outstanding Preferred Security as shall be specified in
the "Schedule of Exchanges of Interests of Global Preferred Security" attached
thereto or otherwise in accordance with the procedures, of the Clearing Agency,
which, in the case of a Global Preferred Security that is not a component of a
CRESTS Unit, initially shall have a zero balance, and the Property Trustee shall
make the necessary endorsement to the "Schedule of Exchanges of Interests of
Global Preferred Security" or otherwise comply with the procedures of the
Clearing Agency to increase the number of outstanding Preferred Securities
represented by a Global Preferred Security that is not a component of a CRESTS
Unit upon a separation of a CRESTS Unit in accordance with the Unit Agreement.
The Property Trustee shall make such other necessary endorsements to the Global
Preferred Security to reflect the appropriate number of outstanding Preferred
Securities represented thereby. The Holder of a
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Global Preferred Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Agreement or
the Securities.
An Administrative Trustee shall execute and the Property
Trustee shall, in accordance with this Section 7.3, authenticate and make
available for delivery initially one or more Global Preferred Securities that
(i) shall be registered in the name of Cede & Co. or other nominee of such
Clearing Agency and (ii) shall be delivered by the Property Trustee to such
Clearing Agency or pursuant to such Clearing Agency's written instructions or
held by the Property Trustee as custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Agreement with respect to any
Global Preferred Security held on their behalf by the Clearing Agency or by the
Property Trustee as the custodian of the Clearing Agency or under such Global
Preferred Security, and the Clearing Agency may be treated by the Trust, the
Property Trustee and any agent of the Trust or the Property Trustee as the
absolute owner of such Global Preferred Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Clearing Agency or impair, as between the Clearing Agency and its
Participants, the operation of customary practices of such Clearing Agency
governing the exercise of the rights of a holder of a beneficial interest in any
Global Preferred Security.
Except as provided in Section 9.2, owners of beneficial
interests in a Global Preferred Security will not be entitled to receive
physical delivery of Preferred Securities in definitive form ("Definitive
Preferred Securities").
SECTION 7.4 Registrar and Paying Agent.
The Trust shall maintain in the Borough of Manhattan, The City
of New York, (i) an office or agency where Preferred Securities may be presented
for registration of transfer ("Registrar") and (ii) an office or agency where
Preferred Securities may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Preferred Securities and of their
transfer. The Trust may appoint the Registrar and the Paying Agent and may
appoint one or more co-registrars and one or more additional paying agents in
such other locations as it shall determine. The term "Registrar" includes any
additional registrar and the term "Paying Agent" includes any additional paying
agent. The Trust may change any Registrar or Paying Agent without prior notice
to any Holder. The Administrative Trustees shall notify the Property Trustee of
the name and address of any Agent not a party to this Agreement. If the Trust
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Property Trustee shall act as such, and as Paying Agent the Property Trustee
shall have the rights set forth in Section 3.8(i). The Trust or any of its
Affiliates may act as Registrar or Paying Agent. The Trust shall act as
Registrar and Paying Agent for the Common Securities.
Any Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' prior written notice to the Property Trustee, the Administrative
Trustees and the Sponsor. In the event that the Property Trustee shall no longer
be the Paying Agent, the Trust shall appoint a
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successor Paying Agent (which shall be a bank or trust company acceptable to the
Sponsor) to act as Paying Agent.
The Trust initially appoints the Property Trustee as Registrar
and Paying Agent for the Preferred Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the
Property Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Property Trustee all money held by the Paying
Agent for the payment of the Redemption Price of or Distributions on the
Securities and will notify the Property Trustee if there are insufficient funds
for such purpose. While any such insufficiency continues, the Property Trustee
may require a Paying Agent to pay all money held by it to the Property Trustee.
The Trust at any time may require a Paying Agent to pay all money held by it to
the Property Trustee and to account for any money disbursed by it. Upon payment
over to the Property Trustee, the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the money. If the
Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
If a Holder of a Security claims that a Security owned by it
has been lost, destroyed or wrongfully taken or if such Security is mutilated
and is surrendered to the Trust or, in the case of the Preferred Securities, to
the Property Trustee, an Administrative Trustee shall execute and the Property
Trustee shall authenticate and make available for delivery a replacement
Security if the Property Trustee's and the Trust's requirements, as the case may
be, are met. An indemnity bond must be provided by the Holder which, in the
judgment of the Property Trustee, is sufficient to protect the Trustees, the
Sponsor or any authenticating agent from any loss which any of them may suffer
if a Security is replaced. The Trust may charge such Holder for its expenses in
replacing a Security.
Every replacement Security is an additional beneficial
interest in the Trust.
SECTION 7.7 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the
Preferred Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Preferred Security is replaced, paid or purchased
pursuant to Section 7.6 hereof, it ceases to be outstanding unless the Property
Trustee receives proof satisfactory to it that the replaced, paid or purchased
Preferred Security is held by a bona fide purchaser.
If Preferred Securities are considered paid in accordance with
the terms of this Agreement, they cease to be outstanding and Distributions
thereon shall cease to accumulate.
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A Preferred Security does not cease to be outstanding because
the Trust, the Sponsor or an Affiliate of the Sponsor holds such Preferred
Security, but such Preferred Security is not counted as outstanding for purposes
of voting or consent by the Holders as set forth in Section 5 of Annex I hereto.
SECTION 7.8 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of
Preferred Securities have concurred in any direction, waiver or consent,
Preferred Securities owned by the Trust, the Sponsor or an Affiliate of the
Sponsor, as the case may be, shall be disregarded and deemed not to be
outstanding, except that for the purposes of determining whether the Property
Trustee shall be fully protected in relying on any such direction, waiver or
consent, only Preferred Securities which a Responsible Officer of the Property
Trustee actually knows are so owned shall be so disregarded.
SECTION 7.9 Temporary Securities.
Until Definitive Securities are ready for delivery, the
Administrative Trustees may prepare and, in the case of the Preferred
Securities, the Property Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of Definitive Securities
but may have variations that the Trust considers appropriate for temporary
Securities. Without unreasonable delay, the Administrative Trustees shall
prepare and, in the case of the Preferred Securities, the Property Trustee shall
authenticate Definitive Securities in exchange for temporary Securities.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Preferred Securities to the
Property Trustee for cancellation. The Registrar and Paying Agent shall forward
to the Property Trustee any Preferred Securities surrendered to them for
registration of transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Preferred Securities surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of cancelled Preferred Securities as the Trust directs, provided that
the Property Trustee shall not be obligated to destroy Preferred Securities. The
Trust may not issue new Preferred Securities to replace Preferred Securities
that it has paid or redeemed or that have been delivered to the Property Trustee
for cancellation or that any Holder has exchanged.
SECTION 7.11 CUSIP Numbers.
The Trust, in issuing Preferred Securities that are not
components of CRESTS Units, shall use a separate "CUSIP" number for such
Preferred Securities, and, accordingly, the Property Trustee shall use such
"CUSIP" number in notices of redemption as a convenience to Holders of such
Preferred Securities; provided that any such notice may state that no
representation is made as to the correctness of such number either as printed on
such Preferred Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on such
Preferred Securities, and any such redemption
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shall not be affected by any defect in or omission of such numbers. The Sponsor
will promptly notify the Property Trustee of any change in any such CUSIP
number.
SECTION 7.12 Amendment to Securities Certificates
In the event the Trust is required to issue replacement
Preferred Securities because of amendments to the provisions of this Agreement
or the terms of the Preferred Securities (as a result of the Remarketing or
otherwise in accordance with Section 12.1 or Section 7 of Annex I hereto), an
Administrative Trustee shall execute and deliver any such replacement Preferred
Securities to the Property Trustee and the Property Trustee shall authenticate
such replacement Preferred Securities by manual signature of an authorized
signatory of the Property Trustee and deliver such replacement Preferred
Securities to the Holders of the prior Preferred Securities. The Holders, by
acceptance of the Preferred Securities, expressly waive any and all rights to
enforce the provisions of the prior Preferred Securities after the replacement
Preferred Securities are issued and delivered. The prior Preferred Securities
shall be deemed to be cancelled as of the effective date of the applicable
amendment, and shall no longer be outstanding.
ARTICLE VIII.
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust.
(a) The Trust shall automatically dissolve upon the first to occur of
the following events:
(i) the bankruptcy of the Sponsor;
(ii) (A) the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor or (B) the
revocation of the Sponsor's charter and the expiration of 90 days after
the date of revocation without a reinstatement thereof;
(iii) the distribution of a Like Amount of the Debentures to
the Holders of the Securities, provided that the Property Trustee has
received written notice from the Sponsor directing the Property Trustee
to dissolve the Trust (which direction is optional and, except as
otherwise expressly provided herein, within the discretion of the
Sponsor), and provided, further, that such dissolution is conditioned
on the receipt by the Administrative Trustees of an opinion of an
independent tax counsel experienced in such matters (a "No Recognition
Opinion") to the effect that the Holders of the Securities will not
recognize any gain or loss for United States Federal income tax
purposes as a result of the dissolution of the Trust and the
distribution of the Debentures;
(iv) the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
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(v) the redemption of all of the Securities and the payment to
the Holders of any and all amounts necessary therefor, all in
accordance with the terms of the Securities; or
(vi) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable upon completion of winding up of the
Trust following the occurrence of an event referred to in Section 8.1(a), the
Administrative Trustees shall terminate the Trust by filing a certificate of
cancellation with the Secretary of State of the State of Delaware in accordance
with the Business Trust Act.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX.
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Agreement and in the
terms of the Securities. To the fullest extent permitted by law, any transfer or
purported transfer of any Security not made in accordance with this Agreement
shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) To the fullest extent permitted by law, the Sponsor may not
transfer the Common Securities except for any transfer (whether voluntarily or
by operation of law) permitted under Article 5 of the Indenture.
(d) The Administrative Trustees shall provide for the registration of
Securities and of the transfer of Securities, which will be effected without
charge but only upon payment (with such indemnity as the Administrative Trustees
may require) in respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of transfer of any
Securities, the Administrative Trustees shall cause one or more new Securities
to be issued in the name of the designated transferee or transferees. Every
Security surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Administrative Trustees duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Security surrendered for registration of
transfer shall be canceled by the Administrative Trustees. A transferee of a
Security shall be entitled to the rights and subject to the obligations of a
Holder hereunder upon the receipt by such transferee of a Security. By
acceptance of a Security, each transferee shall be deemed to have agreed to be
bound by this Agreement.
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SECTION 9.2 Transfer Procedures and Restrictions.
(a) Transfer and Exchange of Definitive Preferred Securities. When
Definitive Preferred Securities are presented to the Registrar:
(x) to register the transfer of such Definitive Preferred
Securities; or
(y) to exchange such Definitive Preferred Securities which
became mutilated, destroyed, defaced, stolen or lost, for an equal
Scheduled Liquidation Amount of each such Definitive Preferred
Security,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Preferred Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form reasonably satisfactory to the Property Trustee and the Registrar, duly
executed by the Holder thereof or the Holder's attorney duly authorized in
writing.
(b) Transfer of a Definitive Preferred Security for a Beneficial
Interest in a Global Preferred Security. Upon receipt by the Property Trustee of
a Definitive Preferred Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Property Trustee, together
with written instructions directing the Property Trustee to make, or to direct
the Clearing Agency to make, an adjustment on its books and records with respect
to the Global Preferred Security to reflect an increase in the Accreted
Liquidation Amount of the Preferred Securities represented by such Global
Preferred Security, then the Property Trustee shall cancel such Definitive
Preferred Security and cause, or direct the Clearing Agency to cause, the
aggregate Accreted Liquidation Amount of Preferred Securities represented by the
appropriate Global Preferred Security to be increased accordingly. If no Global
Preferred Securities are then outstanding, an Administrative Trustee shall
execute on behalf of the Trust and the Property Trustee shall authenticate, upon
written order of any Administrative Trustee, a Global Preferred Security
representing an appropriate Accreted Liquidation Amount of Preferred Securities.
(c) Transfer and Exchange of Global Preferred Securities. Subject to
Section 9.2(d), the transfer and exchange of Global Preferred Securities or
beneficial interests therein shall be effected through the Clearing Agency in
accordance with this Agreement and the procedures of the Clearing Agency
therefor.
(d) Transfer of a Beneficial Interest in a Global Preferred Security
for a Definitive Preferred Security.
(i) A Global Preferred Security deposited with the Clearing
Agency or with the Property Trustee as custodian for the Clearing
Agency pursuant to Section 7.3 shall be transferred to the beneficial
owners thereof in the form of Definitive Preferred Securities only if
such transfer complies with Section 9.2(c) and (1) the Clearing Agency
notifies the Trust that it is unwilling or unable to continue as
Clearing Agency for such Global Preferred Security or if at any time
such Clearing Agency ceases to be a "clearing
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agency" registered under the Exchange Act and, in each case, a clearing
agency is not appointed by the Sponsor within 90 days of receipt of
such notice or of becoming aware of such condition, (2) a Default or an
Event of Default has occurred and is continuing or (3) the Trust at its
sole discretion elects to cause the issuance of Definitive Preferred
Securities.
(ii) Any Global Preferred Security that is transferable to the
beneficial owners thereof in the form of Definitive Preferred
Securities pursuant to this Section 9.2(d) shall be surrendered by the
Clearing Agency to the Property Trustee located in the Borough of
Manhattan, The City of New York, to be so transferred, in whole or from
time to time in part, without charge, and the Property Trustee shall
authenticate and make available for delivery, upon such transfer of
each portion of such Global Preferred Security, an equal aggregate
Scheduled Liquidation Amount of Securities of authorized denominations
in the form of Definitive Preferred Securities. Any portion of a Global
Preferred Security transferred pursuant to this Section shall be
registered in such names as the Clearing Agency shall direct in
writing.
In the event of the occurrence of any of the events specified in clause
(i) above, the Administrative Trustees will promptly make available to the
Property Trustee a reasonable supply of Definitive Preferred Securities in fully
registered form without Distribution coupons.
(e) Restrictions on Transfer and Exchange of Global Preferred
Securities. Notwithstanding any other provisions of this Agreement (other than
the provisions set forth in subsection (d) of this Section 9.2), a Global
Preferred Security may not be transferred as a whole except by the Clearing
Agency to a nominee of the Clearing Agency or another nominee of the Clearing
Agency or by the Clearing Agency or any such nominee to a successor Clearing
Agency or a nominee of such successor Clearing Agency.
(f) Cancellation or Adjustment of Global Preferred Securities. At such
time as all beneficial interests in a Global Preferred Security have either been
exchanged for Definitive Preferred Securities to the extent permitted by this
Agreement or redeemed, repurchased or canceled in accordance with the terms of
this Agreement, such Global Preferred Security shall be returned to the Clearing
Agency for cancellation or retained and canceled by the Property Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global
Preferred Security is exchanged for Definitive Preferred Securities, Preferred
Securities represented by such Global Preferred Security shall be reduced and an
adjustment shall be made on the books and records of the Property Trustee (if it
is then the custodian for such Global Preferred Security) with respect to such
Global Preferred Security, by the Property Trustee or the Securities Custodian,
to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of Preferred
Securities.
(i) To permit registrations of transfers and exchanges, an
Administrative Trustee shall execute and the Property Trustee shall
authenticate Definitive Preferred Securities and Global Preferred
Securities at the Registrar's request in accordance with the terms of
this Agreement.
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(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
or the Sponsor may require) in respect of any tax or other governmental
charge that may be imposed in relation to it.
(iii) The Registrar shall not be required to register the
transfer of or exchange of (a) Preferred Securities during a period
beginning at the opening of business 15 days before the day of mailing
of a notice of redemption or any notice of selection of Preferred
Securities for redemption and ending at the close of business on the
day of such mailing; or (b) any Preferred Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Preferred Security being redeemed in part.
(iv) All Preferred Securities issued upon any registration of
transfer or exchange pursuant to the terms of this Agreement shall
evidence the same security and shall be entitled to the same benefits
under this Agreement as the Preferred Securities surrendered upon such
registration of transfer or exchange.
(h) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Preferred Security, a
Participant in the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its nominee or of any
Participant therein, with respect to any ownership interest in the
Preferred Securities or with respect to the delivery to any
Participant, beneficial owner or other Person (other than the Clearing
Agency) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Preferred
Securities. All notices and communications to be given to the Holders
and all payments to be made to Holders under the Preferred Securities
shall be given or made only to or upon the order of the Holders (which
shall be the Clearing Agency or its nominee in the case of a Global
Preferred Security). The rights of beneficial owners in any Global
Preferred Security shall be exercised only through the Clearing Agency
subject to the applicable rules and procedures of the Clearing Agency.
The Property Trustee may conclusively rely and shall be fully protected
in relying upon information furnished by the Clearing Agency or any
agent thereof with respect to its Participants and any beneficial
owners.
(ii) The Property Trustee and Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Agreement or under
applicable law with respect to any transfer of any interest in any
Preferred Security (including any transfers between or among Clearing
Agency Participants or beneficial owners in any Global Preferred
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by, the terms of this Agreement, and to
examine the same to determine substantial compliance as to form with
the express requirements hereof.
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SECTION 9.3 Deemed Security Holders.
The Trust, the Trustees, the Registrar and the Paying Agent
may treat the Person in whose name any Security shall be registered on the books
and records of the Trust as the sole owner and Holder of such Security for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Security on the part of any Person other than such Holder,
regardless of any notice to the contrary.
SECTION 9.4 Book Entry Interests.
Global Preferred Securities shall initially be registered on
the books and records of the Trust in the name of Cede & Co., the nominee of the
Clearing Agency, and no Preferred Security Beneficial Owner will receive a
Definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Preferred Securities, except as
provided in Section 9.2. Unless and until Definitive Preferred Securities have
been issued to the Preferred Security Beneficial Owners pursuant to Section 9.2:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Agreement (including the payment of
Distributions on the Global Preferred Security and receiving approvals, votes or
consents hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Preferred Security and shall have no obligation to the
Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Agreement, the provisions of this Section 9.4 shall
control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Participants, including receiving and
transmitting payments of Distributions on the Global Preferred Security to such
Participants. DTC will make book entry transfers among the Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required to be given by a Trustee under this Agreement, such
Trustee shall give all such notices and communications specified herein to be
given to the Holder of the Global Preferred Security to the Clearing Agency and
shall have no notice obligations to the Preferred Security Beneficial Owners.
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SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the
Administrative Trustees may, in their sole discretion, appoint a successor
Clearing Agency with respect to the Preferred Securities.
ARTICLE X.
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Agreement, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and obligations of
the Trust (other than with respect to the Securities) to the extent not
satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Agreement or by law, except that
this provision shall not be deemed to modify Section 3.9(b).
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
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SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Agreement shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
any Covered Person and any Indemnified Person; or
(ii) whenever this Agreement or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Agreement or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Agreement an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Agreement or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the
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Trust) by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees and expenses),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in
its favor by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees and expenses)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such Company Indemnified Person is
fairly and reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, the Company Indemnified Person shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by such
Company Indemnified Person in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination
that indemnification of the Company Indemnified Person is proper in the
circumstances because the Company Indemnified Person has met the
applicable standard of conduct set forth in paragraphs (i) and (ii).
Such determination shall be made (1) by the Administrative Trustees by
a majority vote of a Quorum consisting of such Administrative Trustees
who were not parties to such action, suit or proceeding, (2) if such a
Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrative Trustees so directs, by independent legal
counsel in a written opinion or (3) by the Common Security Holder of
the Trust.
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(v) Expenses (including attorneys' fees and expenses) incurred
by a Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Sponsor in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
Company Indemnified Person to repay such amount if it shall ultimately
be determined that such Company Indemnified Person is not entitled to
be indemnified by the Sponsor as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor
if a determination is reasonably and promptly made (1) by the
Administrative Trustees by a majority vote of a Quorum of disinterested
Administrative Trustees, (2) if such a Quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written opinion
or (3) by the Common Security Holder of the Trust, that, based upon the
facts known to the Administrative Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such Person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Administrative Trustees, independent legal counsel
or Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
10.4(a) shall not be deemed exclusive of any other rights to which
those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Sponsor or Preferred Security Holders of the Trust or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Sponsor and each Company Indemnified
Person who serves in such capacity at any time while this Section
10.4(a) is in effect. Any repeal or modification of this Section
10.4(a) shall not affect any rights or obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any Person who is or was a Company Indemnified
Person against any liability asserted against such Company Indemnified
Person and incurred by such Company Indemnified Person in any such
capacity, or arising out of the status as such, whether or not the
Sponsor would have the power to indemnify such Company Indemnified
Person against such liability under the provisions of this Section
10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of
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this Section 10.4(a) with respect to the resulting or surviving entity
as he or she would have with respect to such constituent entity if its
separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a Person
who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the
Delaware Trustee, (iii) any Affiliate of the Property Trustee and the Delaware
Trustee and (iv) any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Property
Trustee and the Delaware Trustee (each of the Persons in (i) through (iv) being
referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary
Indemnified Person harmless against, any and all loss, liability, damage, claim
or expense including taxes (other than taxes based on the income of such
Fiduciary Indemnified Person) incurred without negligence, willful misconduct or
bad faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. With respect to the
Property Trustee, this provision shall not be deemed to modify Section 3.9(b) or
the Trust Indenture Act. The obligation to indemnify as set forth in this
Section 10.4(b) shall survive the resignation or removal of the Property Trustee
or the Delaware Trustee and the satisfaction and discharge of this Agreement.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee (subject to Section 5.3(c)) may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders of Securities shall have no rights by virtue of this
Agreement in and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee or the Property Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor, the Delaware
Trustee and the Property Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to others
any such particular investment or other opportunity. Any Covered Person, the
Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
or may act as depositary for, trustee or agent for, or act on any committee or
body of holders of, securities or other obligations of the Sponsor or its
Affiliates.
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ARTICLE XI.
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Administrative
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States Federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss.
(c) The Administrative Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States Federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Administrative Trustees shall
endeavor to deliver all such information statements within 30 days after the end
of each Fiscal Year of the Trust.
(d) The Administrative Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States Federal
income tax return, on a Form 1041 or such other form required by United States
Federal income tax law, and any other annual income tax returns required to be
filed by the Administrative Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Administrative Trustees; provided, however,
that the Property Trustee shall designate the signatories for the Property
Trustee Account.
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SECTION 11.4 Withholding.
The Trust and the Administrative Trustees shall comply with
all withholding requirements under United States Federal, state and local law.
The Trust shall request, and the Holders shall provide to the Trust, such forms
or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Administrative Trustees to assist them in determining the
extent of, and in fulfilling, the Trust's withholding obligations. The
Administrative Trustees shall file required forms with applicable jurisdictions
and, unless an exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to withhold and pay over
any amounts to any authority with respect to Distributions or allocations to any
Holder, the amount withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder. In the event of any claim of excess
withholding, Holders shall be limited to an action against the applicable
jurisdiction. If the amount required to be withheld was not withheld from actual
Distributions made, the Trust may reduce subsequent Distributions by the amount
of such withholding.
ARTICLE XII.
