As filed with the Securities and Exchange Commission on July 29,
1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
____________________
FORM S-3
____________________
REGISTRATION STATEMENT
Under
The Securities Act of 1933
____________________
SOVEREIGN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2453088
(State or other jurisdiction (I.R.S. employer
of Incorporation) identification no.)
1130 Berkshire Boulevard Jay S. Sidhu, President
Wyomissing, Pennsylvania 19610 and Chief Executive Officer
(610) 320-8400 1130 Berkshire Boulevard
(Address, including zip code, Wyomissing, Pennsylvania 19610
and telephone number, including (610)320-8400
area code, of Registrant's (Name, address, including
executive principal offices) zip code, and telephone
number, including area code,
of agent for service)
____________________
Copy to:
Joseph M. Harenza, Esquire
Stevens & Lee
111 North Sixth Street
Reading, PA 19601
(610) 478-2160
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration
Statement, as determined by market conditions and other factors.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. [ ]
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, please check the following box. [x]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[ ] ________________.
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ] ____________.
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [x]
___________________
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of each class of Proposed maximum Proposed maximum Amount of
securities to be Amount to be offering price aggregate registration
registered (1) registered per unit offering price fee
<S> <C> <C> <C> <C>
Debt Securities, Debt
Warrants, Preferred Stock,
Preferred Stock Warrants,
Common Stock Warrants, and
Common Stock, no par value
(2) $200,000,000
(4)
(3) (3) (5) $68,966(7)
Capital Securities (6) (5) (5) None
<FN>
(1) This Registration Statement also covers contracts which may
be issued by the Registrant under which the counterparty may
be required to purchase Common Stock, Debt Securities, or
Preferred Stock. Such contracts would be issued with the
Common Stock, Debt Securities, Preferred Stock and/or
Securities Warrants. In addition, any other securities
registered hereunder may be sold separately or as units with
other securities registered hereunder.
(2) Associated with the Common Stock are Stock Purchase Rights
that will not be exercisable or evidenced separately from
the Common Stock prior to the occurrence of certain events.
(3) Omitted pursuant to General Instruction II.D of Form S-3
under the Securities Act of 1933.
(4) Or the equivalent thereof in one or more foreign currencies
or composite currencies, including European Currency Units.
(5) No separate consideration will be received (i) for Common
Stock or Preferred Stock that is issued upon conversion of
Debt Securities or Preferred Stock or (ii) for Capital
Securities that are issued in exchange for or upon
conversion of the Debt Securities or upon conversion of
Preferred Stock.
(6) Such amount of Capital Securities (as described on pages __-
__ herein), which may consist of Common Stock, Perpetual
Preferred Stock (as defined on page __ herein) or other
securities as may be issued in exchange for, or upon
conversion of, the Debt Securities or upon conversion of
Preferred Stock issued under this Registration Statement.
(7) Determined pursuant to Rule 457(o). In no event will the
aggregate initial offering price (excluding accrued interest
or dividend) of Common Stock, Debt Securities, Preferred
Stock and/or Securities Warrants issued under this
Registration Statement exceed $200,000,000.
</TABLE> ___________________
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
Subject to Completion, Dated July __, 1996
Prospectus
SOVEREIGN BANCORP, INC.
Common Stock and Common Stock Warrants
Debt Securities and Debt Warrants
Preferred Shares and Preferred Share Warrants
Sovereign Bancorp, Inc. (the "Corporation" or "Sovereign")
may from time to time offer (i) shares of its Common Stock, no
par value (the "Common Stock"), (ii) in one or more series its
unsecured debt securities, which may be either senior (the
"Senior Securities") or subordinated (the "Subordinated
Securities", the Senior Securities and the Subordinated
Securities being referred to collectively as the "Debt
Securities"), (iii) warrants to purchase the Debt Securities
("Debt Warrants"), (iv) shares of preferred stock (the "Preferred
Shares") (v) warrants to purchase the Preferred Shares
("Preferred Share Warrants"), and (iv) warrants to purchase
Common Stock ("Common Stock Warrants," the Debt Warrants,
Preferred Share Warrants and Common Stock Warrants being referred
to collectively as the "Securities Warrants") with an aggregate
initial public offering price (including the exercise price of
any Securities Warrants) of up to $200,000,000 or the equivalent
thereof in one or more foreign currencies or composite
currencies, including European Currency Units ("ECU"), on terms
to be determined at the time of sale.
The Common Stock, Debt Securities, Preferred Shares and
Securities Warrants (collectively, the "Offered Securities") may
be offered separately or together in units, in separate series,
in amounts, at prices, and on terms and conditions to be set
forth in a supplement to this Prospectus (a "Prospectus
Supplement").
The Senior Securities will rank equally with all other
unsubordinated and unsecured indebtedness of the Corporation.
The Subordinated Securities will be subordinated to all existing
and future Senior Debt of the Corporation, as defined. See
"Description of Debt Securities."
