1
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").
2
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
2
3
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:
3
4
(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
4
5
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
5
6
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
6
7
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.
7
8
(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
8
9
(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,
9
10
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
10
11
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
11
12
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
12
13
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;
13
14
(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
14
15
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
15
16
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
16
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
17
18
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
18
19
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
19
20
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
20
21
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
21
22
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
22
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
23
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
24
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
25
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.
26
27
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.
27
28
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
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
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
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
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
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
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
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
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
A-1
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
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
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
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
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
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
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
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
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
46
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.
B-4
47
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.
B-5
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
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
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
C-1
51
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
C-2
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
C-3
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.
C-4
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
C-5
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
C-6
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
C-7
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