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Agreement or by any applicable
terms of the Securities, this Agreement may only be amended by a written
instrument approved and executed by:
(i) the Sponsor and the Administrative Trustees (or, if there
are more than two Administrative Trustees, a majority of the
Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate
from each of the Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Agreement (including the terms
of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee, the Property Trustee shall have first received:
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(A) an Officers' Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and conforms
to, the terms of this Agreement (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Agreement (including the terms
of the Securities) and that all conditions precedent to the
execution and delivery of such amendment have been satisfied;
and
(iii) to the extent the result of such amendment would:
(A) cause the Trust to fail to be classified for
purposes of United States Federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers of
the Property Trustee in contravention of the Trust Indenture
Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act.
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of the Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities;
provided, however, that, without the consent of each Holder of the Securities,
this Agreement may not be amended to (i) change the Distribution rate (or manner
of calculation of the Distribution rate), amount, timing or currency or
otherwise adversely affect the method of any required payment, (ii) change the
purposes of the Trust, (iii) authorize the issuance of any additional beneficial
interests in the Trust, (iv) change the redemption provisions, (v) change the
conditions precedent for the Sponsor to elect to dissolve the Trust and
distribute the Debentures to the Holders of the Securities, (vi) change the
Liquidation Distribution or other provisions relating to the distribution of
amounts payable upon the dissolution and liquidation of the Trust, (vii) affect
the limited liability of any Holder of the Securities or (viii) restrict the
right of a Holder of the Securities to institute suit for the enforcement of any
required payment on or after the due date therefor (or in the case of
redemption, on the Redemption Date).
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities.
(e) Article IV shall not be amended without the consent of the Holders
of a Majority in Liquidation Amount of the Common Securities.
(f) The rights of the Holders of the Common Securities under Article V
to increase or decrease the number of, and to appoint and remove, Trustees shall
not be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities.
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(g) Notwithstanding Section 12.1(c), this Agreement may be amended by
the Sponsor and the Trustees without the consent of the Holders of the
Securities to:
(i) cure any ambiguity, correct or supplement any provision in
this Agreement that may be inconsistent with any other provision of
this Agreement or make any other provisions with respect to matters or
questions arising under this Agreement not inconsistent with any other
provisions of this Agreement;
(ii) modify, eliminate or add to any provisions of this
Agreement to such extent as shall be necessary to ensure that the Trust
will be classified for United States Federal income tax purposes as a
grantor trust at all times that any Securities are outstanding or to
ensure that the Trust will not be required to register as an Investment
Company under the Investment Company Act;
provided, however, that, in each case, such action shall not adversely affect in
any material respect the interests of the Holders of the Securities, and any
such amendments of this Agreement shall become effective when notice thereof is
given to the Holders of the Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Administrative Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Agreement, the terms of
the Securities, or the rules of any stock exchange or quotation system or market
on which the Preferred Securities may then be listed or admitted for trading.
The Administrative Trustees shall call a meeting of the Holders of such class if
directed to do so by the Holders of 10% in Liquidation Amount of the Securities
of such class. Such direction shall be given by delivering to the Administrative
Trustees one or more notices in a writing stating that the signing Holders of
Securities wish to call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders of Securities calling a
meeting shall specify in writing the security certificates held by the Holders
of Securities exercising the right to call a meeting and only those Securities
specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Whenever a vote, consent or approval of the Holders of Securities
is permitted or required under this Agreement or the rules of any stock exchange
or quotation system or market on which the Preferred Securities may then be
listed or admitted for trading, such vote, consent or approval may be given at a
meeting of the Holders of Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a meeting if a consent in
writing setting forth the action so taken is signed by the Holders of Securities
owning not less than the minimum amount of Securities in aggregate Accreted
Liquidation Amount that would be necessary to authorize or take such action at a
meeting at which all Holders of Securities having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who have not
consented in writing.
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(c) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least seven
days and not more than 60 days before the date of such meeting. The
Administrative Trustees may specify that any written ballot submitted
to the Security Holders for the purpose of taking any action without a
meeting shall be returned to the Trust within the time specified by the
Administrative Trustees;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of eleven months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder of Securities executing it. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders
of the Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Administrative Trustees or by such other Person that
the Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Agreement, the terms
of the Securities, the Trust Indenture Act or the listing rules of any
stock exchange or quotation system or market on which the Preferred
Securities may then be listed or trading otherwise provides, the
Administrative Trustees, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any meeting at which
any matter is to be voted on by any Holders of Securities, waiver of
any such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy or
any other matter with respect to the exercise of any such right to
vote.
SECTION 12.3 Power of Attorney.
Each Holder, by acceptance of the Preferred Securities, hereby
irrevocably constitutes and appoints the Remarketing Agent and each of its
officers as the Holder's true and lawful representative and attorney-in-fact,
with full power and authority in the Holder's name, place and stead to make,
execute, acknowledge, deliver, swear to, record and file with respect to the
Preferred Securities any and all instruments, documents and certificates which,
from time to time, may be required in connection with the Remarketing of the
Preferred Securities and to take any other action which the Remarketing Agent
may deem necessary or appropriate, in its discretion, in connection with the
Remarketing of the Preferred Securities. This power of attorney is coupled with
an interest and shall continue in full force and effect and shall not be
affected by the subsequent death, disability, insolvency, bankruptcy,
termination or incapacity of
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a Holder and may be exercised by an officer of the Remarketing Agent signing
individually for any Holder or for all Holders exercising any particular
instrument.
ARTICLE XIII.
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Agreement, and
each Successor Property Trustee represents and warrants, as applicable, to the
Trust and the Sponsor at the time of the Successor Property Trustee's acceptance
of its appointment as Property Trustee that:
(a) the Property Trustee is a banking corporation, a national banking
association or a bank or trust company, duly organized, validly existing and in
good standing under the laws of the United States or a State of the United
States, as the case may be, with corporate power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Agreement;
(b) the execution, delivery and performance by the Property Trustee of
this Agreement have been duly authorized by all necessary corporate action on
the part of the Property Trustee; and this Agreement has been duly executed and
delivered by the Property Trustee under New York law and constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) the execution, delivery and performance of this Agreement by the
Property Trustee do not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any federal or New York State banking authority is required for the
execution, delivery or performance by the Property Trustee of this Agreement.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Agreement, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee is a banking corporation, a national banking
association or a bank or trust company, duly organized, validly existing and in
good standing under the laws of the United States or the State of Delaware, as
the case may be, with corporate power and
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authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Agreement;
(b) the execution, delivery and performance by the Delaware Trustee of
this Agreement have been duly authorized by all necessary corporate action on
the part of the Delaware Trustee; this Agreement has been duly executed and
delivered by the Delaware Trustee under Delaware law and constitutes a legal,
valid and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) the execution, delivery and performance of this Agreement by the
Delaware Trustee do not conflict with or constitute a breach of the charter or
by-laws of the Delaware Trustee;
(d) no consent, approval or authorization of, or registration with or
notice to, any Federal or Delaware banking authority governing the trust powers
of the Delaware Trustee is required for the execution, delivery or performance
by the Delaware Trustee of this Agreement; and
(e) the Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware, and is a Person that satisfies for
the Trust Section 3807(a) of the Business Trust Act.
ARTICLE XIV.
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Agreement shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative Trustees at
the Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders of the Securities):
Hercules Trust II
c/o Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
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Attention: Israel J. Floyd
Telephone: (302) 594-5000
Telecopier: (302) 594-5210
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Department
Telephone: (302) 984-3372
Telecopier: (302) 428-4903
(c) if given to the Property Trustee, at the Property Trustee's mailing
address set forth below (or such other address as the Property Trustee may give
notice of to the Holders of the Securities):
The Chase Manhattan Bank
c/o Chase Manhattan Trust Company, N.A.
One Liberty Place, 52nd Floor
1650 Market Street
Philadelphia, Pennsylvania 19103
Attention: Capital Markets Fiduciary Services
Telephone: (215) 988-1317
Telecopier: (215) 972-8372
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
Attention: Vice-President and Treasurer and
Corporate Secretary
Telephone: (302) 594-5000
Telecopier: (302) 594-5210
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address
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of which no notice was given, such notice or other document shall be deemed to
have been delivered on the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Agreement and the rights of the parties hereunder shall
be governed by and construed in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws, except that the rights, limitations of
rights, obligations, duties and immunities of the Property Trustee shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States Federal income tax purposes as a grantor trust. The
provisions of this Agreement shall be interpreted to further this intention of
the parties.
SECTION 14.4 Headings.
The Table of Contents, Cross-Reference Table and Headings
contained in this Agreement are inserted for convenience of reference only and
do not affect the interpretation of this Agreement or any provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Agreement any of the parties hereto is named
or referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Agreement by the Sponsor and
the Trustees shall bind and inure to the benefit of their respective successors
and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Agreement, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Agreement, or the application of such provision to Persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 14.7 Counterparts.
This Agreement may contain more than one counterpart of the
signature page and this Agreement may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned have caused this Amended
and Restated Trust Agreement to be executed as of the day and year first above
written.
Jan M. King, not in her individual capacity
but solely as Administrative Trustee of the Trust
/s/ JAN M. KING
--------------------------------------
Stuart C. Shears, not in his individual capacity
but solely as Administrative Trustee of the Trust
/s/ STUART C. SHEARS
---------------------------------------
Israel J. Floyd, not in his individual capacity
but solely as Administrative Trustee of the Trust
/s/ ISRAEL J. FLOYD
---------------------------------------
Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Delaware
Trustee of the Trust
By: /s/ DENIS KELLY
------------------------------------
Name: Denis Kelly
Title: Assistant Vice President
The Chase Manhattan Bank, not in its individual
capacity but solely as Property Trustee of the
Trust
By: /s/ JOSEPH C. PROGAR
------------------------------------
Name: Joseph C. Progar
Title: Authorized Officer
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Hercules Incorporated,
as Sponsor of the Trust
By: /s/ GEORGE MACKENZIE
--------------------------------------
Name: George MacKenzie
Title: Senior Vice President and
Chief Financial Officer
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ANNEX I
TERMS OF
PREFERRED SECURITIES
COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Trust
Agreement of the Trust, dated as of July 27, 1999 (as amended from time to time,
the "Agreement"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities (collectively, the "Securities") are set forth below (each
capitalized term used but not defined herein has the meaning set forth in the
Agreement or, if not defined in such Agreement, as defined in the Indenture):
1. Designation and Number.
(a) Preferred Securities. Up to 400,000 Preferred Securities of the
Trust, with an aggregate Scheduled Liquidation Amount with respect to the assets
of the Trust of Four Hundred Million Dollars ($400,000,000), and with a
Scheduled Liquidation Amount with respect to the assets of the Trust of $1,000
per security, are hereby designated for the purposes of identification only as
"Preferred Securities" (the "Preferred Securities"). The certificates evidencing
the Preferred Securities shall be substantially in the form of Exhibit A-1 to
the Agreement, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
(b) Common Securities. Up to 12,372 Common Securities of the Trust,
with an aggregate Scheduled Liquidation Amount with respect to the assets of the
Trust of Twelve Million Three Hundred Seventy Two Thousand Dollars
($12,372,000), and with a Scheduled Liquidation Amount with respect to the
assets of the Trust of $1,000 per security, are hereby designated for the
purposes of identification only as "Common Securities" (the "Common
Securities"). The certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Agreement, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice.
2. Distributions.
(a) Distributions on each Security will be payable at a rate per annum
of 6.50% of the scheduled liquidation amount of $1,000 per Security (the
"Scheduled Liquidation Amount"), such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee; provided, however, that
Distributions on each Security on and after a Reset Date, if any, will be
payable at the annual rate determined in the related Remarketing of the
Preferred Securities based on the Accreted Liquidation Amount thereof (for the
avoidance of doubt, the Distribution payable on the Distribution Date (as
defined below) immediately following a Reset Date shall be the sum of (i) the
Distributions accumulated from and including the last Distribution Date to but
excluding the Reset Date at the Distribution Rate (as defined below) in effect
prior to the Reset Date, plus (ii) the Distributions accumulated from and
including the Reset Date to but excluding the applicable Distribution
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Date at the Distribution Rate determined in the Remarketing). Distributions in
arrears for more than one quarterly period will bear additional distributions
thereon compounded quarterly at the then applicable Distribution Rate (to the
extent permitted by applicable law). The term "Distributions," as used herein,
includes any such additional distributions unless otherwise stated. The term
"Distribution Rate," as used herein, means a rate per annum equal to 6.50% of
the Scheduled Liquidation Amount or, in the case of a Remarketing of Preferred
Securities, the annual rate determined in such Remarketing based on the Accreted
Liquidation Amount. A Distribution is payable only to the extent that payments
are made by the Sponsor in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds legally available
therefor.
Upon the occurrence of a Reset Event (other than a Reset Event
within the meaning of clause (B) of the definition of a Trading Reset Event in
Article I of the Agreement), if any, the Sponsor shall select a date, not less
than 30 nor more than 60 days after the date notice is given to the Holders of
the Preferred Securities and not more than 70 days after the occurrence of such
Reset Event, on which the Remarketing of the Preferred Securities shall occur
and modifications to the terms of the Preferred Securities and the Debentures
referred to herein shall become effective (the "Reset Date"). Upon the
occurrence of a Reset Event within the meaning of clause (B) of the definition
of a Trading Reset Event in Article I of the Agreement, the "Reset Date" shall
automatically be the date 15 Business Days prior to the Expiration Date of the
Warrants.
Notwithstanding the foregoing, there shall not be a "Reset
Date" if (i) in the case of a Trading Reset Event, an Event of Default under the
Agreement or a deferral of Distributions to Holders of the Preferred Securities
has occurred and is continuing; (ii) in the case of a Trading Reset Event, the
closing price of the Sponsor's common stock on the New York Stock Exchange (or,
if not then listed on such exchange, any other national securities exchange) as
of fifth Business Day preceding the Reset Date or as of the Reset Date is less
than the Exercise Price Per Share (determined without regard to the Reset Date);
(iii) in the case of a Trading Reset Event, (A) the Shelf Registration Statement
is not effective under the Securities Act or (B) the Sponsor shall have notified
the Warrant Agent under the Warrant Agreement, which notice shall not have been
withdrawn by it, that it is unable as of the Reset Date to deliver a then
current Prospectus to exercising holders of the Warrants; or (iv) the
Remarketing Agent is unable to Remarket all of the Preferred Securities to be
Remarketed at the Remarketing Rate prior to the close of business on the fifth
Business Day following the Reset Date or all of the conditions precedent to such
Remarketing referred to in the Agreement have not been fulfilled (a "Failed
Remarketing").
The Administrative Trustees will give notice of a Failed
Remarketing to all Holders of the Preferred Securities and to the Property
Trustee and the Delaware Trustee prior to the close of business on the sixth
Business Day following the Reset Date. Following a Failed Remarketing (or the
absence of a Remarketing due to a failure to satisfy one of the other conditions
referred to above), (i) in the case of a Trading Reset Event, the Preferred
Securities may be Remarketed again, in the manner described in the Agreement if
a Reset Event subsequently occurs and (ii) in the case of an Acquisition Reset
Event, the Preferred Securities shall be Remarketed every fifteenth day
thereafter until there has been a successful Remarketing, in which case the date
of the successful Remarketing will be the "Reset Date."
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The Sponsor shall notify the Trustee and the Debenture Trustee
within five Business Days after the occurrence of a Reset Date.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from and including July 27, 1999, to but
excluding the related Distribution Date or Redemption Date (as defined below)
and will be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 1999, (each, a "Distribution
Date"), and on the Redemption Date, except as otherwise described below. The
amount of Distributions payable for any Distribution Period will be computed on
the basis of a 360-day year consisting of twelve 30-day months. "Distribution
Period" means the period from and including the immediately preceding
Distribution Date (or July 27, 1999, in the case of the first Distribution
Period), to but excluding the applicable Distribution Date, or Redemption Date,
as the case may be. If a Distribution Date is not a Business Day, then such
Distribution will be made on the next succeeding Business Day. However, if the
next succeeding 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 on the Debentures by extending the interest payment
period at any time and from time to time for a period not exceeding 20
consecutive quarterly periods (each quarterly period as to which quarterly
interest payments have been deferred is referred to herein as an "Extension
Period"), provided that an Extension Period must end on an Interest Payment Date
for the Debentures and may not extend beyond the stated maturity date or date of
earlier redemption of the Debentures, as the case may be. As a consequence of
such deferral, Distributions on the Securities will also be deferred during an
Extension Period. Despite such deferral, quarterly Distributions will continue
to accumulate with additional interest thereon (to the extent permitted by
applicable law but not at a rate greater than the rate at which interest is then
accruing on the Debentures) at the Distribution Rate then in effect, compounded
quarterly during any Extension Period. Prior to the termination of an Extension
Period, the Debenture Issuer may further defer payments of interest by further
extending such Extension Period; provided that an 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 Debentures and
may not extend beyond the stated maturity date or date of earlier redemption of
the Debentures, as the case may be. At the end of an Extension Period, all
accumulated and unpaid Distributions (but only to the extent payments are made
in respect of the Debentures held by the Property Trustee and to the extent the
Property Trustee has funds legally 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.
(c) Distributions on a Distribution Date will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
day immediately preceding such Distribution Date. If the Preferred Securities
are ever issued in the form of Definitive Preferred Securities, the record date
for the payment of Distributions shall be the 15th day of the calendar
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month in which the Distribution Date occurs, even if that day is not a Business
Day. The relevant record dates for the Common Securities shall be the same as
the record dates for the Preferred Securities. Distributions payable on any
Securities that are not punctually paid or duly provided for on any Distribution
Date, as a result of the Debenture Issuer having failed to make a payment under
the Debentures, will cease to be payable to the Holder on the relevant record
date, and such defaulted Distributions will instead be payable to the Person in
whose name such Securities are registered on the Special Record Date or other
specified date determined in accordance with the Indenture.
(d) In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distributed on a Pro Rata (as defined herein) basis among the Holders
of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any dissolution of the Trust, the Trust shall
be liquidated by the Administrative Trustees as expeditiously as the
Administrative Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, to the Holders of the Securities a Like Amount (as defined below) of the
Debentures, unless such distribution is determined by the Property Trustee not
to be practicable, in which event such Holders will be entitled to receive out
of the assets of the Trust legally available for distribution to Holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the aggregate of the Accreted Liquidation Amount per
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount is referred to herein as the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having an aggregate Scheduled Liquidation Amount equal to
the aggregate principal amount of Debentures to be paid in accordance with their
terms and (ii) with respect to a distribution of Debentures upon the dissolution
of the Trust, Debentures having an aggregate principal amount equal to the
aggregate Scheduled Liquidation Amount of the Securities of the Holder to whom
such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall be paid on a Pro
Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures on their stated
maturity date or date of earlier redemption, the proceeds from such repayment
shall be simultaneously applied by the Property Trustee to redeem a Like Amount
of the Securities at a redemption price equal to (i) in the case of the
repayment of the Debentures on their stated maturity date, the Maturity
Redemption Price (as defined below) and (ii) in the case of the redemption of
the Debentures following the Remarketing of the Preferred Securities, the
Optional Redemption Price (as defined below). The Maturity Redemption Price and
the Optional Redemption Price are referred
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to collectively as the "Redemption Price" and the date fixed for redemption of
the Securities is referred to herein as the "Redemption Date." Holders will be
given not less than 30 nor more than 60 days' prior written notice of such
redemption in accordance with Section 4(e). Any redemption of Securities shall
be made, and the applicable Redemption Price shall be payable, on the Redemption
Date, and only to the extent that the Trust has funds legally available for the
payment thereof.
(b) The "Maturity Redemption Price" shall mean a price equal
to the Scheduled Liquidation Amount of the Securities plus accumulated and
unpaid Distributions thereon, if any, to the Redemption Date. The "Optional
Redemption Price" shall mean a price equal to the Accreted Liquidation Amount of
the Securities plus accumulated and unpaid Distributions thereon, if any, to the
Redemption Date.
(c) If fewer than all the outstanding Securities are to be so
redeemed, the Securities will be redeemed on a Pro Rata basis and the Preferred
Securities to be redeemed will be determined as described in Section 4(e)(ii)
below.
(d) On and from the date fixed by the Administrative Trustees
for any distribution of Debentures and liquidation of the Trust: (i) the
Securities will no longer be deemed to be outstanding, (ii) the Clearing Agency
or its nominee (or any successor Clearing Agency or its nominee), as the Holder
of the Preferred Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any certificates representing Securities not held by the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee) will be
deemed to represent beneficial interests in Debentures until such certificates
are presented to the Debenture Issuer or its agent for transfer or reissue.
(e) The procedure with respect to redemptions or distributions
of Debentures shall be as follows:
(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for, the Securities (a
"Redemption/Distribution Notice") will be given by an
Administrative Trustee on behalf of the Trust by mail to each
Holder of Securities to be redeemed or exchanged (with a copy
to the Property Trustee) not fewer than 30 nor more than 60
days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation
of the date of redemption or exchange and the dates on which
notices are given pursuant to this Section 4(e)(i), a
Redemption/Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of Securities. Each
Redemption/Distribution Notice shall be addressed to the
Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in
the Redemption/Distribution Notice or in the mailing of either
thereof with respect to any Holder shall affect the validity
of the redemption or exchange proceedings with respect to any
other Holder.
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(ii) In the event that fewer than all the outstanding
Preferred Securities are to be redeemed, the Preferred
Securities to be redeemed shall be redeemed on a Pro Rata
basis from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities registered
in the name of and held of record by the Clearing Agency or
its nominee (or any successor Clearing Agency or its nominee)
or any nominee, the distribution of the proceeds of such
redemption will be made to the Clearing Agency and disbursed
by such Clearing Agency in accordance with the procedures
applied by such agency or nominee.
(iii) If the Securities are to be redeemed and the
Trust gives a Redemption/Distribution Notice (which notice
will be irrevocable), then (A) with respect to Global
Preferred Securities representing Preferred Securities issued
in book-entry form, by 12:00 noon, New York City time, on the
Redemption Date, provided that the Debenture Issuer has paid
the Property Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures by
10:00 a.m., New York City time, on the Stated Maturity Date or
the date of earlier redemption, as the case requires, the
Property Trustee will deposit irrevocably with the Clearing
Agency or its nominee (or successor Clearing Agency or its
nominee) funds sufficient to pay the applicable Redemption
Price with respect to such Preferred Securities and will give
the Clearing Agency irrevocable instructions and authority to
pay the Redemption Price to the relevant Participants, and (B)
with respect to Definitive Preferred Securities and Common
Securities, provided that the Debenture Issuer has paid the
Property Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, the
Property Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of
such Holder appearing on the books and records of the Trust on
the Redemption Date. If a Redemption/Distribution Notice shall
have been given and funds deposited as required, then
immediately prior to the close of business on the date of such
deposit, or on the Redemption Date, as applicable,
Distributions will cease to accumulate on the Securities so
called for redemption and all rights of Holders of such
Securities so called for redemption will cease, except the
right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption
Price, and such Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on
the Redemption Date will be subject to the rights of Holders
of Securities on the close of business on a record date in
respect of a Distribution Date occurring on or prior to such
Redemption Date.
(v) Neither the Administrative Trustees nor the Trust
shall be required to register or cause to be registered the
transfer of (i) any Securities beginning on the opening of
business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Securities for
redemption or (ii) any Securities selected for redemption
except the unredeemed portion of any Security being redeemed.
If a Redemption Date is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the
next succeeding Business Day, and no interest or other payment
in respect of any such delay will accumulate for the period to
but excluding such Business Day. If payment of the Redemption
Price in respect of any Securities is
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improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to
the relevant Securities Guarantee, Distributions on such
Securities will continue to accumulate from the original
redemption date to the actual date of payment, in which case
the actual payment date will be considered the Redemption Date
for purposes of calculating the Redemption Price.
(vi) Redemption/Distribution Notices shall be sent by
the Property Trustee on behalf of the Trust to (A) in respect
of the Preferred Securities, the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) if
the Global Preferred Securities have been issued or, if
Definitive Preferred Securities have been issued, to the
Holders thereof, and (B) in respect of the Common Securities,
to the Sponsor.
(vii) Subject to the foregoing and applicable law
(including, without limitation, United States Federal
securities laws and banking laws), the Sponsor or any of its
subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market
or by private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law or the Agreement, the Holders of the Preferred
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding with respect to any remedy available to the Debenture
Trustee, or exercise any trust or power conferred upon the Debenture Trustee,
with respect to the Debentures, (ii) waive any past default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the principal of the Debentures or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required, without, in each case,
obtaining (1) the prior approval of the Holders of a Majority in Liquidation
Amount of all outstanding Preferred Securities; provided, however, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each Holder of the Preferred Securities
and (2) an Opinion of Counsel delivered to the Trust from tax counsel
experienced in such matters to the effect that the Trust will not be classified
as an association taxable as corporation for United States Federal income tax
purposes on account of such action.
Notwithstanding anything to the contrary contained herein, if
an Event of Default under the Agreement has occurred and is continuing and such
event is attributable to the failure of the Debenture Issuer to pay the
principal of or interest on the Debentures on the date such principal or
interest is otherwise payable (or, in the case of redemption, on the Redemption
Date), then a Holder of Preferred Securities may directly institute a proceeding
against the Debenture Issuer for enforcement of payment to such Holder of the
principal of or interest on a Like Amount of Debentures (a "Direct Action") on
or after the respective due date specified in the Debentures. In connection with
such a Direct Action, (i) the rights of the Common Securities Holder will be
subordinated to the rights of Holders of Preferred Securities with respect to
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payments made or required to be made by the Debenture Issuer in such Direct
Action and (ii) the Debenture Issuer shall remain obligated to pay the principal
of or interest on such Debentures, and the Debenture Issuer shall be subrogated
to the rights of such Holder of Preferred Securities to the extent of any
payment made by the Debenture Issuer to such Holder in such Direct Action.
Any approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities or pursuant
to written consent. The Property Trustees will cause a notice of any meeting at
which Holders of Preferred Securities are entitled to vote to be mailed to each
Holder of record of Preferred Securities. Each such notice will include a
statement setting forth (i) the date of such meeting, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote and (iii) instructions for the delivery of proxies.
No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures, in accordance with the Agreement and these terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b) and 7 as otherwise
required by law or the Agreement, the Holders of the Common Securities will have
no voting rights.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding with respect to any remedy available to the Debenture
Trustee, or exercise any trust or power conferred upon the Debenture Trustee,
with respect to the Debentures, (ii) waive any past default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the principal of the Debentures or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required, without, in each case,
obtaining (1) the prior approval of the Holders of a Majority in Liquidation
Amount of all outstanding Common Securities; provided, however, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of the Common Securities Holder and (2) an
Opinion of Counsel delivered to the Trust from tax counsel experienced in such
matters to the effect that the Trust will not be classified as an association
taxable as a corporation for United States Federal income tax purposes on
account of such action.
Notwithstanding anything to the contrary contained herein, if
an Event of Default under the Agreement has occurred and is continuing and such
event is attributable to the failure of the Debenture Issuer to pay principal of
or interest on the Debentures on the date such principal or interest is
otherwise payable (or, in the case of redemption, on the Redemption
I-8
<PAGE> 76
Date), then a Holder of Common Securities may institute a Direct Action against
the Debenture Issuer for enforcement of payment to such Holder of the principal
of or interest on a Like Amount of Debentures on or after the respective due
date specified in the Debentures. In connection with such a Direct Action, (i)
the rights of the Common Securities Holder will be subordinated to the rights of
Holders of Preferred Securities with respect to payments made or required to be
made by the Debenture Issuer in such Direct Action and (ii) the Debenture Issuer
shall remain obligated to pay the principal of or interest on such Debentures,
and the Debenture Issuer shall be subrogated to the rights of such Holder of
Preferred Securities to the extent of any payment made by the Debenture Issuer
to such Holder in such Direct Action.
Any approval or direction of Holder(s) of Common Securities
may be given at a separate meeting of Holder(s) of Common Securities convened
for such purpose, at a meeting of all of the Holders of Securities or pursuant
to written consent. The Administrative Trustees will cause a notice of any
meeting at which Holder(s) of Common Securities are entitled to vote to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holder(s) are entitled to vote and (iii) instructions for the delivery of
proxies.
No vote or consent of the Holder(s) of the Common Securities
will be required for the Trust to redeem and cancel Common Securities, or to
distribute the Debentures, in accordance with the Agreement and these terms of
the Securities.
7. Amendments to Agreement.
In addition to the requirements set out in Section 12.1 of the
Agreement, the Agreement may be amended from time to time by the Sponsor and the
Administrative Trustees with (i) the consent of Holders of a Majority in
Liquidation Amount of all outstanding Securities, and (ii) receipt by the
Trustees of an opinion of counsel experienced in such matters to the effect that
such amendment or the exercise of any power granted to the Trustees in
accordance with such amendment will not affect the Trust's status as a grantor
trust for United States Federal income tax purposes or the Trust's exemption
from status as an Investment Company under the Investment Company Act; provided,
however, that, without the consent of each Holder of the Securities, the
Agreement may not be amended to (i) change the Distribution Rate (or manner of
calculation of the Distribution Rate), amount, timing or currency or otherwise
adversely affect the method of any required payment, (ii) change the purposes of
the Trust, (iii) authorize the issuance of any additional beneficial interests
in the Trust, (iv) change the redemption provisions, (v) change the conditions
precedent for the Sponsor to elect to dissolve the Trust and distribute the
Debentures to the Holders of the Securities, (vi) change the Liquidation
Distribution or other provisions relating to the distribution of amounts payable
upon the dissolution and liquidation of the Trust, (vii) affect the limited
liability of any Holder of the Securities or (viii) restrict the right of a
Holder of the Securities to institute suit for the enforcement of any required
payment on or after the due date therefor (or, in the case of redemption, on the
Redemption Date).
8. Pro Rata.
I-9
<PAGE> 77
A reference herein to any payment, distribution or treatment
as being "Pro Rata" shall mean pro rata to each Holder of Securities according
to the aggregate Scheduled Liquidation Amount of the Securities held by such
Holder in relation to the aggregate Scheduled Liquidation Amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Agreement has occurred and is continuing, in which case any funds
legally available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate Scheduled Liquidation
Amount of Preferred Securities held by such Holder relative to the aggregate
Scheduled Liquidation Amount of all Preferred Securities outstanding, and only
after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate Scheduled Liquidation Amount of Common Securities held by such Holder
relative to the aggregate Scheduled Liquidation Amount of all Common Securities
outstanding.
9. Ranking.
The Preferred Securities rank pari passu with the Common
Securities and payment thereon shall be made Pro Rata with the Common
Securities, except that, if an Event of Default under the Agreement occurs and
is continuing, no payments in respect of Distributions on, or payments upon
liquidation, redemption or otherwise with respect to, the Common Securities
shall be made until the Holders of the Preferred Securities shall be paid in
full the Distributions, Redemption Price, Liquidation Distribution and other
payments to which they are entitled at such time.
10. Acceptance of Securities Guarantees and Indenture.
Each Holder of Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee, the Common Securities Guarantee and the Indenture, including the
subordination provisions therein.
11. No Preemptive Rights.
The Holders of the Securities shall have no preemptive or
similar rights to subscribe for any other securities of the Trust.
12. Miscellaneous.
These terms constitute a part of the Agreement.
The Sponsor will provide a copy of the Agreement, the
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental indenture) to a
Holder without charge on written request to the Sponsor at its principal place
of business.
I-10
<PAGE> 78
EXHIBIT A-1
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 Up to:
--- ---------
CUSIP No. 427 098 207
Certificate Evidencing Preferred Securities
of
HERCULES TRUST II
Trust II Preferred Securities
(scheduled liquidation amount $1,000 per Preferred Security)
HERCULES TRUST II, 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 up to ________ preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust
designated as the Trust II Preferred Securities (scheduled liquidation amount
$1,000 per Preferred Security) (the "Preferred Securities") as reflected on the
Schedule of Exchanges of Interests of Global Preferred Security attached hereto.
The Preferred Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of
A1-1
<PAGE> 79
this certificate duly endorsed and in proper form for transfer and otherwise
complies with the terms of this Preferred Security.
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 July 27, 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 Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
A1-2
<PAGE> 80
IN WITNESS WHEREOF, the Trust has executed this certificate this 27th
day of July, 1999.
HERCULES TRUST II
By:
------------------------------------
Name: Israel J. Floyd
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
A1-3
<PAGE> 81
[REVERSE OF PREFERRED SECURITY]
Distributions on this Preferred Security will be payable at a rate per
annum of 6 1/2% of the Scheduled Liquidation Amount of $1,000 per Preferred
Security (the "Scheduled Liquidation Amount"), such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee, except
that if the Preferred Securities are Remarketed, Distributions on this Preferred
Security on and after the Reset Date will be payable at the annual distribution
rate established in the Remarketing on the Accreted Liquidation Amount of this
Preferred Security. Distributions not paid when due will themselves accumulate
distributions at the then applicable annual rate (to the extent permitted by
law). The term "Distributions," as used herein, includes any such additional
distributions unless otherwise stated. The term "Distribution Rate," as used
herein, means a rate per annum equal to 6 1/2% of the Scheduled Liquidation
Amount or, in the case of a Remarketing, the annual rate established thereby
based on the Accreted Liquidation Amount. A Distribution is payable only to the
extent that payments are made in respect of the 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 July 27,
1999, 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,
commencing on September 30, 1999 (each, a "Distribution Date"), except as
otherwise described below and in the Trust Agreement. The amount of
Distributions payable for any period shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. "Distribution Period" means the period
from and including the immediately preceding Distribution Date (or July 27,
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 (and without any interest or other payment in respect of such
delay), 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 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 Debentures and may not extend beyond the
stated maturity date or date of earlier redemption for the 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 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
A1-4
<PAGE> 82
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
Debentures and may not extend beyond the stated maturity date or date of earlier
redemption of the Debentures. At the end of the Extension Period, all
accumulated and unpaid Distributions (but only to the extent payments are made
in respect of the 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 certain 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 Debentures to be distributed to the Holders
of the Preferred Securities in liquidation of the Trust or, simultaneously with
the maturity or any redemption of the Debentures, cause a Like Amount of the
Preferred Securities to be redeemed by the Trust.
The Preferred Securities shall be redeemable as provided in the Trust
Agreement.
Upon a Remarketing, certain terms of the Preferred Securities referred
to in the Trust Agreement will be modified as of the Reset Date.
A1-5
<PAGE> 83
-----------------------
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" 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.
A1-6
<PAGE> 84
SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL PREFERRED SECURITY
Unless otherwise specified below, the Preferred Securities represented
by this Global Preferred Security shall have a zero balance.
The following exchanges of a part of this Global Preferred Security have been
made:
<TABLE>
<CAPTION>
Amount of increase in
number of Preferred Number of Preferred Signature of
Securities in this Securities in this Global authorized
Global Preferred Preferred Security signatory of
Date of Exchange Security following such increase Property Trustee
- ---------------- --------------------- ------------------------- ----------------
<S> <C> <C> <C>
</TABLE>
A1-7
<PAGE> 85
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN THE TRUST
AGREEMENT REFERRED TO BELOW.
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD UNLESS SUCH OFFER AND SALE ARE REGISTERED UNDER OR ARE EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT.
Certificate Number CS-001 Number of Common Securities: 10,825
Certificate Evidencing Common Securities
of
HERCULES TRUST II
Trust II Common Securities
(scheduled liquidation amount $1,000 per Common Security)
HERCULES TRUST II, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Hercules Incorporated
(the "Holder") is the registered owner of 10,825 common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated as the Trust II Common Securities (scheduled liquidation amount
$1,000 per common security) (the "Common Securities"). The Common 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.
The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common 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 July 27, 1999, as the same
may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of the Common 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 Common 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
Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
A2-1
<PAGE> 86
IN WITNESS WHEREOF, the Trust has executed this certificate this 27th
day of July, 1999.
HERCULES TRUST II
By:
-----------------------------
Name: Stuart C. Shears
Title: Administrative Trustee
A2-2
<PAGE> 87
[REVERSE OF COMMON SECURITY CERTIFICATE]
Distributions on this Common Security will be payable at a rate per
annum of 6 1/2% of the Scheduled Liquidation Amount of $1,000 per Common
Security (the "Scheduled Liquidation Amount"), such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee, except
that if the Preferred Securities are Remarketed, Distributions on this Common
Security will be payable at the annual distribution rate established in the
Remarketing on the Accreted Liquidation Amount of this Common Security.
Distributions not paid when due will themselves accumulate distributions at the
then applicable annual rate (to the extent permitted by law). The term
"Distributions," as used herein, includes any such additional distributions
unless otherwise stated. The term "Distribution Rate," as used herein, means a
rate per annum equal to 6 1/2% of the Scheduled Liquidation Amount or, in the
case of a Remarketing, the annual rate established thereby based on the Accreted
Liquidation Amount. A Distribution is payable only to the extent that payments
are made in respect of the Debentures held by the Property Trustee and to the
extent the Property Trustee has funds on hand legally available therefor.
Distributions on the Common 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 July 27,
1999, 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,
commencing on September 30, 1999 (each, a "Distribution Date"), except as
otherwise described below and in the Trust Agreement. The amount of
Distributions payable for any period shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. "Distribution Period" means the period
from and including the immediately preceding Distribution Date (or July 27,
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 (and without any interest or other payment in respect of such
delay), 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 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 Debentures and may not extend beyond the
stated maturity date or date of earlier redemption for the 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 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
A2-3
<PAGE> 88
quarterly periods, must end on an interest payment date for the Debentures and
may not extend beyond the stated maturity date or date of earlier redemption of
the Debentures. At the end of the Extension Period, all accumulated and unpaid
Distributions (but only to the extent payments are made in respect of the
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 elect a new Extension Period, subject to the foregoing requirements.
Subject to certain 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 Debentures to be distributed to the Holders
of the Common Securities in liquidation of the Trust or simultaneously with the
maturity or any redemption of the Debentures, cause a Like Amount of the Common
Securities to be redeemed by the Trust.
The Common Securities shall be redeemable as provided in the Trust
Agreement.
Upon Remarketing, certain terms of the Common Securities referred to in
the Trust Agreement will be modified as of the Reset Date.
A2-4
<PAGE> 89
-----------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common 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 Common 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 Common 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.
A2-5
<PAGE> 1
Exhibit 4.3
----------------------------------
UNIT AGREEMENT
Dated as of July 27, 1999
by and among
HERCULES INCORPORATED,
HERCULES TRUST II
and
THE CHASE MANHATTAN BANK
as Unit Agent
----------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. Certain Definitions ........................................... 1
SECTION 2. Appointment of Unit Agent ..................................... 3
SECTION 3. Issuance of Units; Unit Certificates .......................... 4
SECTION 4. Rights to Components of Units ................................. 9
SECTION 5. Enforcement of Rights ......................................... 9
SECTION 6. Merger, Consolidation or Change of Name of Unit Agent ......... 9
SECTION 7. Unit Agent .................................................... 10
SECTION 8. Resignation and Removal of Unit Agent; Appointment of
Successor ..................................................... 12
SECTION 9. Notices ....................................................... 13
SECTION 10. Supplements and Amendments .................................... 14
SECTION 11. Successors .................................................... 15
SECTION 12. Termination ................................................... 15
SECTION 13. Governing Law ................................................. 15
SECTION 14. Benefits of This Agreement .................................... 15
SECTION 15. Counterparts .................................................. 15
</TABLE>
i
<PAGE> 3
UNIT AGREEMENT, dated as of July 27, 1999 (the "Agreement"), among
Hercules Incorporated, a corporation duly organized and existing under the laws
of the State of Delaware (the "Company"), Hercules Trust II, a statutory
business trust formed under the Business Trust Act of the State of Delaware (the
"Trust") and The Chase Manhattan Bank, a banking corporation duly organized and
existing under the laws of the State of New York, as unit agent (the "Unit
Agent").
WHEREAS, in connection with an offering of up to 400,000 CRESTS(SM)
Units (the "Units"), the Company proposes to issue up to 400,000 warrants (the
"Warrants") to purchase up to an aggregate of 9,367,680 shares of the Company's
common stock, without par value ($25/48 stated value) (the "Common Stock"), and
the Trust proposes to issue up to 400,000 preferred securities (the "Preferred
Securities"), each Unit consisting of one Preferred Security and one Warrant.
WHEREAS, the Company and the Trust desire the Unit Agent to act on
their behalf, and the Unit Agent is willing so to act, in connection with the
issuance of Unit Certificates (as defined below) and other matters as provided
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Trust, the Unit Agent and the Holders
(as defined below), the parties hereto agree as follows:
SECTION 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"AFFILIATE" has the same meaning given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"AGREEMENT" means this Unit Agreement, dated as of July 27, 1999,
including all exhibits hereto, as amended or supplemented from time to time.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in the Global Unit, the rules and
procedures of the Depositary that apply to such transfer or exchange, as made
available by the Depositary to the Company, the Trust, the Unit Agent and others
from time to time upon request.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
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.
"CLOSING TIME" means the Closing Time as defined in the
Underwriting Agreement.
"COMMISSION" means the Unites States Securities and Exchange
Commission as from time to time constituted or, if at any time after the
execution of this Agreement such Commission is not existing and performing the
duties now assigned to it under applicable federal securities laws, then the
body performing such duties at such time.
<PAGE> 4
"DEBENTURES" means the Series A Junior Subordinated Deferrable
Interest Debentures of the Company.
"DEFINITIVE UNIT" means a Unit in certificated form registered in
the name of the Holder thereof and issued in accordance with Section 3. hereof,
as evidenced by a Unit Certificate substantially in the form of Exhibit A hereto
except that such Unit Certificates shall not bear the Global Unit Legend and
shall not have the "Schedule of Exchanges of Interests of Global Unit" attached
thereto.
"DEPOSITARY" means the Person specified in Section 3.3 hereof as the
Depositary with respect to the Units, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of this Agreement.
"DTC" means The Depository Trust Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"GLOBAL UNIT" means one or more Units issued in book-entry form,
registered in the name of Cede & Co. or such other nominee designated by the
Depository and issued in accordance with Section 3.1(b) hereof, as evidenced by
Unit Certificates substantially in the form of Exhibit A hereto.
"GLOBAL UNIT LEGEND" means the legend set forth in Section 3.5(d)
which is required to be placed on the Global Unit.
"HOLDER" means any Person in whose name a Unit Certificate shall be
registered in the register maintained by the Unit Registrar.
"INDENTURE" means the Junior Subordinated Debentures Indenture,
dated as of March 17, 1999, between the Company and The Chase Manhattan Bank, as
trustee, relating to the Debentures, as amended or supplemented from time to
time, including the First Supplemental Indenture thereto, dated as of July 27,
1999.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial
interest in a Global Unit through a Participant.
"OFFICER" means, with respect to any Person, the Chief Executive
Officer, the Chief Financial Officer, the President or a Vice President of such
Person.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Unit Agent in form and substance reasonably
acceptable to the Unit Agent. The counsel may be an employee of or counsel to
the Company, any subsidiary of the Company or the Unit Agent.
"PARTICIPANT" means, with respect to the Depositary, a Person who
has an account with the Depositary.
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"PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"RESPONSIBLE OFFICER" when used with respect to the Unit Agent,
means any officer within the corporate trust department of the Unit Agent,
including any vice president, any assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other authorized agent of the Unit
Agent who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement of
the Trust, dated as of July 27, 1999, including Annex I thereto, 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"), Chase Manhattan Bank
Delaware, as Delaware Trustee, and the holders from time to time of undivided
beneficial interests in the Trust, as amended or supplemented from time to time.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated
July 21, 1999, by and among the Company, the Trust and the Underwriters named
therein relating to the Units.
"UNIT CERTIFICATE" has the meaning assigned to such term in
Section 3.1(a) hereof.
"UNIT COUNTERSIGNATURE ORDER" has the meaning assigned to such term
in Section 3.2 hereof.
"UNIT REGISTRAR" has the meaning assigned to such term in Section
3.3 hereof.
"WARRANT AGREEMENT" means the Warrant Agreement, dated as of July
27, 1999, between the Company and The Chase Manhattan Bank, as warrant agent
(the "Warrant Agent"), as amended or supplemented from time to time.
SECTION 2. Appointment of Unit Agent. Each of the Company and the
Trust hereby appoints the Unit Agent to act as its agent in accordance with the
terms set forth in this Agreement, and the Unit Agent hereby accepts such
appointment.
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SECTION 3. Issuance of Units; Unit Certificates.
3.1. Form and Dating.
(a) General.
Each Unit will consist of one Preferred Security and one Warrant.
The Units shall be evidenced by one or more certificates (the "Unit
Certificates") substantially in the form of Exhibit A hereto. The Unit
Certificates may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Unit Certificate shall be dated the date of the
Unit Agent's countersignature and will bear a "CUSIP" number. The Preferred
Securities and Warrants that are components of Units will be attached to the
Unit Certificates but will not bear separate "CUSIP" numbers.
The terms and provisions contained in the Unit Certificates shall
constitute, and are hereby expressly made, a part of this Agreement. The
Company, the Trust and the Unit Agent, by their execution and delivery of this
Agreement, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Unit Certificate conflicts with the
express provisions of this Agreement, the provisions of this Agreement shall
govern and be controlling.
(b) Global and Definitive Units.
Units issued in certificated form shall be evidenced by Unit
Certificates substantially in the form of Exhibit A attached hereto (but without
the Global Unit Legend thereon and without the "Schedule of Exchanges of
Interests of Global Unit" attached thereto). Units issued in book-entry form
shall be evidenced by Unit Certificates substantially in the form of Exhibit A
attached hereto (including the Global Unit Legend thereon).
The Global Unit shall represent such of the outstanding Units as
shall be specified in the "Schedule of Exchanges of Interests of Global Unit"
attached thereto or otherwise in accordance with the Applicable Procedures,
initially equal to 350,000 Units. At any time after issuance, the Preferred
Security and Warrant components of any Unit may be separated by the Holder and
thereafter transferred separately. In the event of any separation of the
components of a Unit, (i) if such Unit is a Definitive Unit, the Holder shall
present such Unit to the Unit Agent for cancellation and the Unit Agent shall so
notify the Unit Registrar and shall return the Preferred Security and Warrant
components of such Unit to the Property Trustee and Warrant Agent, respectively,
with an instruction for them to countersign and deliver to, or upon the
instruction of, such Holder a separated Preferred Security and a separated
Warrant, bearing the separate "CUSIP" number assigned to the Preferred Security
and the Warrant, respectively, and (ii) if such Unit is represented by the
Global Unit, the Unit Agent shall make the necessary endorsement to the
"Schedule of Exchanges of Interests of Global Unit" attached to the Global Unit
or otherwise comply with the Applicable Procedures to reduce the amount of Units
represented thereby and shall instruct the Property Trustee and the Warrant
Agent to effect a corresponding increase in the Preferred Securities and the
Warrants, respectively, represented by global certificates bearing separate
"CUSIP" numbers, which certificates initially shall each have a zero balance.
The Unit Agent shall make such other necessary endorsements to the Global Unit
consistent with the terms of this Agreement to reflect
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the appropriate number of Units represented thereby. Once separated, the
Preferred Security and Warrant components of a Unit may not be rejoined to form
a Unit.
3.2. Execution.
The Unit Certificates shall be signed, manually or by facsimile, by
an Officer of the Company in respect of the Warrant and by an Administrative
Trustee of the Trust in respect of the Preferred Securities. If the Officer or
Administrative Trustee whose signature is on a Unit Certificate no longer holds
the required office or position at the time a Unit Certificate is countersigned,
the Units evidenced thereby shall nevertheless be valid.
A duly executed Unit Certificate shall not be valid for any purpose
until countersigned by the manual signature of the Unit Agent. The Unit Agent's
countersignature shall be conclusive evidence, and the only evidence, that the
Units evidenced by the applicable Unit Certificate have been properly issued
under this Agreement.
The Unit Agent shall, upon a written order of the Company signed by
an Officer and of the Trust signed by an Administrative Trustee (a "Unit
Countersignature Order"), countersign duly executed Unit Certificates for
original issue up to the number stated in the preamble hereto and deliver such
Unit Certificates in accordance with such Unit Countersignature Order.
Subsequent to issuance of the Unit Certificates in accordance with the
Underwriting Agreement, the Unit Agent shall countersign duly executed Unit
Certificates only if issued in exchange or substitution for one or more
previously countersigned Unit Certificates or in connection with their transfer
as provided in Section 3.5 hereof.
The Unit Agent may appoint an agent acceptable to the Company and
the Trust to countersign Unit Certificates. Such an agent may countersign Unit
Certificates whenever the Unit Agent may do so. Each reference in this Agreement
to a countersignature by the Unit Agent includes a countersignature by such
agent. Such an agent has the same rights as the Unit Agent to deal with the
Company, the Trust or an Affiliate of the Company or the Trust.
3.3. Unit Registrar.
The Company and the Trust shall maintain an office or agency where
Units may be presented for registration of transfer or for exchange (the "Unit
Registrar"). The Unit Registrar shall keep a register of the Units and of their
transfer and exchange. The Company and the Trust may appoint one or more co-Unit
Registrars. The term "Unit Registrar" includes any co-Unit Registrar. The
Company and the Trust may change any Unit Registrar without notice to any
Holder. The Company and the Trust shall notify the Unit Agent in writing of the
name and address of any Unit Registrar not a party to this Agreement. If the
Company and the Trust fail to appoint or maintain another entity as Unit
Registrar, the Unit Agent shall act as such.
The Company and the Trust initially appoint the Unit Agent to act as
the Unit Registrar with respect to the Global Unit and any Definitive Units.
The Company and the Trust initially appoint DTC to act as Depositary
with respect to the Global Unit.
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3.4. Holder Lists.
The Unit Agent shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders. If the Unit Agent is not the Unit Registrar, the Company and the
Trust shall promptly furnish to the Unit Agent at such times as the Unit Agent
may request in writing a list in such form and as of such date as the Unit Agent
may reasonably require of the names and addresses of the Holders.
3.5. Transfer and Exchange.
(a) Transfer and Exchange of the Global Unit.
The Global Unit may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. The Global Unit will be exchanged by the Company and the Trust for
Definitive Units if (i) the Company and the Trust deliver to the Unit Agent
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company and the Trust within 90 days after the date of such notice from the
Depositary, (ii) the Company and the Trust in their sole discretion determine
that the Global Unit (in whole but not in part) should be exchanged for
Definitive Units and delivers a written notice to such effect to the Unit Agent
or (iii) a default under this Agreement, the Warrant Agreement or the Trust
Agreement has occurred and is continuing. Upon the occurrence of any of the
events in (i), (ii) or (iii) above, Definitive Units shall be issued in such
names, and issued in any denominations, as the Depositary shall instruct the
Unit Agent in writing. The Global Unit also may be exchanged or replaced, in
whole or in part, as provided in Section 3.6 hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Unit.
The transfer and exchange of beneficial interests in the Global Unit
shall be effected through the Depositary in accordance with the provisions of
this Agreement and the Applicable Procedures. Beneficial interests in the Global
Unit may be transferred to Persons who take delivery thereof in the form of
beneficial interests in the Global Unit without delivering any written orders or
instructions to the Unit Registrar to effect such transfers. However, no
beneficial interest in a Warrant or Preferred Security that is a component of a
Unit represented by the Global Unit may be transferred or exchanged (except by
transfer or exchange of such Unit) until such components have been separated in
accordance with Section 3.1(b) hereof and each component of a Unit shall bear a
legend to such effect.
(c) Transfer and Exchange of Beneficial Interests in Definitive
Units.
The transfer or exchange of Definitive Units shall be effected
through the Unit Registrar in accordance with the provisions of this Agreement.
Prior to such transfer or exchange, the requesting Holder shall present or
surrender to the Unit Registrar the Definitive Units duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Unit Registrar duly executed by such Holder or by its attorney, duly authorized
in writing.
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However, no Warrant or Preferred Security that is a component of a Definitive
Unit may be transferred or exchanged (except by transfer or exchange of such
Definitive Unit) until such components have been separated in accordance with
Section 3.1(b) hereof and each component of a Unit shall bear a legend to such
effect.
(d) Legend. The following legend shall appear on the face of the
Global Unit:
"THIS UNIT CERTIFICATE IS A GLOBAL UNIT WITHIN THE MEANING OF THE UNIT
AGREEMENT, DATED AS OF JULY 27, 1999, AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE
DEPOSITARY. THIS UNIT CERTIFICATE IS EXCHANGEABLE FOR UNITS REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN SUCH UNIT AGREEMENT, AND NO TRANSFER OF
THIS UNIT CERTIFICATE (OTHER THAN A TRANSFER OF THIS UNIT CERTIFICATE AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR
BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS UNIT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY TO HERCULES INCORPORATED OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY UNIT CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN."
(e) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges of Unit
Certificates, the Company and the Trust shall execute the Unit
Certificates at the Unit Registrar's request. The Unit Agent shall
countersign and deliver the Unit Certificates in accordance with the
provisions of Section 3.2 hereof.
(ii) No service charge shall be made for any registration of
transfer or exchange of Unit Certificates, but the Company and the Trust
may require payment of a sum sufficient to cover any stamps or other tax
or governmental charge payable in connection therewith.
(iii) The Unit Certificates issued upon any registration of transfer
or exchange shall be duly authorized, executed and delivered and shall be
valid obligations of the Company and the Trust, respectively, evidencing
the same obligations, and entitled to the
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same benefits under this Agreement, as the Unit Certificates surrendered
upon such registration of transfer or exchange.
(iv) Prior to due presentment for the registration of transfer of
any Unit Certificate, the Unit Agent, the Unit Registrar, the Company and
the Trust may deem and treat the Person in whose name any Unit Certificate
is registered as the absolute owner of such Unit Certificate for all
purposes and none of the Unit Agent, the Unit Registrar, the Company and
the Trust shall be affected by notice to the contrary.
(v) In the event that Debentures are distributed to holders of the
Preferred Securities in exchange for such Preferred Securities in
accordance with the terms of the Trust Agreement, the Company and the
Trust shall deliver Debentures in respect of Preferred Securities that are
components of Units to the Unit Agent with a written notice of such
distribution. In the case of the Global Unit, the Depositary shall receive
for such global Preferred Security a global Debenture representing
Debentures in an aggregate principal amount equal to the aggregate
Scheduled Liquidation Amount (as defined in the Trust Agreement) of the
global Preferred Security included in such Global Unit. In the case of
Definitive Units, the Unit Agent shall notify the Holders thereof of such
distribution and that Definitive Units including such Debentures would be
exchangeable for Preferred Securities represented by such Definitive
Units. The Unit Agent shall return any Preferred Securities received upon
exchange to the Property Trustee under the Trust Agreement for
cancellation. Prior to any such exchange, the Preferred Securities that
are components of Units shall be deemed to represent the Debentures that
have been distributed in exchange for such Preferred Securities.
3.6. Replacement Unit Certificates.
Upon receipt by the Unit Agent of evidence reasonably satisfactory
to it, the Company and the Trust of the ownership of and the loss, mutilation,
theft or destruction of any Unit Certificate and of such security or indemnity
as may be required by the Company, the Trust and the Unit Agent to hold each of
them and any agent of them harmless and, in the case of mutilation of a Unit
Certificate, upon surrender thereof to the Unit Agent for cancellation, then, in
the absence of notice to the Company, the Trust or the Unit Agent that such Unit
Certificate has been acquired by a bona fide purchaser, the Company and the
Trust shall execute, and the Unit Agent shall manually countersign and deliver,
in exchange for or in lieu of the lost, mutilated, stolen or destroyed Unit
Certificate, a new Unit Certificate of the same tenor and evidencing a like
number of Units. Upon the issuance of any new Unit Certificate under this
Section, the Company and the Trust may require the payment of a sum sufficient
to cover any stamp or other tax or other governmental charge that may be imposed
in relation thereto and any other expenses in connection therewith. Every
substitute Unit Certificate executed and delivered pursuant to this Section in
lieu of any lost, mutilated, stolen or destroyed Unit Certificate shall
represent an additional contractual obligation of the Company and the Trust,
whether or not the lost, stolen or destroyed Unit Certificate shall be at any
time enforceable by anyone, and shall be entitled to the benefits of this
Agreement equally and proportionately with any and all other Unit Certificates
duly executed and delivered hereunder. The provisions of this Section are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement of lost, mutilated, stolen or destroyed
Unit Certificates.
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3.7. Cancellation.
The Company may at any time deliver Unit Certificates representing
Units acquired by the Company to the Unit Agent for cancellation. In addition,
the Unit Registrar shall forward to the Unit Agent any Unit Certificates
surrendered to the Unit Registrar for registration of transfer, exchange or
exercise. The Unit Agent shall cancel all Unit Certificates surrendered for
registration of transfer, exchange, exercise, replacement or cancellation and
shall return such Unit Certificates to the Company. The Company and the Trust
may not issue new Unit Certificates to replace Units that have been delivered to
the Unit Agent for cancellation.
SECTION 4. Rights to Components of Units. A Unit shall entitle the
Holder or any beneficial owner thereof to any of the rights of a holder or
beneficial owner of the component Preferred Security and Warrant, subject to the
last sentences of Sections 3.5(b) and 3.5(c) hereof.
SECTION 5. Enforcement of Rights. Notwithstanding any of the
provisions of this Agreement, any Holder of a Unit Certificate or the beneficial
owner of any Unit evidenced thereby, without the consent of the Unit Agent, the
Holder of any other Unit Certificate or any other party, may, in its own behalf
and for its own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company and the Trust suitable to enforce, or
otherwise in respect of, its rights under such Unit Certificate and in this
Agreement.
SECTION 6. Merger, Consolidation or Change of Name of Unit Agent.
Any corporation or other association into which the Unit Agent may be merged or
with which it may be consolidated, or any corporation or other association
resulting from any merger or consolidation to which the Unit Agent shall be a
party, or any corporation or other association succeeding to the part of the
business of the Unit Agent that includes services hereunder, shall be the
successor to the Unit Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation or other association would be eligible for appointment as a
successor to the Unit Agent under the provisions of Section 8 hereof. Any such
successor Unit Agent shall promptly cause notice of its succession as Unit Agent
to be mailed (by first class mail, postage prepaid) to each Holder at such
Holder's last address as shown on the register maintained by the Unit Registrar.
In case at the time such successor to the Unit Agent shall succeed to the agency
created by this Agreement, and in case at that time any of the Unit Certificates
shall have been countersigned but not delivered, any such successor to the Unit
Agent may adopt the countersignature of the original Unit Agent; and in case at
that time any of the Unit Certificates shall not have been countersigned, any
successor to the Unit Agent may countersign such Unit Certificates either in the
name of the predecessor Unit Agent or in the name of the successor to the Unit
Agent; and in all such cases such Unit Certificates shall have the full force
and effect provided in the Unit Certificates and in this Agreement.
In case at any time the name of the Unit Agent shall be changed and
at such time any of the Unit Certificates shall have been countersigned but not
delivered, the Unit Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the Unit
Certificates shall not have been countersigned, the Unit Agent may countersign
such Unit Certificates either in its prior name or in its changed name, and in
all such
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cases such Unit Certificates shall have the full force and effect provided in
the Unit Certificates and in this Agreement.
SECTION 7. Unit Agent. The Unit Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company, the Trust and the Holders of Units, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Unit Certificates
shall be taken as statements of the Company or the Trust, as applicable, and the
Unit Agent assumes no responsibility for the correctness of any of the same
except such as describe the Unit Agent or action taken (including the Unit
Agent's countersignature) or to be taken by it.
(b) The Unit Agent shall not be responsible for any failure of the
Company or the Trust to comply with any of the covenants contained in this
Agreement or in the Unit Certificates to be complied with by the Company or the
Trust.
(c) The Unit Agent may consult at any time with counsel of its own
selection (who may be counsel for the Company) and the Unit Agent shall incur no
liability or responsibility to the Company, the Trust or any Holder of any Unit
in respect of any action taken, suffered or omitted by it hereunder so long as
taken, suffered or omitted in good faith and in accordance with the opinion or
the advice of such counsel.
(d) Before the Unit Agent acts or refrains from acting with respect
to the Units, it may require a certificate or an opinion of counsel, or both,
from the Company or the Trust. The Unit Agent may conclusively rely upon, and
shall incur no liability or responsibility to the Company, the Trust or any
Holder of any Unit for, any action taken in reliance on any Unit, certificate of
shares, notice, resolution, waiver, consent, order, certificate, or other paper
of the Company or the Trust, document or instrument (whether in its original or
facsimile form) believed by it in good faith to be genuine and to have been
signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Unit Agent such compensation as
shall be agreed upon from time to time for all services rendered by the Unit
Agent in the execution of this Agreement, to reimburse the Unit Agent for all
expenses, taxes, duties and governmental charges and other charges of any kind
and nature reasonably incurred by the Unit Agent in the execution of this
Agreement and to indemnify the Unit Agent and save it harmless against any and
all liabilities, claims, damages, losses and expenses (including taxes other
than taxes based on the income of the Unit Agent and judgments, reasonable costs
and counsel fees and expenses), for anything done or omitted by the Unit Agent
in the execution of this Agreement or arising out of or in connection with its
performance of its obligations or duties under this Agreement, except to the
extent such liabilities are attributable to the Unit Agent's negligence, bad
faith or willful misconduct. The Unit Agent shall notify the Company and the
Trust promptly of any claim for which it may seek indemnity; provided that the
failure by the Unit Agent to so notify the Company and the Trust shall not
relieve the Company of its obligations hereunder. The Company shall defend any
such claim and the Unit Agent shall cooperate in the defense. The Unit Agent may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel only if counsel for the Company has interests which conflict
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with those of the Unit Agent and, if so, counsel selected by the Unit Agent must
be reasonably satisfactory to the Company. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
(f) The Unit Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Holders of Units shall furnish the
Unit Agent with security and indemnity reasonably satisfactory to it for any
costs and expenses which may be incurred, but this provision shall not affect
the power of the Unit Agent to take such action as is necessary, whether with or
without any such security or indemnity. All rights of action under this
Agreement or under any of the Units may be enforced by the Unit Agent without
the possession of any of the Unit Certificates or the production thereof at any
trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Unit Agent shall be brought in its name as Unit
Agent and any recovery of judgment shall be for the ratable benefit of the
Holders of the Units, as their respective rights or interests may appear.
(g) Nothing in this Agreement shall prevent the Unit Agent, or any
stockholder, director, officer or employee of the Unit Agent, from buying,
selling or dealing in any of the Units or other securities of the Company or the
Trust or becoming pecuniarily interested in any transaction in which the Company
or the Trust may be interested, or contracting with or lending money to the
Company or the Trust or otherwise act as fully and freely as though it were not
Unit Agent under this Agreement. Nothing herein shall preclude the Unit Agent
from acting in any other capacity for the Company or the Trust or for any other
legal entity.
(h) The Unit Agent shall act hereunder solely as agent for the
Company and the Trust, and its duties shall be determined solely by the
provisions hereof. The Unit Agent shall not be liable for anything which it may
do or refrain from doing in connection with this Agreement except for its own
negligence, bad faith or willful misconduct.
(i) The Unit Agent undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Unit Agent.
(j) The Unit Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Unit Agent and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Unit Agent, the Unit Agent shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Agreement.
(k) The Unit Agent shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Agreement.
(l) The Unit Agent shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority of the number of the then outstanding
Warrants (excluding Warrants held by the
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Company, the Trust or any of their respective Affiliates) relating to the time,
method and place of conducting any proceeding for any remedy available to the
Unit Agent, or exercising any trust or power conferred upon the Unit Agent,
under this Agreement with respect to the Units.
(m) No provision of this Agreement shall require the Unit Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(n) The Unit Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document.
(o) The Unit Agent may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys.
(p) The Unit Agent shall not be deemed to have notice of any default
under this Agreement unless a Responsible Officer of the Unit Agent has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Unit Agent at the office of the Unit Agent.
(q) The rights, privileges, protections, immunities and benefits
given to the Unit Agent, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Unit Agent in
each of its capacities hereunder.
(r) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Unit Agent shall be subject to the provisions of
this Section.
SECTION 8. Resignation and Removal of Unit Agent; Appointment of
Successor. No resignation or removal of the Unit Agent and no appointment of a
successor Unit Agent shall become effective until the acceptance of appointment
by the successor Unit Agent as provided herein. The Unit Agent may resign its
duties and be discharged from all further duties and liability hereunder (except
liability arising as a result of the Unit Agent's own negligence, bad faith or
willful misconduct) after giving written notice to the Company and the Trust.
The Company and the Trust may remove the Unit Agent upon written notice, and the
Unit Agent shall thereupon in like manner be discharged from all further duties
and liabilities hereunder, except as aforesaid. The Unit Agent shall, at the
Company's expense, cause to be mailed (by first class mail, postage prepaid) to
each Holder of a Unit at his last address as shown on the register maintained by
the Unit Registrar a copy of said notice of resignation or notice of removal, as
the case may be. Upon such resignation or removal, the Company and the Trust
shall appoint in writing a new Unit Agent. If the Company and the Trust shall
fail to make such appointment within a period of 30 calendar days after they
have been notified in writing of such resignation by the resigning Unit Agent or
after such removal, then the resigning Unit Agent or the Holder of any Unit may
at the expense of the Company apply to any court of competent
12
<PAGE> 15
jurisdiction for the appointment of a new Unit Agent. Any new Unit Agent,
whether appointed by the Company and the Trust or by such a court, shall be a
corporation or other association doing business under the laws of the United
States or any state thereof, in good standing and having a combined capital and
surplus of not less than $50,000,000. The combined capital and surplus of any
new Unit Agent shall be deemed to be the combined capital and surplus as set
forth in the most recent annual report of its condition published prior to its
appointment, provided that such reports are published at least annually pursuant
to law or to the requirements of a federal or state supervising or examining
authority. After acceptance in writing of such appointment by the new Unit
Agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been named herein as the original Unit Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Unit Agent. Not later than the effective date of any such appointment,
the Company and the Trust shall give notice thereof to the resigning or removed
Unit Agent. Failure to give any notice provided for in this Section, however, or
any defect therein, shall not affect the legality or validity of the resignation
of the Unit Agent or the appointment of a new Unit Agent, as the case may be.
SECTION 9. Notices. Any notice or demand authorized by this
Agreement to be given or made by the Unit Agent or by the Holder of any Unit to
or on the Company or the Trust shall be sufficiently given or made when and if
deposited in the mail, first class or registered, postage prepaid, addressed
(until another address is filed in writing by the Company or the Trust, as
applicable, with the Unit Agent), as follows:
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
Telephone No.: (302) 594-5000
Telecopier No.: (302) 594-5210
Attention: Israel J. Floyd, Esq.
Hercules Trust II
c/o Hercules Incorporated
1313 North Market Street
Wilmington, Delaware 19894-0001
Telephone No.: (302) 594-5000
Telecopier No.: (302) 594-5210
Attention: Israel J. Floyd, Esq.
In case the Company or the Trust shall fail to maintain such office
or agency or shall fail to give such notice of the location or of any change in
the location thereof, presentations may be made and notices and demands may be
served at the principal office of the Unit Agent.
13
<PAGE> 16
Any notice pursuant to this Agreement to be given by the Company,
the Trust or the Holder of any Unit to the Unit Agent shall be sufficiently
given when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Unit Agent
with the Company and the Trust) to the Unit Agent as follows:
The Chase Manhattan Bank
c/o Chase Manhattan Trust Company, N.A.
One Liberty Place, 52nd Floor
1650 Market Street
Philadelphia, Pennsylvania 19103
Telephone No.: (215) 988-1317
Telecopier: (215) 972-8372
Attention: Capital Markets Fiduciary Services
Any notice pursuant to this Agreement to Holders of the Units by the
Company, the Trust or the Unit Agent shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each such Holder, at the address appearing in the register
maintained by the Unit Registrar, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice.
If by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification to Holders as shall be made with the
approval of the Unit Agent shall constitute a sufficient notification to such
Holders for every purpose hereunder.
SECTION 10. Supplements and Amendments. The Company, the Trust and
the Unit Agent may from time to time amend or supplement this Agreement without
the approval of any Holder of Units in order to cure any ambiguity or to cure,
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company, the Trust
and the Unit Agent may deem necessary or desirable and which shall not adversely
affect the interests of any Holder of Units. The Company, the Trust and the Unit
Agent may amend or supplement this Agreement or the Units with the consent of
Holders of a majority of the number of the then outstanding Units (excluding
Units held by the Company, the Trust or any of their respective Affiliates).
However, the consent of each Holder of a Unit shall be required for any
amendment or supplement pursuant to which (i) the rights of any Holder would be
materially and adversely affected or (ii) the percentage of the number of then
outstanding Units the consent of whose Holders of which is required for
amendments or supplements would be reduced. The Unit Agent shall be entitled to
receive and, subject to Section 7, shall be fully protected in relying upon, a
certificate and opinion of counsel as conclusive evidence that any such
amendment or supplement is authorized or permitted
14
<PAGE> 17
hereunder, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company and the Trust in accordance with its terms.
SECTION 11. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Trust or the Unit Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 12. Termination. This Agreement shall terminate when there
are no Units outstanding.
SECTION 13. Governing Law. THIS AGREEMENT AND EACH UNIT CERTIFICATE
ISSUED HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES.
SECTION 14. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Trust, the
Unit Agent and the Holders of Units any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Trust, the Unit Agent and the Holders of
Units.
SECTION 15. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
15
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
HERCULES INCORPORATED
By: /s/ GEORGE MACKENZIE
----------------------------------------
Name: George Mackenzie
Title: Senior Vice President and
Chief Executive Officer
HERCULES TRUST II
By: /s/ ISRAEL J. FLOYD
----------------------------------------
Name: Israel J. Floyd
Title: Administrative Trustee
THE CHASE MANHATTAN BANK,
as Unit Agent
By: /s/ JOSEPH C. PROGAR
---------------------------------
Authorized Signature
16
<PAGE> 19
EXHIBIT A
[Form of Unit Certificate]
[Face]
No. ______ Up to ____ Units
CUSIP No. 427098306
Unit Certificate
This Unit Certificate certifies that Cede & Co., or its registered
assigns, is the registered holder of _________ Units issued pursuant to the Unit
Agreement, dated as of July 27, 1999 (the "Unit Agreement"), among Hercules
Incorporated (the "Company"), Hercules Trust II (the "Trust") and The Chase
Manhattan Bank, as Unit Agent (the "Unit Agent"), each Unit consisting of one
preferred security of the Trust and one warrant to purchase shares of common
stock, without par value ($25/48 stated value), of the Company.
Reference is hereby made to the further provisions of this Unit
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Unit Certificate shall not be valid unless countersigned by the
Unit Agent.
This Unit Certificate shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
D-1
<PAGE> 20
IN WITNESS WHEREOF, each of the Company and the Trust has caused
this Unit Certificate to be signed by its duly authorized representative, each
by a manual or facsimile signature.
Dated: July 27, 1999
HERCULES INCORPORATED
By: ______________________________________
Name:
Title:
HERCULES TRUST II
By: ______________________________________
Name:
Title:
Countersigned:
THE CHASE MANHATTAN BANK,
as Unit Agent
By: __________________________
Authorized Signature
Dated: July 27, 1999
D-2
<PAGE> 21
[Reverse]
THIS UNIT CERTIFICATE IS A GLOBAL UNIT WITHIN THE MEANING OF THE UNIT AGREEMENT
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS UNIT CERTIFICATE
IS EXCHANGEABLE FOR UNITS REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN SUCH
UNIT AGREEMENT, AND NO TRANSFER OF THIS UNIT CERTIFICATE (OTHER THAN A TRANSFER
OF THIS UNIT CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY, OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BE
REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS UNIT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO HERCULES INCORPORATED AND HERCULES TRUST II OR THEIR AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY UNIT CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
The Unit Agreement, as well as the Trust Agreement and the Warrant
Agreement (each as defined in the Unit Agreement), are hereby incorporated by
reference in and made a part of this Unit Certificate and are hereby referred to
for a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Unit Agent, the Company, the Trust and the Holders
of the Units. A copy of the Unit Agreement, the Trust Agreement and the Warrant
Agreement may be obtained by the Holder hereof upon written request to the
Company, the Trust or the Unit Agent.
D-3
<PAGE> 22
SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL UNIT
This Global Unit shall represent _______ Units unless otherwise indicated below.
The following exchanges of a part of this Global Unit have been made:
<TABLE>
<CAPTION>
Amount of decrease in Number of Units in this Signature of
Date of Number of Units in Global Unit following authorized signatory
Exchange this Global Unit such decrease of Unit Agent
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
D-4
<PAGE> 23
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.
THIS PREFERRED SECURITY IS A COMPONENT OF A CRESTS UNIT AND, UNTIL SEPARATED
FROM SUCH CRESTS UNIT AS PROVIDED IN THE UNIT AGREEMENT, MAY NOT BE TRANSFERRED
EXCEPT AS PART OF A TRANSFER OF SUCH CRESTS UNIT.
D-5
<PAGE> 24
Certificate Number PS-___ Number of Preferred Securities Up to: ________
Certificate Evidencing Preferred Securities
of
HERCULES TRUST II
Trust II Preferred Securities
(scheduled liquidation amount $1,000 per Preferred Security)
HERCULES TRUST II, 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 up to ________ preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust
designated as the Trust II Preferred Securities (scheduled liquidation amount
$1,000 per Preferred Security) (the "Preferred Securities") as reflected on the
Schedule of Interest of Global Preferred Security attached hereto. 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 and otherwise complies with the
terms of this Preferred Security.
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 July 27, 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 Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
D-6
<PAGE> 25
IN WITNESS WHEREOF, the Trust has executed this certificate this 27th
day of July, 1999.
HERCULES TRUST II
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
D-7
<PAGE> 26
[REVERSE OF PREFERRED SECURITY]
Distributions on this Preferred Security will be payable at a rate per
annum of 6 1/2% of the Scheduled Liquidation Amount of $1,000 per Preferred
Security (the "Scheduled Liquidation Amount"), such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee, except
that if the Preferred Securities are Remarketed, Distributions on this
Preferred Security on and after the Reset Date will be payable at the annual
distribution rate established in the Remarketing on the Accreted Liquidation
Amount of this Preferred Security. Distributions not paid when due will
themselves accumulate distributions at the then applicable annual rate (to the
extent permitted by law). The term "Distributions," as used herein, includes
any such additional distributions unless otherwise stated. The term
"Distribution Rate," as used herein, means a rate per annum equal to 6 1/2% of
the Scheduled Liquidation Amount or, in the case of a Remarketing, the annual
rate established thereby based on the Accreted Liquidation Amount. A
Distribution is payable only to the extent that payments are made in respect of
the 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 July 27,
1999, 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,
commencing on September 30, 1999 (each, a "Distribution Date"), except as
otherwise described below and in the Trust Agreement. The amount of
Distributions payable for any period shall be computed on the basis of a
360-day year consisting of twelve 30-day months. "Distribution Period" means
the period from and including the immediately preceding Distribution Date (or
July 27, 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 (and without any interest or other payment in respect of such
delay), 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 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 Debentures and may not extend beyond
the stated maturity date or date of earlier redemption for the 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 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
D-8
<PAGE> 27
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
Debentures and may not extend beyond the stated maturity date or date of
earlier redemption of the Debentures. At the end of the Extension Period, all
accumulated and unpaid Distributions (but only to the extent payments are made
in respect of the 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 certain 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 Debentures to be distributed to the Holders
of the Preferred Securities in liquidation of the Trust or, simultaneously with
the maturity or any redemption of the Debentures, cause a Like Amount of the
Preferred Securities to be redeemed by the Trust.
The Preferred Securities shall be redeemable as provided in the Trust
Agreement.
Upon a Remarketing, certain terms of the Preferred Securities referred
to in the Trust Agreement will be modified as of the Reset Date.
D-9
<PAGE> 28
-----------------------
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) Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent 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.
D-10
<PAGE> 29
SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL PREFERRED SECURITY
Number of Preferred Securities upon Original Issue:
--------
The following exchanges of a part of this Global Preferred Security have been
made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of Increase Number of Preferred
number of Preferred in number of Securities in this Signature of
Securities in this Preferred Securities Global Preferred authorized
Global Preferred in this Global Security following such signatory of
Date of Exchange Security Preferred Security decrease or increase Property Trustee
- ---------------- --------------------- -------------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
</TABLE>
D-11
<PAGE> 30
[Face]
No. W-____ ________ Warrants
Warrant Certificate
Hercules Incorporated
This Warrant Certificate certifies that Cede & Co., or its registered
assigns, is the registered holder of up to ________ warrants as reflected in
the Schedule of Exchanges of Interests of Global Warrant attached hereto (the
"Warrants") expiring March 31, 2029 (the "Expiration Date"), subject to
adjustment as described in the Warrant Agreement, dated as of July 27, 1999
(the "Warrant Agreement"), between Hercules Incorporated, a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, as Warrant Agent
(the "Warrant Agent"), to purchase common stock, without par value ($25/48
stated value) (the "Common Stock"), of the Company. Each Warrant entitles the
registered holder, upon exercise at any time (or from time to time) prior to
5:00 p.m., New York City time, on any Business Day (as defined in the Warrant
Agreement) on or prior to the Expiration Date, to purchase from the Company
23.4192 fully paid and nonassessable shares of Common Stock (the "Warrant
Shares") at the initial exercise price of $1,000 (the "Warrant Exercise Price")
(equal to $42.70 per share (the "Exercise Price Per Share")), subject to
adjustment as described in the Warrant Agreement, payable upon surrender of
this Warrant Certificate and payment of the Warrant Exercise Price at the
office or agency of the Warrant Agent, but only subject to the conditions set
forth herein and in the Warrant Agreement. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
No Warrant may be exercised after the Expiration Date and, to the
extent not exercised prior to 5:00 p.m., New York City time, on the Expiration
Date, such Warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent.
This Warrant Certificate shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
D-12
<PAGE> 31
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its duly authorized representative by a manual or facsimile
signature.
Dated: July 27, 1999 HERCULES INCORPORATED
----------------
By:
-------------------------------------
Name:
Title:
Countersigned:
THE CHASE MANHATTAN BANK,
as Warrant Agent
By:
-------------------------------
Authorized Signature
Dated: July 27, 1999
---------------
D-13
<PAGE> 32
[Reverse]
THIS WARRANT CERTIFICATE IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY.
THIS WARRANT CERTIFICATE IS EXCHANGEABLE FOR WARRANTS REGISTERED IN THE NAME OF
A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN SUCH WARRANT AGREEMENT, AND NO TRANSFER OF THIS
WARRANT CERTIFICATE (OTHER THAN A TRANSFER OF THIS WARRANT CERTIFICATE AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TO HERCULES INCORPORATED OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY WARRANT CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS WARRANT CERTIFICATE IS A COMPONENT OF A CRESTS UNIT AND, UNTIL SEPARATED
FROM SUCH CRESTS UNIT AS PROVIDED IN THE UNIT AGREEMENT, MAY NOT BE TRANSFERRED
EXCEPT AS PART OF A TRANSFER OF SUCH CRESTS UNIT OR BE EXERCISED EXCEPT IN
CONNECTION WITH A REMARKETING OF THE PREFERRED SECURITY COMPONENT OF SUCH
CRESTS UNIT.
The Warrant Agreement is hereby incorporated by reference in and made
a part of this Warrant Certificate and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the Holders of the Warrants. A
copy of the Warrant Agreement may be obtained by the Holder hereof upon written
request to the Company or the Warrant Agent.
The Holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Warrant Exercise Price at the office of the Warrant Agent,
all in accordance with the Warrant Agreement. In the event that upon any
exercise of Warrants evidenced by this Warrant Certificate the number of
Warrants exercised shall be less than the total number of Warrants evidenced by
this Warrant Certificate, there shall be issued to the
D-14
<PAGE> 33
Holder hereof or its assignee a new Warrant Certificate evidencing the number
of Warrants not exercised.
D-15
<PAGE> 34
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Any Warrant)
The undersigned hereby irrevocably elects to exercise ____________
Warrants, represented by this Warrant Certificate, to purchase __________
shares of Common Stock and herewith tenders payment for such shares to the
order of Hercules Incorporated in the amount of $_____ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of _____________________________, whose address is
_____________________________, and that such shares be delivered to
_____________________________, whose address is _____________________________.
If said number of shares is less than all of the shares of Common Stock
issuable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_____________________________, whose address is _____________________________,
and that such Warrant Certificate be delivered to _____________ whose address is
_____________________________.
-----------------------------------------
Signature
Date:
-----------------------------------------
Signature Guaranteed
Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Warrant Registrar,
which requirements include membership or
participation in the Security Transfer
Agent Medallion Program ("STAMP") or
such other "signature guarantee program"
as may be determined by the Warrant
Registrar in addition to, or in substitution
for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
D-16
<PAGE> 1
Exhibit 4.4
----------------------------------
WARRANT AGREEMENT
Dated as of July 27, 1999
by and between
HERCULES INCORPORATED
and
THE CHASE MANHATTAN BANK
as Warrant Agent
----------------------------------
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TABLE OF CONTENTS
Table of Contents
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SECTION 1. Certain Definitions....................................... 1
SECTION 2. Appointment of Warrant Agent.............................. 6
SECTION 3. Issuance of Warrants; Warrant Certificates................ 6
SECTION 4. No Rights as Holder of Warrant Shares Conferred by
Warrants or Warrant Certificates......................... 10
SECTION 5. Enforcement of Rights.................................... 10
SECTION 6. Terms of Warrants; Exercise of Warrants.................. 11
SECTION 7. Payment of Taxes......................................... 14
SECTION 8. Reservation of Warrant Shares............................ 14
SECTION 9. Obtaining Stock Exchange Listings........................ 15
SECTION 10. Adjustment of Exercise Price Per Share, Warrant Exercise
Price and Number of Warrant Shares Issuable.............. 15
SECTION 11. Statement on Warrants.................................... 23
SECTION 12. No Dilution or Impairment; Capital and Ownership
Structure................................................ 23
SECTION 13. Fractional Interest...................................... 23
SECTION 14. Notices to Warrant Holders; No Rights as Shareholders.... 24
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent. 25
SECTION 16. Warrant Agent............................................ 26
SECTION 17. Resignation and Removal of Warrant Agent; Appointment of
Successor................................................ 28
SECTION 18. Reports.................................................. 29
SECTION 19. Notices.................................................. 29
SECTION 20. Supplements and Amendments............................... 30
SECTION 21. Successors............................................... 31
SECTION 22. Termination.............................................. 31
SECTION 23. Governing Law............................................ 31
SECTION 24. Benefits of This Agreement............................... 31
SECTION 25. Counterparts............................................. 31
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WARRANT AGREEMENT, dated as of July 27, 1999 (the "Agreement"),
between Hercules Incorporated, a corporation duly organized and existing under
the laws of the State of Delaware (the "Company"), and The Chase Manhattan Bank,
a New York banking corporation, as warrant agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue up to 400,000 warrants, as
hereinafter described (the "Warrants"), to purchase up to an aggregate of
9,367,680 shares of the Company's common stock, without par value ($25/48 stated
value) (the "Common Stock"), in connection with the offering by the Company and
Hercules Trust II, a statutory business trust formed under the Business Trust
Act of the State of Delaware (the "Trust"), of up to 400,000 CRESTS(SM) Units
(the "CRESTS Units"), each CRESTS Unit consisting of one preferred security of
the Trust (collectively the "Preferred Securities"), and one Warrant to purchase
23.4192 shares of the Common Stock.
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders (as
defined below), the parties hereto agree as follows:
SECTION 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"ACCRETED LIQUIDATION AMOUNT" means, at any date, the sum of the
initial purchase price of a Preferred Security (i.e. $741.46) plus accrual of
the discount (i.e. the difference between the scheduled liquidation amount of
$1,000 payable in respect of such Preferred Security on June 30, 2029 and such
initial purchase price), calculated from July 27, 1999 to the date of
calculation on a quarterly bond equivalent yield basis using a 360-day year of
twelve 30-day months until such sum equals $1,000 on June 30, 2029; provided
however, if the Preferred Securities are Remarketed, then at all times on and
after the Reset Date, the term "Accreted Liquidation Amount" shall mean the
"Accreted Liquidation Amount" calculated as described above as of the Reset
Date.
"ACQUISITION RESET EVENT" shall occur if (i) all of the shares of
Common Stock are acquired by a third party and all or a portion of the
consideration for such acquisition involves cash and (ii) the total
consideration per share of Common Stock exceeds the Exercise Price Per Share
(after giving effect to the reduction of the Warrant Exercise Price as
contemplated in Section 6.3 hereof upon the occurrence of a Reset Event).
"AFFILIATE" has the same meaning given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"AGGREGATE MARKET CAPITALIZATION" means the product of the Current
Market Price of a share of Common Stock multiplied by the number of shares of
Common Stock then outstanding.
"AGREEMENT" means this Warrant Agreement, dated as of July 27, 1999,
including all exhibits hereto, as amended or supplemented from time to time.
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"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for, or exercise of, any beneficial interests in the Global
Warrant (including a Global Warrant that is a component of a CRESTS Unit), the
rules and procedures of the Depositary that apply to such transfer, exchange, or
exercise as made available by the Depositary to the Company, the Warrant Agent
and others from time to time upon request.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
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.
"CLOSING TIME" means the Closing Time as defined in the
Underwriting Agreement.
"COMMISSION" means the United States Securities and Exchange
Commission as from time to time constituted or, if at any time after the
execution of this Agreement such Commission is not existing and performing the
duties now assigned to it under applicable federal securities laws, then the
body performing such duties at such time.
"COMMON STOCK" means the common stock, without par value ($25/48
stated value), of the Company.
"CURRENT MARKET PRICE" means the per share average of the daily
closing prices of the Common Stock for the five consecutive Trading Days
selected by the Company commencing not more than 30 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
Ex Date with respect to the issuance or distribution requiring such computation.
"DEBENTURES" means the Series A Junior Subordinated Deferrable
Interest Debentures of the Company.
"DEFINITIVE WARRANT" means the Warrants in certificated form
registered in the name of the Holder thereof, as evidenced by Warrant
Certificates substantially in the form of Exhibit A hereto except that such
Warrant Certificates shall not bear the Global Warrant Legend and shall not have
the "Schedule of Exchanges of Interests of Global Warrant" attached thereto.
"DEPOSITARY" means the Person specified in Section 3.3 hereof as the
Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of this Agreement.
"DTC" means The Depository Trust Company.
"EX DATE", when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades the regular way on the
exchange or market in which the Common Stock is then trading without the right
to receive such issuance or distribution.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
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"EXERCISE DATE" means any Business Day on which a Holder elects to
exercise its Warrants in accordance with terms of this Agreement.
"EXERCISE PRICE PER SHARE" means the purchase price per share of
Common Stock paid or payable upon the exercise of a Warrant in accordance with
the terms of this Agreement, which price shall initially be equal to $42.70,
subject to adjustment pursuant to Section 10 hereof.
"EXPIRATION DATE" means March 31, 2029, subject to acceleration
pursuant to Section 6.3 hereof and extension pursuant to Section 6.4 hereof, or
if any such date is not a Business Day, the next succeeding Business Day.
"FAILED REMARKETING" means that the Remarketing Agent is unable to
Remarket all of the Preferred Securities to be Remarketed at the Remarketing
Rate prior to the close of business on the fifth Business Day following the
Reset Date or all of the conditions precedent to the Remarketing have not been
fulfilled, in each case, as contemplated in the Trust Agreement.
"GLOBAL WARRANT" means one or more Warrant Certificates representing
Warrants in book-entry form, registered in the name of Cede & Co. or such other
nominee designated by the Depositary and issued in the form of one or more
global certificates in accordance with Section 3.1(b) hereof, as evidenced by
Warrant Certificates substantially in the form of Exhibit A hereto.
"GLOBAL WARRANT LEGEND" means the legend set forth in Section 3.5(d)
which is required to be placed on the Warrant Certificates for the Global
Warrant.
"HOLDER" means any Person in whose name a Warrant Certificate shall
be registered in the register maintained by the Warrant Registrar.
"INDENTURE" means the Junior Subordinated Debentures Indenture,
dated as of March 17, 1999, between the Company and The Chase Manhattan Bank, as
trustee, relating to the Debentures, as amended or supplemented from time to
time, including the First Supplemental Indenture thereto, dated as of July 27,
1999.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial
interest in a Global Warrant through a Participant.
"OFFICER" means, with respect to any Person, the Chief Executive
Officer, the Chief Financial Officer, the President or a Vice President of such
Person.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Warrant Agent in form and substance reasonably
acceptable to the Warrant Agent. The counsel may be an employee of or counsel to
the Company, any subsidiary of the Company or the Warrant Agent.
"PARTICIPANT" means, with respect to the Depositary, a Person who
has an account with the Depositary.
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"PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"PROSPECTUS" means the prospectus included in the Shelf Registration
Statement at the time the Shelf Registration Statement was declared effective,
as amended or supplemented by any prospectus supplement and by all other
amendments, including post-effective amendments, and supplements thereto, and
all material incorporated by reference therein.
"REMARKETING" means a remarketing of Preferred Securities in
accordance with the terms of the Trust Agreement, and "Remarket" and
"Remarketed" have related meanings.
"REMARKETING AGENT" means a nationally recognized investment banking
firm selected by the Company.
"REMARKETING RATE" means, in the event of a Remarketing, the annual
distribution rate that enables a resale of the Preferred Securities at a price
equal to at least 100.25% (after provision for the fee of the Remarketing Agent)
of the Accreted Liquidation Amount thereof as of the Reset Date, plus
accumulated distributions, if any, to the Reset Date.
"RESET DATE" has the meaning assigned to such term in Section 6.3
hereof.
"RESET EVENT" means an Acquisition Reset Event or a Trading Reset
Event.
"RESPONSIBLE OFFICER" when used with respect to the Warrant Agent,
means any officer within the corporate trust department of the Warrant Agent,
including any vice president, any assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other authorized representative of the
Warrant Agent who customarily performs functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"SHELF REGISTRATION STATEMENT" means the registration statement
(File No. 333-63423) relating to the registration for resale of Warrant Shares
that has been filed with and declared effective by the Commission pursuant to
this Agreement, and all amendments (including post-effective amendments)
thereto, and all exhibits and material incorporated by reference therein.
"TRADING DAY" means any day on which shares of Common Stock, or any
other capital stock exchangeable for the Common Stock in accordance with Section
10(b) hereof, are traded on the New York Stock Exchange or, if such shares are
not then listed or admitted for trading on the New York Stock Exchange, on the
principal national securities exchange on which such shares are listed or
admitted or, if such shares are not then listed or admitted for trading on
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any national securities exchange, on the Nasdaq National Market or, if such
shares are not then quoted on the Nasdaq National Market, in the applicable
securities market in which such shares are then traded.
"TRADING RESET EVENT" shall occur if (A)(i) on any date after July
27, 2004, the closing price of the Common Stock (taking into account any other
capital stock issued in exchange for the Company's Common Stock, calculated on
an as adjusted basis for each share of the Company's Common Stock) has exceeded
$51.24 for at least 20 Trading Days within the immediately preceding 30 Trading
Days and (ii) the Company elects, at its option, to cause the Remarketing of the
Preferred Securities to occur and, as described in Section 6 hereof, to
accelerate the Expiration Date of the Warrants, and gives written notice of any
such election to the holders of the CRESTS Units, the Preferred Securities and
the Warrants or (B) if there is no prior Remarketing, on January 31, 2029, the
closing price of the Common Stock (taking into account any other capital stock
issued in exchange for the Company's Common Stock, calculated on an as adjusted
basis for each share of the Company's Common Stock) has exceeded $40.56 for at
least 20 Trading Days within the immediately preceding 30 Trading Days.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement of
the Trust, dated as of July 27, 1999, among the Company, as sponsor, Israel J.
Floyd, Jan M. King and Stuart C. Shears, as administrative trustees, The Chase
Manhattan Bank, as property trustee, and Chase Manhattan Bank Delaware, as
Delaware trustee, as amended or supplemented from time to time.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated
July 21, 1999, by and among the Company, the Trust and the underwriters named
therein relating to the CRESTS Units.
"UNIT AGREEMENT" means the Unit Agreement, dated as of July 27,
1999, among the Company, the Trust and The Chase Manhattan Bank, as unit agent.
"WARRANT CERTIFICATE" has the meaning assigned to such term in
Section 3.1(a) hereof.
"WARRANT COUNTERSIGNATURE ORDER" has the meaning assigned to such
term in Section 3.2 hereof.
"WARRANT EXERCISE PRICE" means the purchase price for all shares of
Common Stock paid or payable upon the exercise of a Warrant in full in
accordance with the terms of this Agreement, which price shall initially be
equal to $1,000, subject to adjustment pursuant to Sections 6.3 and 10(o)
hereof.
"WARRANT REGISTRAR" has the meaning assigned to such term in Section
3.3 hereof.
"WARRANT SHARES" means the shares of Common Stock issued or issuable
upon the exercise of the Warrants, which shall initially be equal to 23.4192
shares per Warrant, subject to adjustment pursuant to Section 10 hereof.
SECTION 2. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the terms
set forth in this Agreement, and the Warrant Agent hereby accepts such
appointment.
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SECTION 3. Issuance of Warrants; Warrant Certificates.
3.1. Form and Dating.
(a) General.
The Warrants shall be evidenced by one or more certificates (the
"Warrant Certificates") substantially in the form of Exhibit A hereto. The
Warrant Certificates may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Warrant Certificate shall be dated the
date of the Warrant Agent's countersignature. Warrants that are part of a CRESTS
Unit will not bear a CUSIP number separate from that of the CRESTS Units and
Warrants that are not components of a CRESTS Unit will bear a separate "CUSIP"
number.
The terms and provisions contained in the Warrant Certificates shall
constitute, and are hereby expressly made, a part of this Agreement. The Company
and the Warrant Agent, by their execution and delivery of this Agreement,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Warrant Certificate conflicts with the
express provisions of this Agreement, the provisions of this Agreement shall
govern and be controlling.
(b) Global and Definitive Warrants.
Warrants issued in certificated form shall be evidenced by Warrant
Certificates substantially in the form of Exhibit A attached hereto (but without
the Global Warrant Legend thereon and without the "Schedule of Exchanges of
Interests of Global Warrant" attached thereto). Warrants issued in book-entry
form shall be evidenced by Warrant Certificates substantially in the form of
Exhibit A attached hereto (including the Global Warrant Legend thereon).
The Global Warrant shall represent such of the outstanding Warrants
as shall be specified in the "Schedule of Exchanges of Interests of Global
Warrant" attached thereto or otherwise in accordance with the Applicable
Procedures. A Global Warrant that is not a component of a CRESTS Unit initially
shall have a zero balance, and the Warrant Agent shall make the necessary
endorsement to the "Schedule of Exchanges of Interests of Global Warrant" or
otherwise comply with the Applicable Procedures to increase the number of
outstanding Warrants represented by a Global Warrant that is not a component of
a CRESTS Unit upon a separation of the components in a CRESTS Unit in accordance
with the Unit Agreement. The Warrant Agent shall make such other necessary
endorsements to the Global Warrant to reflect the appropriate number of
outstanding Warrants represented thereby.
3.2. Execution.
An Officer shall sign the Warrant Certificates for the Company by
manual or facsimile signature. If the Officer whose signature is on a Warrant
Certificate no longer holds the required office at the time a Warrant
Certificate is countersigned, the Warrants evidenced thereby shall nevertheless
be valid.
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A Warrant Certificate duly executed by an Officer of the Company
shall not be valid for any purpose until countersigned by the manual signature
of the Warrant Agent. The Warrant Agent's countersignature shall be conclusive
evidence, and the only evidence, that the Warrant evidenced by the applicable
Warrant Certificate have been properly issued under this Agreement.
The Warrant Agent shall, upon a written order of the Company signed
by an Officer (a "Warrant Countersignature Order"), countersign duly executed
Warrant Certificates for original issue up to the number stated in the preamble
hereto and deliver such Warrant Certificates in accordance with such Warrant
Countersignature Order. Subsequent to issuance of the Warrant Certificates
contemplated in the Underwriting Agreement, the Warrant Agent shall countersign
duly executed Warrant Certificates only if issued in exchange or substitution
for one or more previously countersigned Warrant Certificates or in connection
with their transfer as provided in Section 3.5 hereof.
The Warrant Agent may appoint an agent acceptable to the Company to
countersign Warrant Certificates. Such an agent may countersign Warrant
Certificates whenever the Warrant Agent may do so. Each reference in this
Warrant Agreement to a countersignature by the Warrant Agent includes a
countersignature by such agent. Such an agent has the same rights as the Warrant
Agent to deal with the Company or an Affiliate of the Company.
3.3. Warrant Registrar.
The Company shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange (the "Warrant
Registrar"). The Warrant Registrar shall keep a register of the Warrants and of
their transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar. The
Company may change any Warrant Registrar without notice to any Holder. The
Company shall notify the Warrant Agent in writing of the name and address of any
Warrant Registrar not a party to this Warrant Agreement. If the Company fails to
appoint or maintain another entity as Warrant Registrar, the Warrant Agent shall
act as such.
The Company initially appoints the Warrant Agent to act as the
Warrant Registrar with respect to the Global Warrant and any Definitive
Warrants.
The Company initially appoints DTC to act as Depositary with respect
to the Global Warrants.
3.4. Holder Lists.
The Warrant Agent shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders. If the Warrant Agent is not the Warrant Registrar, the
Company shall promptly furnish to the Warrant Agent at such times as the Warrant
Agent may request in writing a list in such form and as of such date as the
Warrant Agent may reasonably require of the names and addresses of the Holders.
3.5. Transfer and Exchange.
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(a) Transfer and Exchange of the Global Warrant.
The Global Warrant may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. The Global Warrant will be exchanged by the Company for Definitive
Warrants if (i) the Company delivers to the Warrant Agent notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by the Company within 90
days after the date of such notice from the Depositary, (ii) the Company in its
sole discretion determines that the Global Warrant (in whole but not in part)
should be exchanged for Definitive Warrants and delivers a written notice to
such effect to the Warrant Agent or (iii) a default under this Agreement has
occurred and is continuing. Upon the occurrence of any of the events in (i),
(ii) or (iii) above, Definitive Warrants shall be issued in such names, and
issued in any denominations, as the Depositary shall instruct the Warrant Agent
in writing. The Global Warrant also may be exchanged or replaced, in whole or in
part, as provided in Section 3.6 hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Warrant.
The transfer and exchange of beneficial interests in the Global
Warrant shall be effected through the Depositary in accordance with the
provisions of this Agreement and the Applicable Procedures. Beneficial interests
in the Global Warrant may be transferred to Persons who take delivery thereof in
the form of beneficial interests in the Global Warrants without delivering any
written orders or instructions to the Warrant Registrar to effect such
transfers.
(c) Transfer and Exchange of Beneficial Interests in Definitive Warrants.
The transfer or exchange of Definitive Warrants shall be effected
through the Warrant Registrar in accordance with the provisions of this
Agreement. Prior to such transfer or exchange, the requesting Holder shall
present or surrender to the Warrant Registrar the Definitive Warrants duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Warrant Registrar duly executed by such Holder or by its
attorney, duly authorized in writing.
(d) Legend. The following legend shall appear on the face of the Global
Warrants:
"THIS WARRANT CERTIFICATE IS A GLOBAL WARRANT WITHIN THE MEANING OF THE
WARRANT AGREEMENT, DATED AS OF JULY 27, 1999, AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF
THE DEPOSITARY. THIS WARRANT CERTIFICATE IS EXCHANGEABLE FOR WARRANTS
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN SUCH WARRANT
AGREEMENT, AND NO TRANSFER OF THIS WARRANT CERTIFICATE (OTHER THAN A
TRANSFER OF THIS WARRANT CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY, OR BY A NOMINEE OF
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THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR
BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TO HERCULES INCORPORATED OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY WARRANT CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."
(e) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges of Warrant
Certificates, the Company shall execute the Warrant Certificates at the
Warrant Registrar's request. The Warrant Agent shall countersign and
deliver the Warrant Certificates in accordance with the provisions of
Section 3.2 hereof.
(ii) No service charge shall be made for any registration of
transfer or exchange of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamps or other tax or
governmental charge payable in connection therewith.
(iii) The Warrant Certificates issued upon any registration of
transfer or exchange shall be duly authorized, executed and delivered and
shall be valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as
the Warrant Certificates surrendered upon such registration of transfer or
exchange.
(iv) Prior to due presentment for the registration of transfer of
any Warrant Certificate, the Warrant Agent, the Warrant Registrar and the
Company may deem and treat the Person in whose name any Warrant
Certificate is registered as the absolute owner of such Warrant
Certificate for all purposes and none of the Warrant Agent, the Warrant
Registrar or the Company shall be affected by notice to the contrary.
3.6. Replacement Warrant Certificates.
Upon receipt by the Warrant Agent of evidence reasonably
satisfactory to it and the Company of the ownership of and the loss, mutilation,
theft or destruction of any Warrant Certificate and of such security or
indemnity as may be required by the Company and the Warrant Agent to hold each
of them and any agent of them harmless and, in the case of mutilation of a
Warrant Certificate, upon surrender thereof to the Warrant Agent for
cancellation, then, in the absence of notice to the Company or the Warrant Agent
that such Warrant Certificate has been acquired by a bona fide purchaser, the
Company shall execute, and the Warrant Agent
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shall manually countersign and deliver, in exchange for or in lieu of the lost,
mutilated, stolen or destroyed Warrant Certificate, a new Warrant Certificate of
the same tenor and evidencing a like number of Warrants. Upon the issuance of
any new Warrant Certificate under this Section, the Company may require the
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that may be imposed in relation thereto and any other
expenses in connection therewith. Every substitute Warrant Certificate executed
and delivered pursuant to this Section in lieu of any lost, mutilated, stolen or
destroyed Warrant Certificate shall represent an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and shall be entitled to
the benefits of this Agreement equally and proportionately with any and all
other Warrant Certificates duly executed and delivered hereunder. The provisions
of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement of lost, mutilated,
stolen or destroyed Warrant Certificates.
3.7. Cancellation.
The Company may at any time deliver Warrant Certificates
representing Warrants acquired by the Company to the Warrant Agent for
cancellation. In addition, the Warrant Registrar shall forward to the Warrant
Agent any Warrant Certificates surrendered to the Warrant Registrar for
registration of transfer, exchange or exercise. The Warrant Agent shall cancel
all Warrant Certificates surrendered for registration of transfer, exchange,
exercise, replacement or cancellation and shall return such canceled Warrant
Certificates to the Company. The Company may not issue new Warrant Certificates
to replace Warrants that have been exercised or that have been delivered to the
Warrant Agent for cancellation.
3.8. Amendment to Warrant Certificates.
In the event the Company is required to issue replacement Warrant
Certificates because of amendments to the provisions of this Agreement or the
terms of the Warrants affecting the Warrant Certificates (as a result of a
Remarketing or otherwise in accordance with Section 20 hereof), the Company
shall execute and deliver such replacement Warrant Certificates to the Warrant
Agent and the Warrant Agent shall manually countersign and deliver such
replacement Warrant Certificates to the Holders of the prior Warrant
Certificates in accordance with the directions of the Company. The Holders, by
acceptance of the Warrant Certificates, expressly waive any and all rights to
enforce the provisions of the prior Warrant Certificates after the replacement
Warrant Certificates are issued and delivered. The prior Warrant Certificates
shall be deemed to be canceled as of the effective date of the applicable
amendment, and shall no longer be outstanding.
SECTION 4. No Rights as Holder of Warrant Shares Conferred by
Warrants or Warrant Certificates. No Warrant Certificate or Warrant evidenced
thereby shall entitle the Holder or any beneficial owner thereof to any of the
rights of a holder or beneficial owner of Warrant Shares.
SECTION 5. Enforcement of Rights. Notwithstanding any of the
provisions of this Agreement, any Holder of a Warrant Certificate or the
beneficial owner of any Warrant evidenced thereby, without the consent of the
Warrant Agent, the Holder of any other Warrant Certificate or any other party,
may, in its own behalf and for its own benefit, enforce, and may
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institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, its right to exercise its
Warrants in the manner provided in the Warrant Certificate evidencing such
Warrants and in this Agreement.
SECTION 6. Terms of Warrants; Exercise of Warrants.
6.1. Exercise of Warrants.
Subject to Section 6.4 hereof, each Holder shall have the right to
exercise all or any portion of its Warrants at any time (or from time to time)
prior to 5:00 p.m., New York City time, on any Business Day on or prior to the
Expiration Date and, upon exercise of such Warrants in compliance with the
procedures set forth in Section 6.2, to receive from the Company the number of
fully paid and nonassessable Warrant Shares which the Holder is entitled to
receive in accordance with the terms of such Warrants and this Agreement of such
Warrants; provided, however, that a Warrant may be exercised only in whole and
not in part.
Each Warrant not exercised prior to 5:00 p.m., New York City time,
on the Expiration Date shall become void and all rights thereunder and all
rights in respect thereof under this Agreement shall cease as of such time.
6.2. Procedures.
In order to exercise all or any of the Warrants represented by a
Warrant Certificate, prior to 11:00 a.m., New York City time, on an Exercise
Date, (i)(A) in the case of Definitive Warrants, the Holder thereof must
surrender for exercise the Warrant Certificate to the Company at the office of
the Warrant Agent at its New York corporate trust office or (B) in the case of a
beneficial interest in the Global Warrant, the exercising Holder's Participant
whose name appears on a securities position listing of the Depositary as the
recordholder of such beneficial interest must comply with the Applicable
Procedures relating to the exercise of such beneficial interest in the Global
Warrant, (ii) the exercising Holder's Participant or the Holder thereof, as
applicable, must deliver to the Company at the office of the Warrant Agent an
election to purchase Warrant Shares in the form set forth on the reverse of the
Warrant Certificate duly completed and signed, which signature shall be
medallion guaranteed by an institution which is a member of a Securities
Transfer Association recognized signature guarantee program and (iii) the
exercising Holder's Participant, the Holder thereof or, as contemplated by
Section 6.3 hereof, the Remarketing Agent, as applicable, must present payment
to the Warrant Agent for the account of the Company of the Exercise Price Per
Share for the number of Warrant Shares in respect of which such Warrants are
being exercised. For purposes of the foregoing, the Warrant Agent is entitled to
conclusively rely on written instructions received from the Depositary regarding
any exercise of Warrants evidenced by a Global Warrant.
Payment of the Exercise Price Per Share shall be made in cash
(including the automatic application of a portion of the proceeds of any
Remarketing of Preferred Securities contemplated in Section 6.3 hereof) by wire
transfer to an account designated by the Company or by certified or official
bank check, payable to the order of the Company in United States dollars.
Subject to Section 6.4 hereof, upon satisfaction of the conditions
specified in this Section, the Warrant Agent shall thereupon promptly notify the
Company or the transfer agent
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for the Common Stock (the "Transfer Agent"), and the Company shall promptly
transfer to the Holder of the applicable Warrant Certificate a certificate or
certificates for the requisite number of Warrant Shares or other securities or
property (including any money) to which the Holder is entitled, registered or
otherwise placed in, or payable to the order of, such name or names as may be
directed in writing by the Holder, and shall deliver such certificate or
certificates representing the Warrant Shares and any other securities or
property (including any money) to the person or persons entitled to receive the
same, together with an amount in cash in lieu of any fraction of a share as
provided in Section 13 hereof. Any such certificate or certificates representing
the Warrant Shares shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a Holder of record
of such Warrant Shares as of the date the conditions specified in this Section
are satisfied.
If less than all the Warrants evidenced by a Definitive Warrant are
exercised, such Definitive Warrant shall be surrendered and a new Definitive
Warrant of the same tenor and for the number of Warrants which were not
exercised shall be executed by the Company and delivered to the Warrant Agent
and the Warrant Agent shall countersign the new Definitive Warrant, registered
in such name or names as may be directed in writing by the Holder, and shall
deliver the new Definitive Warrant to the Person or Persons entitled to receive
the same. If less than all the Warrants evidenced by the Global Warrant are
exercised, the Warrant Agent shall make such notations on the "Schedule of
Exchanges of Interests of Global Warrant" to the Global Warrant or otherwise
comply with the Applicable Procedures to reflect the change in the number of
Warrants represented by the Global Warrant resulting from such exercise.
All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled by the Warrant Agent in accordance with Section 3.7 hereof. The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.
6.3. Reset Event.
Upon the occurrence of a Reset Event (other than a Reset Event
within the meaning of clause (B) of the definition of a Trading Reset Event in
Section 1 of this Agreement), if any, the Company shall select a date, not less
than 30 nor more than 60 days after the date notice is given to the Holders and
not more than 70 days after the occurrence of such Reset Event, on which the
modifications to the terms of the Warrants specified in the immediately
succeeding paragraph shall become effective (the "Reset Date"). In addition,
upon the occurrence of a Reset Event within the meaning of clause (B) of the
definition of a Trading Reset Event in Section 1 of this Agreement, the "Reset
Date" shall automatically be the date 15 Business Days prior to the Expiration
Date. The Company shall give the Holders and the Warrant Agent notice of the
Reset Date relating to a Reset Event not less than 30 nor more than 60 days
prior to such Reset Date.
The following modifications to the terms of the Warrants shall
become effective as of the Reset Date, if any: (i) the Expiration Date shall be
accelerated to the date 15 Business Days following the Reset Date, except in the
case of a Reset Event within the meaning of clause (B) of the definition of a
Trading Reset Event in Section 1 of this Agreement and (ii) the Warrant
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<PAGE> 15
Exercise Price on the Reset Date shall be reduced to the Accreted Liquidation
Amount of a Preferred Security as of the Reset Date, plus accumulated
distributions, if any, on a Preferred Security to the Reset Date.
Notwithstanding the foregoing, there shall not be a "Reset Date" if
(i) in the case of a Trading Reset Event, an Event of Default under the Trust
Agreement or a deferral of distributions to holders of the Preferred Securities
has occurred and is continuing; (ii) in the case of a Trading Reset Event, the
closing price of the Common Stock on the New York Stock Exchange (or, if not
then listed on such exchange, any other national securities exchange) as of the
fifth Business Day preceding the Reset Date or as of the Reset Date is less than
the Exercise Price Per Share (determined without regard to the Reset Date);
(iii) in the case of a Trading Reset Event, (A) the Shelf Registration Statement
is not effective under the Securities Act or (B) the Company shall have notified
the Warrant Agent, which notice shall not have been withdrawn by it, that it is
unable as of the Reset Date to deliver a then current Prospectus to exercising
Holders; or (iv) there is a Failed Remarketing.
If (i) the Company fails to specify a Reset Date when required to do
so or a Reset Date is deemed not to have occurred, (ii) a holder of Preferred
Securities has not satisfied the conditions for Remarketing such Preferred
Securities that are contemplated in the Trust Agreement or (iii) Holders
exercising their Warrants do not hold such Warrants as part of complete CRESTS
Unit on the Reset Date (i.e. the Warrant and Preferred Security components of a
CRESTS Unit have been separated), then Holders of Warrants will be required to
tender cash in order to exercise such Warrants in accordance with the procedures
set forth in Section 6.2 hereof. If, however, (i) a Reset Date has occurred,
(ii) a Holder exercising its Warrants holds such Warrants as part of complete
CRESTS Units on the Reset Date and (iii) the Holder has satisfied the conditions
for Remarketing of the Preferred Securities held as part of such CRESTS Units
contemplated in the Trust Agreement, then the portion of the proceeds of the
Remarketing equal to the Warrant Exercise Price on the Reset Date will
automatically be applied by the Remarketing Agent to pay the Warrant Exercise
Price of the Warrants delivered to the Remarketing Agent.
6.4. Restrictions on Ability to Exercise Warrants.
The Company shall use its best efforts to (i) maintain the
effectiveness of the Shelf Registration Statement under the Securities Act, (ii)
register or qualify on or prior to the Exercise Date, unless exempt, the Warrant
Shares under the securities laws of the state of residence of the exercising
Holders and (iii) deliver a then current Prospectus on or prior to the Exercise
Date that does not include a material misstatement or omission to exercising
Holders. The Company shall deliver to the Warrant Agent a copy of the Shelf
Registration Statement and any Prospectus and any amendment or supplement
thereto as may be filed or delivered from time to time.
Warrants will not be exercisable if, on the Exercise Date, (i) the
Shelf Registration Statement is not then effective under the Securities Act,
unless the sale of the Warrant Shares upon exercise of the Warrants is exempt
from the registration requirements of the Securities Act, (ii) the Warrant
Shares are not then registered or qualified under the securities laws of the
state of residence of the exercising Holder, unless the sale of the Warrant
Shares is
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<PAGE> 16
exempt under such state securities laws or (iii) the Company has notified the
Warrant Agent, which notice shall not have been withdrawn by it, that it is
unable as of the Exercise Date to deliver a then current Prospectus to
exercising Holders. If the circumstances described in clause (i), (ii) or (iii)
above occur during the 90 days immediately preceding the originally scheduled
Expiration Date, then the Expiration Date will be extended to the first date
after the originally scheduled Expiration Date for which the Company has
maintained the effectiveness of the Shelf Registration Statement under the
Securities Act (and the registration or qualification of the shares of Common
Stock under the applicable state securities laws) and made a then current
Prospectus available to exercising Holders for a 90-day period.
No Warrant that is part of a CRESTS Unit will be exercisable until
the components of such CRESTS Unit have been separated in accordance with the
terms of the Unit Agreement, except that a Warrant that is a component of a
CRESTS Unit may be exercised in accordance with a Remarketing of the Preferred
Security that is also a component of such CRESTS Unit.
SECTION 7. Payment of Taxes. The Company shall pay any and all stamp
or other taxes, duties or governmental charges attributable to the issuance or
transfer of Warrant Certificates or Warrant Shares upon the exercise of
Warrants; provided that the Company shall not be required to pay any taxes,
duties or governmental charges which may be payable in respect of Warrant Shares
in a name other than that of the Holder of the surrendered Warrant Certificate.
SECTION 8. Reservation of Warrant Shares.
8.1. Number of Warrant Shares
The Company shall at all times reserve and keep available, free from
preemptive or other similar rights, out of the aggregate of its authorized but
unissued Common Stock or its authorized and issued Common Stock held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon exercise of Warrants, the maximum number of shares of Common
Stock which may then be deliverable upon the exercise of all outstanding
Warrants. The Transfer Agent will be irrevocably authorized and directed at all
times to reserve such number of authorized shares of Common Stock as shall be
required for such purpose. The Company shall supply the Transfer Agent with duly
executed certificates for the Warrant Shares for such purpose and shall provide
or otherwise make available any cash which may be payable as provided in Section
13 hereof. The Company shall furnish such Transfer Agent a copy of all notices
transmitted to Holders of the Warrants pursuant to Section 14 hereof.
8.2. Additional Corporate Action
Before taking any action which would cause an adjustment pursuant to
Sections 10 or 12 hereof to reduce the Exercise Price Per Share below the then
par value (if any) of the Warrant Shares, the Company will take any corporate
action which may, in the opinion of its counsel (which may be counsel employed
by the Company), be necessary in order that the Company may duly and validly
issue fully paid and nonassessable Warrant Shares at the Exercise Price Per
Share as so adjusted.
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<PAGE> 17
8.3. Covenants
The Company covenants that all Warrant Shares issuable upon exercise
of Warrants in accordance with the terms of this Agreement will, upon such
issuance, be duly and validly issued, fully paid and nonassessable, free of
preemptive or other similar rights and free from all taxes, liens, charges and
security interests with respect to the issuance thereof (other than any created
by the Holders).
SECTION 9. Obtaining Stock Exchange Listings. The Company will from
time to time take all action necessary so that the Warrant Shares, immediately
upon their issuance upon the exercise of Warrants, will be listed on each
principal securities exchange and market (including, without limitation, the New
York Stock Exchange) within the United States of America, if any, on which other
shares of Common Stock are then listed. The Company will obtain and keep all
required permits and records in connection with such listing.
SECTION 10. Adjustment of Exercise Price Per Share, Warrant Exercise
Price and Number of Warrant Shares Issuable. The number and kind of Warrant
Shares issuable upon the exercise of Warrants, the Exercise Price Per Share and
the Warrant Exercise Price shall be subject to adjustment from time to time as
follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or other equity
interests of the Company), (B) subdivide or split its outstanding shares of
Common Stock into a greater number of shares, (C) combine its outstanding shares
of Common Stock into a smaller number of shares or (D) issue by reclassification
of its shares of Common Stock any shares of capital stock of the Company, the
Exercise Price Per Share in effect immediately prior to such action and, if
applicable, the amount and/or type of security issuable upon any exercise of a
Warrant shall be adjusted so that the Holder of any Warrant thereafter exercised
shall be entitled to receive upon payment of the Warrant Exercise Price the kind
and amount of shares of capital stock of the Company which such Holder would
have owned immediately following such action had such Warrant been exercised
immediately prior thereto. An adjustment made pursuant to this paragraph shall
become effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of a
subdivision, split, combination or reclassification. If, as a result of an
adjustment made pursuant to this paragraph, the Holder of any Warrant thereafter
exercised shall become entitled to receive shares of two or more classes of
capital stock of the Company, the Board of Directors of the Company (whose
determination shall be conclusive) shall determine the allocation of the
adjusted Warrant Exercise Price between or among shares of such classes of
capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision, split or combination),
or in case of any consolidation or merger of the Company with or into another
Person (other than a merger in which the Company is the continuing corporation
and which does not result in any reclassification or change of the then
outstanding shares of Common Stock or
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<PAGE> 18
other capital stock issuable upon exercise of the Warrants), or in case of any
sale, conveyance or transfer to another Person of the property of the Company as
an entirety or substantially as an entirety, except any such transaction covered
by paragraph (d) below, then, as a condition of such reclassification, change,
consolidation, merger, sale, conveyance or transfer, the Company or such a
successor or purchasing Person, as the case may be, shall forthwith make lawful
and adequate provision whereby the Holder of all Warrants then outstanding shall
have the right thereafter to receive upon exercise thereof the kind and amount
of shares of stock or other securities or property receivable upon such
reclassification, change, consolidation, merger, sale, conveyance or transfer by
a holder of the number of shares of Common Stock issuable upon exercise of such
Warrants immediately prior to such reclassification, change, consolidation,
merger, sale, conveyance or transfer. Such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments specified in this Agreement. The above provisions of this paragraph
(b) shall similarly apply to successive reclassifications and changes of shares
of Common Stock and to successive consolidations, mergers, sales, conveyances or
transfers.
(c) Distribution of Options or Convertible Securities. In the event
that (x) the Company shall issue, sell, distribute or otherwise grant in any
manner (including by assumption) to all holders of the Common Stock any rights,
warrants or options entitling such holders to subscribe for or purchase Common
Stock or any stock or securities convertible into or exercisable or exchangeable
for Common Stock (any such rights, warrants or options being herein called
"Options" and any such convertible, exercisable or exchangeable stock or
securities being herein called "Convertible Securities") (other than a dividend
or distribution subject to paragraph (a) above), whether or not such Options or
the conversion, exercise or exchange rights are then vested and (y) the price
per share at which Common Stock is issuable upon the exercise of such Options or
upon the conversion, exercise or exchange of such Convertible Securities
(determined by dividing (i) the aggregate amount, if any, received or receivable
by the Company as consideration for the issuance, sale, distribution or granting
of such Options or such Convertible Securities, plus the minimum aggregate
amount (determined without regard to possible adjustments that are contingent
upon future events) of additional consideration, if any, payable to the Company
upon the exercise of all such Options or upon conversion, exercise or exchange
of all such Convertible Securities, plus, in the case of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion, exercise or exchange of all
such Convertible Securities, by (ii) the total maximum number of shares
(determined without regard to possible adjustments that are contingent upon
future events) of Common Stock issuable upon the exercise of all such Options or
upon the conversion, exercise or exchange of all such Convertible Securities or
upon the conversion, exercise or exchange of all Convertible Securities issuable
upon the exercise of all such Options) shall be less than the Current Market
Price per share of Common Stock on the record date for the issuance, sale,
distribution or granting of such Options or Convertible Securities (any such
event being herein called a "Distribution"), then, effective upon such
Distribution, (I) the Exercise Price Per Share shall be reduced to the price
(calculated to the nearest 1/1,000 of one cent) determined by multiplying the
Exercise Price Per Share in effect immediately prior to such Distribution by a
fraction, the numerator of which shall be the sum of (1) the number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately prior to
such Distribution multiplied by the Current Market Price per share of Common
Stock on the record date for such Distribution plus (2) the consideration, if
any, received by the Company upon such
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<PAGE> 19
Distribution, and the denominator of which shall be the product of (A) the total
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately after such Distribution multiplied by (B) the Current Market Price
per share of Common Stock on the record date for such Distribution and (II) the
number of Warrant Shares issuable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock so issuable immediately prior to such Distribution by a fraction, the
numerator of which shall be the Exercise Price Per Share in effect immediately
prior to the adjustment required by clause (I) of this sentence and the
denominator of which shall be the Exercise Price Per Share in effect immediately
after such adjustment (for the purposes of this clause (II) without giving
effect to the provisions of Section 10(k)). Such adjustments shall be made
whenever such Options or Convertible Securities are issued, sold, distributed or
granted. Except as provided in paragraphs (l) and (m) below, no additional
adjustment of the Exercise Price Per Share shall be made upon the actual
exercise of such Options or upon conversion, exercise or exchange of the
Convertible Securities or upon the conversion, exercise or exchange of the
Convertible Securities issuable upon the exercise of such Options.
For purposes of the foregoing, the total maximum number of shares of
Common Stock issuable upon exercise of all such Options or upon conversion,
exercise or exchange of all such Convertible Securities or upon the conversion,
exercise or exchange of the total maximum amount of the Convertible Securities
issuable upon the exercise of all such Options shall be deemed to have been
issued as of the date of such Distribution and thereafter shall be deemed to be
outstanding and the Company shall be deemed to have received as consideration
therefor such price per share, determined as provided above, which shall
constitute consideration received by the Company upon such Distribution for
purposes of the foregoing calculations. For purposes of the foregoing, the total
number of shares of Common Stock issuable upon conversion, exercise or exchange
of outstanding Options or Convertible Securities shall be deemed outstanding
before and after such Distribution if the conversion, exercise or exchange price
with respect thereto is less than the Current Market Value.
(d) Other Issuances of Common Stock, Options or Convertible Securities.
Upon any issuance of Common Stock, Options or Convertible Securities as to which
paragraphs (a), (b) and (c) above are not applicable, in the event that at any
time or from time to time the Company shall issue (i) shares of Common Stock
(subject to the provisions set forth below), (ii) Options (provided, however,
that no adjustment shall be made upon the exercise of such Options) or (iii)
Convertible Securities (provided, however, that no adjustment shall be made upon
the conversion, exchange or exercise of such Convertible Securities (other than
issuances specified in (i), (ii) or (iii) which are made as the result of
antidilution adjustments in such securities)) at a price per share (determined,
in the case of Options and Convertible Securities, as provided in clause (y) of
paragraph (c) above) at the date of such issuance that is less than the then
Current Market Price per share of Common Stock, then the Warrant Shares issuable
upon the exercise of each Warrant shall be increased to a number determined by
multiplying the number of Warrant Shares theretofore issuable upon exercise of
each Warrant by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such sale or issuance (including
shares deemed outstanding as provided in paragraph (c) above) plus the number of
additional shares of Common Stock into or for which such securities that are
issued are convertible, exchangeable or exercisable, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such sale or issuance (including
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<PAGE> 20
shares deemed outstanding as provided in paragraph (c) above) plus the total
number of shares of Common Stock which the aggregate consideration expected to
be received by the Company (assuming the conversion, exercise or exchange of all
such Options or Convertible Securities, if any) would purchase at the then
Current Market Price per share of Common Stock, and subject to paragraph (k)
below, the Exercise Price Per Share shall be adjusted to a number determined by
dividing the Exercise Price Per Share immediately prior to such date of issuance
by the aforementioned fraction; provided, however, that no adjustment to the
number of Warrant Shares issuable upon the exercise of the Warrants or to the
Exercise Price Per Share shall be made as a result of (i) the issuance of shares
of Common Stock, Options and/or Convertible Securities in bona fide public or
private offerings that are underwritten or in which a placement agent is
retained by the Company or (ii) the issuance of Options or shares of Common
Stock pursuant to any employee benefit plans approved by the Board of Directors.
Such adjustments shall be made whenever such Common Stock, Options and/or
Convertible Securities are issued. No adjustment shall be made pursuant to this
paragraph which shall have the effect of decreasing the number of Warrant Shares
issuable upon exercise of the Warrants or of increasing the Exercise Price Per
Share, except by operation of paragraph (l) or (m) below. For purposes of this
paragraph only, any issuance of Common Stock, Options or Convertible Securities
in exchange for or otherwise in connection with the bona fide acquisition of
property or assets of any kind (excluding any such exchange exclusively for
cash) of any Person at a price per share determined by the Board of Directors to
be equal to the fair market value thereof at the time an agreement in principle
is reached or at the time a definitive agreement is entered into shall be deemed
to have been made at a price per share equal to the Current Market Price per
share at the record date with respect to such issuance if such definitive
agreement is entered into within 90 days of the date of such agreement in
principle.
(e) Distribution of Cash. In case the Company shall, by dividend or
otherwise, distribute to all holders of the Common Stock cash (other than
regular quarterly cash dividends, as to which paragraph (g) below applies) in an
aggregate amount that, together with (i) the aggregate amount of any
distributions to all holders of the Common Stock (other than regular quarterly
cash dividends) made exclusively in cash within the 12 months preceding the date
of payment of such distribution and (ii) the aggregate of any cash plus the fair
market value, as of the expiration of the applicable tender or exchange offer
referred to in paragraph (f) below (as determined by the Board of Directors,
whose determination shall be conclusive), of consideration payable in respect of
any tender or exchange offer by the Company or any subsidiary of the Company for
all or any portion of the Common Stock expiring within the 12 months preceding
the date of payment of such distribution made, exceeds 15% of the Aggregate
Market Capitalization on the date for the determination of holders of shares of
Common Stock entitled to receive such distribution, then, and in each such case,
immediately after the close of business on such date for determination, then (A)
the Exercise Price Per Share shall be reduced to the price (calculated to the
nearest 1/1,000 of one cent) determined by multiplying the Exercise Price Per
Share in effect immediately prior to the close of business on the date fixed for
determination of the stockholders entitled to receive such distribution by a
fraction, the numerator of which shall be equal to the Current Market Price per
share of the Common Stock on the date fixed for such determination less an
amount equal to the quotient of (x) the combined amount distributed or payable
in the transactions as described above and (y) the number of shares of Common
Stock outstanding on such date for determination, and the denominator of which
shall be equal to the Current Market Price per share of the Common Stock on such
date for determination and (B) the
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number of Warrant Shares issuable upon exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock so issuable immediately prior to such distribution by a fraction, the
numerator of which shall be the Exercise Price Per Share in effect immediately
prior to the adjustment required by clause (A) of this sentence and the
denominator of which shall be the Exercise Price Per Share in effect immediately
after such adjustment (for the purposes of this clause (B) without giving effect
to the provisions of paragraph (k)).
(f) Tender Offers or Exchange Offers. In case a tender or exchange offer
made by the Company or any subsidiary of the Company for all or any portion of
the Common Stock shall expire and such tender or exchange offer (as amended upon
the expiration thereof) shall require the payment to stockholders (based upon
the acceptance (up to any maximum specified in the terms of the tender or
exchange offer) of Purchased Shares (as defined below) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) that, together with (i) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive), as of the expiration of
such tender or exchange offer, of consideration payable in respect of any other
tender or exchange offer (other than consideration payable in respect of any
odd-lot tender offer) by the Company or any subsidiary of the Company for all or
any portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender or exchange offer and (ii) the aggregate amount of any
distributions (other than regular quarterly cash dividends) to all holders of
the Common Stock made exclusively in cash within the 12 months preceding the
expiration of such tender or exchange offer exceeds 15% of the Aggregate Market
Capitalization as of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender or exchange offer (as it may be amended),
then, and in each such case, immediately prior to the opening of business on the
day after the date of the Expiration Time, then (A) the Exercise Price Per Share
shall be reduced to the price (calculated to the nearest 1/1,000 of one cent)
determined by multiplying the Exercise Price Per Share in effect immediately
prior to the close of business as of the Expiration Time by a fraction, the
numerator of which shall be equal to the Current Market Price per share of the
Common Stock as of the Expiration Time less an amount equal to the quotient of
(x) the combined amount of cash plus the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders in the
transactions as described above and (y) the number of shares of Common Stock
outstanding (including any tendered shares) as of the Expiration Time, and the
denominator of which shall be equal to the Current Market Price per share of the
Common Stock as of the Expiration Time (it being understood that the shares
accepted in the tender or exchange offer, up to any specified maximum, are
referred to herein as the "Purchased Shares") and (B) the number of Warrant
Shares issuable upon exercise of each Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock so issuable
immediately prior to the Expiration Time by a fraction, the numerator of which
shall be the Exercise Price Per Share in effect immediately prior to the
adjustment required by clause (A) of this sentence and the denominator of which
shall be the Exercise Price Per Share in effect immediately after such
adjustment (for the purposes of this clause (B) without giving effect to the
provisions of paragraph (k)).
(g) Dividends and Distributions. In the event the Company shall distribute
to all holders of the Common Stock any dividend or other distribution of cash,
evidences of its indebtedness,
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other securities or other properties or assets (in each case other than (i)
dividends payable in Options or Convertible Securities or rights to acquire the
same and (ii) any cash dividend that, when added to all other cash dividends
paid in the same fiscal year prior to the declaration date of such dividend
(excluding any such other dividend included in a previous adjustment of the
Exercise Price Per Share pursuant to paragraphs (e) or (f) above or this
paragraph (g)), does not exceed the Company's retained earnings as of the end of
the immediately preceding fiscal period), then (A) the Exercise Price Per Share
shall be decreased to a price (calculated to the nearest 1/1,000 of one cent)
determined by multiplying the Exercise Price Per Share then in effect by a
fraction, the numerator of which shall be the Current Market Price per share of
Common Stock on the record date for such distribution less the sum of (X) the
cash portion, if any, of such distribution per share of Common Stock outstanding
(exclusive of any treasury shares) on the record date for such distribution plus
(Y) the then fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive) per share of
Common Stock outstanding (exclusive of any treasury shares) on the record date
for such distribution of that portion, if any, of such distribution consisting
of evidences of indebtedness, other securities, other properties or other
assets, and the denominator of which shall be the Current Market Price per share
of Common Stock on the record date for such distribution and (B) the number of
Warrant Shares issuable upon the exercise of each Warrant shall be increased to
a number determined by multiplying the number of shares of Common Stock so
issuable immediately prior to the record date for such distribution by a
fraction, the numerator of which shall be the Exercise Price Per Share in effect
immediately prior to the adjustment required by clause (A) of this sentence and
the denominator of which shall be the Exercise Price Per Share in effect
immediately after such adjustment (for the purposes of this clause (B) without
giving effect to the provisions of paragraph (k)). The adjustments required by
this paragraph shall be made whenever any such distribution occurs retroactive
to the record date for the determination of stockholders entitled to receive
such distribution.
(h) Business Combination; Liquidation. In the event of (A) a business
combination where consideration to the holders of Common Stock in exchange for
their shares is payable solely in cash or (B) the dissolution, liquidation or
winding-up of the Company, Holders shall be entitled to receive, upon surrender
of their Warrant Certificates, distributions on an equal basis with the holders
of Common Stock or other securities, issuable upon exercise of the Warrants, as
if the Warrants had been exercised immediately prior to such event, less the
Warrant Exercise Price. Upon receipt of such payment, if any, the Warrants will
expire and the rights of the Holders will cease. In case of any combination
described in this paragraph (h), the surviving or acquiring Person and, in the
event of any dissolution, liquidation or winding-up of the Company, the Company
shall deposit promptly with the Warrant Agent the funds, if any, necessary to
pay to the Holders of the Warrants the amounts to which they are entitled as
described above. After such funds and the surrendered Warrant Certificates are
received, the Warrant Agent is required to deliver a check in such amount as is
appropriate, as instructed by the Company (or, in the case of consideration
other than cash, such other consideration as is appropriate), to such Person or
Persons as it may be directed in writing by the Holders surrendering such
Warrants.
(i) Certain Distributions. If the Company shall pay a dividend payable in
Options or Convertible Securities or make any other distribution payable in
Options or Convertible Securities, then, for purposes of paragraph (c) above,
such Options or Convertible Securities shall be deemed to have been issued or
sold without consideration.
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(j) Consideration Received. If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for consideration
other than cash, the amount of the consideration other than cash received by the
Company in respect thereof shall be deemed to be the then fair market value of
such consideration (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive). If any Options shall be
issued in connection with the issuance and sale of other securities of the
Company, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such Options
shall be deemed to have been issued for such consideration as is established in
good faith by the Board of Directors of the Company.
(k) Deferral of Certain Adjustments. No adjustment to the Exercise Price
Per Share (including the related adjustment to the number of Warrant Shares
issuable upon the exercise of each Warrant) shall be required hereunder unless
such adjustment, together with other adjustments carried forward as provided
below, would result in an increase or decrease of at least one percent of the
Exercise Price Per Share; provided that any adjustments which by reason of this
paragraph are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. No adjustment need be made for a change in
the par value of the Common Stock. All calculations under this Section 10 shall
be made to the nearest 1/1,000 of one cent or to the nearest 1/1,000 of a share,
as the case may be.
(l) Changes in Options and Convertible Securities. If the exercise price
provided for in any Options referred to in paragraphs (c) and (d) above, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraphs (c) and (d) above, or the rate
at which any Convertible Securities referred to in paragraphs (c) and (d) above
are convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 10), the Exercise Price Per Share then in effect and the number of
Warrant Shares issuable upon the exercise of each Warrant shall forthwith be
readjusted (effective only with respect to any exercise of any Warrant after
such readjustment) to the Exercise Price Per Share and number of Warrant Shares
so issuable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.
(m) Expiration of Options and Convertible Securities. If, at any time
after any adjustment to the Exercise Price Per Share and the number of Warrant
Shares issuable upon the exercise of each Warrant shall have been made pursuant
to paragraph (c), (d) or (g) above or this paragraph, any Options or conversion
rights of Convertible Securities shall have expired unexercised, the Exercise
Price Per Share and the number of Warrant Shares issuable upon the exercise of
each Warrant shall, upon such expiration, be readjusted and shall thereafter be
such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the only
shares of Common Stock deemed to have been issued in connection with such
Options or Convertible Securities were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such Options or Convertible
Securities and (ii) such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such exercise plus the
aggregate
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consideration, if any, actually received by the Company for the issuance, sale,
distribution or granting of all such Options or Convertible Securities, whether
or not exercised; provided that no such readjustment shall have the effect of
increasing the Exercise Price Per Share or decreasing the number of such Warrant
Shares so issuable by an amount (calculated by adjusting such increase or
decrease to account for all other adjustments made pursuant to this Section 10
following the date of the original adjustment referred to above) in excess of
the amount of the adjustment initially made in respect of the issuance, sale,
distribution or granting of such Options or Convertible Securities.
(n) Other Adjustments. The Company may at any time reduce the Exercise
Price Per Share for any period of time (but not less than 20 Business Days) when
deemed appropriate by the Board of Directors of the Company, provided that the
Exercise Price Per Share may not be reduced to an amount that is less than the
par value of the Common Stock. In the event that at any time, as a result of an
adjustment made pursuant to any provision of this Section 10, the Holders shall
become entitled to receive any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Exercise Price Per Share applicable to such
exercise shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
shares of Common Stock contained herein.
(o) Exercise Price Per Share; Warrant Exercise Price. Upon any adjustment
of the Warrant Exercise Price pursuant to Section 6.3, the Exercise Price Per
Share shall be adjusted so as to equal the adjusted Warrant Exercise Price
divided by the number of shares of Common Stock issuable upon exercise of a
Warrant. Upon any adjustment of the Exercise Price Per Share pursuant to
paragraph (n) above, the Warrant Exercise Price shall be adjusted to equal the
Exercise Price Per Share multiplied by the number of shares of Common Stock
issuable upon exercise of a Warrant. Other adjustments to the Exercise Price Per
Share pursuant to this Section 10, together with the related adjustment in the
number of Warrant Shares issuable upon exercise of a Warrant, will result in no
adjustment to the Warrant Exercise Price.
SECTION 11. Statement on Warrants. Irrespective of any adjustment in
the number or kind of shares issuable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares initially issuable upon exercise pursuant to this
Agreement as are stated in the initially issued Warrants.
SECTION 12. No Dilution or Impairment; Capital and Ownership
Structure. If any event shall occur as to which the provisions of Section 10
hereof are not strictly applicable but the failure to make any adjustment would
adversely affect the purchase rights represented by the Warrants so as to be
contrary to the essential intent and principles of such Section, then, in each
such case, the Company shall appoint an investment banking firm of recognized
national standing which does not have a direct or material indirect financial
interest in the Company or any of its subsidiaries and which has not been, and,
at the time it is called upon to give independent financial advice to the
Company, is not (and none of its directors, officers, employees, affiliates or
stockholders are) a promoter, director or officer of the Company or any of its
subsidiaries, to give their opinion that as to what adjustment, if any, is
necessary to preserve, on a basis consistent with the essential intent and
principles established in Section 10 hereof, the purchase rights represented by
the Warrants. Upon receipt of such opinion, the
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Company will promptly mail a copy thereof to the holders of the Warrants and
shall make any adjustment described therein.
The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of the Warrants against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (a) will take all such action as may be necessary or appropriate in
order that the Company may duly and validly issue fully paid and nonassessable
shares of Common Stock upon the exercise of the Warrants from time to time
outstanding and (b) will not take any action which results in any adjustment of
the Exercise Price Per Share if the total number of Warrant Shares issuable
after the action upon the exercise of all of the Warrants would exceed the total
number of shares of Common Stock then authorized by the Company's certificate of
incorporation and available for the purposes of issue upon such exercise.
SECTION 13. Fractional Interest. The Company shall not be required
to issue fractional shares of Common Stock upon the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same time
by the same Holder, the number of full shares of Common Stock which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of shares of Common Stock issuable upon exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section, be issuable upon the exercise of any Warrant (or
specified portion thereof), the Company shall direct the Transfer Agent to pay
an amount in cash, calculated by the Transfer Agent, to equal the then Current
Market Price per share multiplied by such fraction computed to the nearest whole
cent. The Holders, by their acceptance of the Warrant Certificates, expressly
waive any and all rights to receive any fraction of a share of Common Stock or a
stock certificate representing a fraction of a share of Common Stock.
SECTION 14. Notices to Warrant Holders; No Rights as Shareholders.
Upon any adjustment of the Exercise Price Per Share and/or the Warrant Exercise
Price in accordance with the terms of this Agreement, the Company shall promptly
thereafter (i) cause to be filed with the Warrant Agent a certificate of a firm
of independent public accountants of nationally recognized standing selected by
the Board of Directors of the Company (who may be the regular auditors of the
Company) setting forth the Exercise Price Per Share and/or the Warrant Exercise
Price after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and setting
forth the number of Warrant Shares (or portion thereof) issuable after such
adjustment, upon exercise of a Warrant and payment of the Warrant Exercise
Price, which certificate, absent manifest error, shall be conclusive evidence of
the correctness of the matters set forth therein and (ii) cause to be given to
each of the Holders of the Warrants at their addresses appearing in the register
maintained by the Warrant Registrar written notice of such adjustment by
first-class mail, postage prepaid. The Warrant Agent shall be entitled to rely
on the above-referenced accountant's certificate and shall be under no duty or
responsibility with respect to any such certificate, except to make the same
available to any Holder for inspection during reasonable business hours. The
Warrant Agent shall not at any time
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be under any duty or responsibility to any Holder to determine whether any facts
exist that may require any adjustment of the number of shares of Common Stock or
other stock or property issuable upon exercise of the Warrants, the Exercise
Price Per Share or the Warrant Exercise Price, or with respect to the nature or
extent of any such adjustment when made, or with respect to the method employed
in making such adjustment or the validity or value (or the kind or amount) of
any Warrant Shares or other stock or property which may be issuable upon
exercise of the Warrants. The Warrant Agent shall not be responsible for any
failure of the Company to make any cash payment or to issue, transfer or deliver
any Warrant Shares or stock certificates or other common stock or property upon
the exercise of any Warrant.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or securities convertible into or
exercisable for shares of Common Stock or of any other subscription rights
or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of indebtedness, shares of capital
stock, cash or other assets of the Company (other than cash dividends or
other cash distributions payable out of retained earnings and other than
those rights, options and warrants referred to in clause (a) above); or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or
of the sale, conveyance or transfer of the properties and assets of the
Company as an entirety or substantially as an entirety, or of any
reclassification or change of Common Stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par
value, or from no par value to par value), or a tender offer or exchange
offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) of the occurrence of a Reset Event; or
(f) the Company proposes to take any action not referred to above
that would require an adjustment of the Exercise Price Per Share or the
Warrant Exercise Price or the number of Warrant Shares in accordance with
the terms of this Agreement;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the Holders of the Warrants at their addresses appearing
in the register maintained by the Warrant Registrar, at least 20 calendar days
prior to the applicable record date or other applicable determination date, by
first class mail, postage prepaid, a written notice stating (i) the date as of
which the holders of record of shares of Common Stock entitled to receive any
such distributions are to be determined or (ii) the date on which any such
reclassification, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding up, or the Reset Date, as the case may be,
is expected to become effective or consummated, and the date as of which it is
expected
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that holders of shares of Common Stock shall be entitled to exchange such shares
for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 14 or any defect therein shall not affect the legality or
validity of the proceedings described in this Section.
SECTION 15. Merger, Consolidation or Change of Name of Warrant
Agent. Any corporation or other association into which the Warrant Agent may be
merged or with which it may be consolidated, or any corporation or other
association resulting from any merger or consolidation to which the Warrant
Agent shall be a party, or any corporation or other association succeeding to
the part of the business of the Warrant Agent that includes services hereunder,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
to the Warrant Agent under the provisions of Section 17 hereof. Any such
successor Warrant Agent shall promptly cause notice of its succession as Warrant
Agent to be mailed (by first class mail, postage prepaid) to each Holder at such
Holder's last address as shown on the register maintained by the Warrant
Registrar. In case at the time such successor to the Warrant Agent shall succeed
to the agency created by this Agreement, and in case at that time any of the
Warrant Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent; and in case at that time any of the Warrant Certificates shall
not have been countersigned, any successor to the Warrant Agent may countersign
such Warrant Certificates either in the name of the predecessor Warrant Agent or
in the name of the successor to the Warrant Agent; and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 16. Warrant Agent. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken (including the Warrant Agent's
countersignature) or to be taken by it.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company.
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(c) The Warrant Agent may consult at any time with counsel of its
own selection (who may be counsel for the Company) and the Warrant Agent shall
incur no liability or responsibility to the Company or to any Holder of any
Warrant in respect of any action taken, suffered or omitted by it hereunder so
long as taken, suffered or omitted in good faith and in accordance with the
opinion or the advice of such counsel.
(d) Before the Warrant Agent acts or refrains from acting with
respect to the Warrants, it may require an officer's certificate or an opinion
of counsel, or both, from the Company. The Warrant Agent may conclusively rely
upon, and shall incur no liability or responsibility to the Company or to any
Holder of any Warrant for, any action taken in reliance on any Warrant,
certificate of shares, notice, resolution, waiver, consent, order, certificate,
or other paper of the Company, document or instrument (whether in its original
or facsimile form) believed by it in good faith to be genuine and to have been
signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent such compensation
as shall be agreed upon from time to time for all services rendered by the
Warrant Agent in the execution of this Agreement, to reimburse the Warrant Agent
for all expenses, taxes, duties and governmental charges and other charges of
any kind and nature reasonably incurred by the Warrant Agent in the execution of
this Agreement and to indemnify the Warrant Agent and save it harmless against
any and all liabilities, claims, damages, losses and expenses (including taxes
other than taxes based on the income of the Warrant Agent and judgments,
reasonable costs and counsel fees and expenses), for anything done or omitted by
the Warrant Agent in the execution of this Agreement or arising out of or in
connection with its performance of its obligations or duties under this
Agreement, except to the extent such liabilities are attributable to the Warrant
Agent's negligence, bad faith or willful misconduct. The Warrant Agent shall
notify the Company promptly of any claim for which it may seek indemnity;
provided that the failure by the Warrant Agent to so notify the Company shall
not relieve its obligations hereunder. The Company shall defend any such claim
and the Warrant Agent shall cooperate in the defense. The Warrant Agent may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel only if counsel for the Company has interests which conflict with
those of the Warrant Agent and, if so, counsel selected by the Warrant Agent
must be reasonably satisfactory to the Trust. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Holders of Warrants shall furnish the
Warrant Agent with security and indemnity reasonably satisfactory to it for any
costs and expenses which may be incurred, but this provision shall not affect
the power of the Warrant Agent to take such action as is necessary, whether with
or without any such security or indemnity. All rights of action under this
Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrant Certificates or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent and any recovery of judgment shall be for the ratable benefit
of the Holders of the Warrants, as their respective rights or interests may
appear.
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(g) Nothing in this Agreement shall prevent the Warrant Agent, or
any stockholder, director, officer or employee of the Warrant Agent, from
buying, selling or dealing in any of the Warrants or other securities of the
Company or becoming pecuniarily interested in any transaction in which the
Company may be interested, or contracting with or lending money to the Company
or otherwise act as fully and freely as though it were not Warrant Agent under
this Agreement. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own negligence, bad faith
or willful misconduct.
(i) The Warrant Agent shall not be accountable with respect to
whether any Warrant Shares or other stock or property issuable upon exercise of
the Warrants will, when issued, be validly issued and fully paid and
nonassessable and makes no representation with respect thereto.
(j) The Warrant Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Warrant
Agent.
(k) The Warrant Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Warrant Agent and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Warrant Agent, the Warrant Agent shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(l) The Warrant Agent shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Agreement.
(m) The Warrant Agent shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority of the number of the then outstanding
Warrants (excluding Warrants held by the Company or any of its Affiliates)
relating to the time, method and place of conducting any proceeding for any
remedy available to the Warrant Agent, or exercising any trust or power
conferred upon the Warrant Agent, under this Agreement with respect to the
Warrants.
(n) No provision of this Agreement shall require the Warrant Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(o) The Warrant Agent shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice,
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request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document.
(p) The Warrant Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.
(q) The Warrant Agent shall not be deemed to have notice of any
default under this Agreement unless a Responsible Officer of the Warrant Agent
has actual knowledge thereof or unless written notice of any event which is in
fact such a default is received by the Warrant Agent at the office of the
Warrant Agent.
(r) The rights, privileges, protections, immunities and benefits
given to the Warrant Agent, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Warrant Agent in
each of its capacities hereunder.
(s) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Warrant Agent shall be subject to the provisions of
this Section.
SECTION 17. Resignation and Removal of Warrant Agent; Appointment of
Successor. No resignation or removal of the Warrant Agent and no appointment of
a successor Warrant Agent shall become effective until the acceptance of
appointment by the successor Warrant Agent as provided herein. The Warrant Agent
may resign its duties and be discharged from all further duties and liability
hereunder (except liability arising as a result of the Warrant Agent's own
negligence, bad faith or willful misconduct) after giving written notice to the
Company. The Company may remove the Warrant Agent upon written notice, and the
Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall,
at the Company's expense, cause to be mailed (by first class mail, postage
prepaid) to each Holder of a Warrant at his last address as shown on the
register maintained by the Warrant Registrar a copy of said notice of
resignation or notice of removal, as the case may be. Upon such resignation or
removal, the Company shall appoint in writing a new Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 calendar days
after it has been notified in writing of such resignation by the resigning
Warrant Agent or after such removal, then the resigning Warrant Agent or the
Holder of any Warrant may at the expense of the Company apply to any court of
competent jurisdiction for the appointment of a new Warrant Agent. Any new
Warrant Agent, whether appointed by the Company or by such a court, shall be a
corporation or other association doing business under the laws of the United
States or any state thereof, in good standing and having a combined capital and
surplus of not less than $50,000,000. The combined capital and surplus of any
new Warrant Agent shall be deemed to be the combined capital and surplus as set
forth in the most recent annual report of its condition published prior to its
appointment, provided that such reports are published at least annually pursuant
to law or to the requirements of a federal or state supervising or examining
authority. After acceptance in writing of such appointment by the new Warrant
Agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been named herein as the original Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of
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<PAGE> 31
the Company and shall be legally and validly executed and delivered by the
resigning or removed Warrant Agent. Not later than the effective date of any
such appointment, the Company shall give notice thereof to the resigning or
removed Warrant Agent. Failure to give any notice provided for in this Section,
however, or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new Warrant Agent, as
the case may be.
SECTION 18. Reports. So long as any of the Warrants remain
outstanding, but only to the extent the Company is required to send such
documents to the holders of its outstanding Common Stock, whether or not
required by the rules and regulations of the Commission, the Company shall
furnish to the Holders of the Warrants (and to the beneficial owners therein,
upon request): (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants; and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request.
The Company shall provide the Warrant Agent with a sufficient number
of copies of all reports filed with the Commission pursuant to the immediately
preceding paragraph that the Warrant Agent may be required to deliver to the
Holders of the Warrants under this Section.
SECTION 19. Notices. Any notice or demand authorized by this
Agreement to be given or made by the Warrant Agent or by the Holder of any
Warrant to or on the Company shall be sufficiently given or made when and if
deposited in the mail, first class or registered, postage prepaid, addressed
(until another address is filed in writing by the Company with the Warrant
Agent), as follows:
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
Telephone No: (302) 594-5000
Telecopier No.: (302) 594-5210
Attention: Israel J. Floyd, Esq.
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or
by the Holder of any Warrant to the Warrant Agent shall be sufficiently given
when and if deposited in
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the mail, first-class or registered, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) to the
Warrant Agent as follows:
The Chase Manhattan Bank
c/o Chase Manhattan Trust Company, N.A.
One Liberty Place, 52nd Floor
1650 Market Street
Philadelphia, Pennsylvania 19103
Telecopier No.: (215) 972-8372
Attention: Capital Markets Fiduciary Services
Any notice pursuant to this Agreement to Holders of the Warrants by
the Company or the Warrant Agent shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to each such Holder, at the address appearing in the register
maintained by the Warrant Registrar, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice.
If by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification to Holders as shall be made with the
approval of the Warrant Agent shall constitute a sufficient notification to such
Holders for ever purpose hereunder.
SECTION 20. Supplements and Amendments. The Company and the Warrant
Agent may from time to time amend or supplement this Agreement without the
approval of any Holder of Warrants in order to cure any ambiguity or to cure,
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
materially adversely affect the interests of any Holder of Warrants. The Company
and the Warrant Agent may amend or supplement this Agreement or the Warrants
with the consent of Holders of a majority of the number of the then outstanding
Warrants (excluding Warrants held by the Company or any of its Affiliates).
However, the consent of each Holder of a Warrant shall be required for any
amendment or supplement pursuant to which (i) the Exercise Price Per Share would
be increased, except as otherwise explicitly specified in this Agreement, (ii)
the number of Warrant Shares issuable upon exercise of Warrants would be
decreased, except as otherwise explicitly specified in this Agreement, (iii) the
Expiration Date would be accelerated, except as otherwise explicitly specified
in this Agreement, (iv) the rights of any Holder would be materially and
adversely affected or (v) the percentage of the number of then outstanding
Warrants the consent of whose Holders of which is required for amendments or
supplements would be reduced. The Warrant Agent shall be entitled to receive
and, subject to Section 16, shall be fully protected in relying upon, an
officers' certificate and opinion of counsel as conclusive evidence that any
such amendment or supplement is authorized or permitted
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<PAGE> 33
hereunder, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms.
SECTION 21. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 22. Termination. This Agreement shall terminate at 5:00
p.m., New York City time, on the Expiration Date.
SECTION 23. Governing Law. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO CONFLICTS OF
LAW PRINCIPLES.
SECTION 24. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Warrant
Agent and the Holders of Warrants any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Warrant Agent and the Holders of Warrants.
SECTION 25. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
HERCULES INCORPORATED
By: /s/ GEORGE MACKENZIE
---------------------------------------
Name: George MacKenzie
Title: Senior Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Warrant Agent
By: /s/ JOSEPH C. PROGAR
------------------------------------------
Authorized Signature
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EXHIBIT A
[Form of Warrant Certificate]
[Face]
No. W-001 Up to 350,000 Warrants
CUSIP No. 427098116
Warrant Certificate
Hercules Incorporated
This Warrant Certificate certifies that Cede & Co., or its
registered assigns, is the registered holder of up to 350,000 warrants as
reflected in the Schedule of Exchanges of Interests of Global Warrant attached
hereto (the "Warrants") expiring March 31, 2029 (the "Expiration Date"),
subject to adjustment as described in the Warrant Agreement, dated as of July
27, 1999 (the "Warrant Agreement"), between Hercules Incorporated, a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, as Warrant Agent
(the "Warrant Agent"), to purchase common stock, without par value ($25/48
stated value) (the "Common Stock"), of the Company. Each Warrant entitles the
registered holder, upon exercise at any time (or from time to time) prior to
5:00 p.m., New York City time, on any Business Day (as defined in the Warrant
Agreement) on or prior to the Expiration Date, to purchase from the Company
23.4192 fully paid and nonassessable shares of Common Stock (the "Warrant
Shares") at the initial exercise price of $1,000 (the "Warrant Exercise Price")
(equal to $42.70 per share (the "Exercise Price Per Share")), subject to
adjustment as described in the Warrant Agreement, payable upon surrender of
this Warrant Certificate and payment of the Warrant Exercise Price at the
office or agency of the Warrant Agent, but only subject to the conditions set
forth herein and in the Warrant Agreement. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
No Warrant may be exercised after the Expiration Date and, to the
extent not exercised prior to 5:00 p.m., New York City time, on the Expiration
Date, such Warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent.
This Warrant Certificate shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
A-1
<PAGE> 36
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be signed by its duly authorized representative by a manual or facsimile
signature.
Dated: July 27, 1999 HERCULES INCORPORATED
- --------------------
By: __________________________________
Name:
Title:
Countersigned:
THE CHASE MANHATTAN BANK,
as Warrant Agent
By: __________________________
Authorized Signature
Dated: July 27, 1999
----------------
A-2
<PAGE> 37
[Reverse]
THIS WARRANT CERTIFICATE IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS
WARRANT CERTIFICATE IS EXCHANGEABLE FOR WARRANTS REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN SUCH WARRANT AGREEMENT, AND NO TRANSFER OF THIS
WARRANT CERTIFICATE (OTHER THAN A TRANSFER OF THIS WARRANT CERTIFICATE AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TO HERCULES INCORPORATED OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY WARRANT CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
The Warrant Agreement is hereby incorporated by reference in and made a
part of this Warrant Certificate and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immunities thereunder
of the Warrant Agent, the Company and the Holders of the Warrants. A copy of the
Warrant Agreement may be obtained by the Holder hereof upon written request to
the Company or the Warrant Agent.
The Holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Warrant Exercise Price at the office of the Warrant Agent, all in
accordance with the Warrant Agreement. In the event that upon any exercise of
Warrants evidenced by this Warrant Certificate the number of Warrants exercised
shall be less than the total number of Warrants evidenced by this Warrant
Certificate, there shall be issued to the Holder hereof or its assignee a new
Warrant Certificate evidencing the number of Warrants not exercised.
A-3
<PAGE> 38
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Any Warrant)
The undersigned hereby irrevocably elects to exercise ____________
Warrants, represented by this Warrant Certificate, to purchase __________ shares
of Common Stock and herewith tenders payment for such shares to the order of
Hercules Incorporated in the amount of $_____ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares be
registered in the name of _____________________________, whose address is
_____________________________, and that such shares be delivered to
_____________________________, whose address is _____________________________.
If said number of shares is less than all of the shares of Common Stock issuable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
_____________________________, whose address is _____________________________,
and that such Warrant Certificate be delivered to _____________ whose address is
_____________________________.
______________________________________
Signature
Date:
______________________________________
Signature Guaranteed
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Warrant Registrar, which
requirements include membership or
participation in the Security Transfer
Agent Medallion Program ("STAMP") or
such other "signature guarantee program"
as may be determined by the Warrant
Registrar in addition to, or in
substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934,
as amended.
A-4
<PAGE> 39
SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANT
Unless otherwise specified below, the Warrants represented by this Global
Warrant shall have a zero balance.
The following exchanges of a part of this Global Warrant have been made:
<TABLE>
<CAPTION>
Amount of Number of
increase in Warrants in this Signature of
Number of Global Warrant authorized
Date of Warrants in this following such signatory of
Exchange Global Warrant increase Warrant Agent
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
A-5
<PAGE> 1
EXHIBIT 8.1
July 27, 1999
Hercules Incorporated
Hercules Trust II
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
RE: TRUST II PREFERRED SECURITIES OF HERCULES TRUST II
Ladies and Gentlemen:
We have acted as special tax counsel for Hercules Incorporated, a Delaware
corporation (the "Company"), and Hercules Trust II, 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 July 21, 1999 among the
Company, the Trust and the underwriters (the "Underwriters") named therein (the
"Underwriting Agreement") of 350,000 CRESTS Units consisting of one preferred
security and one Warrant (the "Warrants") to purchase shares of Hercules common
stock (the "Preferred Securities"). The Preferred Securities represent 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 July 27,
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 10,825 Common Securities (liquidation amount $1,000 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 initial
principal amount of $267,537,304.50
<PAGE> 2
Series A Junior Subordinated Deferrable Interest Debentures (the "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 July 27, 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 Debentures are to be issued pursuant to the
junior subordinated debentures indenture, dated as of March 17, 1999 and the
First Supplemental Indenture, dated as of July 27, 1999 (as so supplemented,
the "Indenture"), between the Company and the Chase Manhattan Bank, as
indenture trustee (the "Indenture Trustee"). The Units are to be issued
pursuant to a Unit Agreement, dated July 27, 1999, between the Company and The
Chase Manhattan Bank. The Warrants are to be issued pursuant to a Warrant
Agreement, dated July 27, 1999, between the Company and The Chase Manhattan
Bank.
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 July 21, 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 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; (x) the Unit Agreement; (xi) the form of the Unit; (xii)
the Warrant Agreement; (xiii) the form of the Warrant; and (xiv) representations
from an officer of the Company dated July 21, 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 later documents. In making our examination
of documents executed, or to be executed by parties other than the Company or
the
<PAGE> 3
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 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 conferences with
officers and other representatives of the Company, representatives of the
independent public accountants and others at which the content of the
Prospectus Supplement and related matters were reviewed and discussed. 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 statement and representations made by
the Company and the Trust.
In rendering out 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 our 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, 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 U.S. 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
CRESTS Units, the Preferred Securities and the Warrants, in our opinion such
discussions constitutes, in all material respects, a fair and accurate summary
of the United States federal income tax consequences, to the holders who
purchase the CRESTS Units at their original issuance, of the purchase,
ownership, and disposition of the CRESTS Units, Preferred Securities and
Warrants.
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 Debentures, the CRESTS Units, the Preferred Securities, the
Common Securities, the Warrants or any transactions related to or contemplated
by such issuance.
<PAGE> 4
We are furnishing this opinion to you solely for your benefit in
connection with the sale of the CRESTS Units 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 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 Current
Report on Form 8-K of the Company dated July 27, 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.
Very truly yours,