The Securities Warrants may be issued independently or
together with Common Stock, Debt Securities, or Preferred Shares
offered by any Prospectus Supplement and may be attached to or
separate from such Common Stock, Debt Securities, or Preferred
Shares.
The specific terms of the Offered Securities in respect of
which this Prospectus is being delivered, such as, where
applicable, (i) in the case of Debt Securities, the specific
designation, original issue discount or premium, aggregate
principal amount, currency, denominations, maturity, rate and
time of payment of interest, terms for redemption at the option
of the Corporation or repayment at the option of the holder and
the redemption premium (if any), terms for sinking fund payments,
terms for conversion into Common Stock or Preferred Shares or
exchange into capital securities and the initial public offering
price; (ii) in the case of Preferred Shares, the specific title
and stated value, any dividend, liquidation, redemption,
conversion, exchange, voting and other rights, and the initial
public offering price; and (iii) in the case of Securities
Warrants, where applicable, the duration, offering price,
exercise price and detachability.
Each of the Offered Securities may be issued separately or
together with Securities Warrants as a unit (a "Unit"). If any
of the Offered Securities are issued as a Unit, the Prospectus
Supplement relating thereto will describe the specific terms
relating to such Unit including, where applicable: (i) if the
Securities Warrant will be detachable from the accompanying
Offered Security and when, if ever, such Securities Warrant may
be separately transferred; (ii) the allocation of the public
offering price between the Securities Warrant and the
accompanying Offered Security; (iii) the qualification of the
Units and its composite Offered Securities for trading on any
securities exchange or automated dealers' quotation reporting
system, and (iv) any United States federal income tax
considerations relating to the Unit and the Offered Securities
comprising the Unit.
The Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities
exchange of, the Offered Securities covered by the Prospectus
Supplement.
The Offered Securities may be offered directly by the
Corporation to purchasers, through agents designated from time to
time, or to or through underwriters or dealers. If any agents or
underwriters are involved in the sale of any of the Offered
Securities, their names, and any applicable fee, commission,
purchase price or discount arrangements with them will be set
forth, or will be calculable from the information set forth, in
the Prospectus Supplement. The Corporation may also issue
contracts under which the counterparty may be required to
purchase Common Stock, Debt Securities, or Preferred Stock. Such
contracts would be issued with the Common Stock, Debt Securities,
Preferred Stock, and/or Securities Warrants in amounts, at prices
and on terms to be set forth in a Prospectus Supplement. See
"Plan of Distribution."
Except for the Common Stock and any 6-1/4% Cumulative
Convertible Preferred Stock, Series B that may be offered hereby,
the Offered Securities are a new issue of securities with no
established trading market. In the event that Offered Securities
of a series offered hereby are not listed on a national
securities exchange, certain broker-dealers may make a market in
the Offered Securities, but will not be obligated to do so and
may discontinue any market making any time without notice. No
assurance can be given that any broker-dealer will make a market
in the Offered Securities of any series or as to the liquidity of
the trading market for the Offered Securities. Any such market
making may be discontinued at any time.
____________________
The Offered Securities are not savings accounts, deposits or
other obligations of any bank or nonbank subsidiary of the
Corporation and are not insured by the Federal Deposit Insurance
Corporation, Bank Insurance Fund, Savings Association Insurance
Fund, or any other government agency.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
____________________
This Prospectus may not be used to consummate sales of Offered
Securities unless accompanied by a Prospectus Supplement.
____________________
The date of this Prospectus is July __, 1996.
<PAGE>
No dealer, salesman or other person has been authorized to
give any information or to make any representation not contained
or incorporated by reference in this Prospectus or any Prospectus
Supplement and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Corporation, or any underwriter or agent. This Prospectus
and any Prospectus Supplement do not constitute an offer to sell
or a solicitation of an offer to buy any Offered Securities in
any jurisdiction to any person to whom it is unlawful to make
such offer in such jurisdiction. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sale made
hereunder and thereunder shall, under any circumstances, create
any implication that the information contained or incorporated by
reference herein or therein is correct as of any time subsequent
to the date of such information or that there has been no change
in the affairs of the Corporation since such date.
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files proxy statements,
reports and other information with the Securities and Exchange
Commission (the "Commission"). This filed material can be
inspected and copied at the Commission's office at 450 Fifth
Street, N.W., Washington, D.C. 20549 and the Commission's
Regional Offices in New York (7 World Trade Center, Suite 1300, ,
New York, New York 10048) and Chicago (500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511) and copies of such
materials can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission
by the Corporation are incorporated in this Prospectus by
reference and made a part hereof:
(1) The Corporation's Annual Report on Form 10-K for the
year ended December 31, 1995.
(2) The Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996.
(3) The Corporation's Current Reports on Form 8-K filed
January 22, 1996, February 6, 1996, February 16, 1996, June 3,
1996, and July 29, 1996.
(4) The Corporation's Registration Statement on Form 8-A,
dated October 12, 1989, as amended on Form 8-A/A, dated
January 8, 1996, pursuant to which the Corporation registered
certain stock purchase rights under the Exchange Act.
(5) The Corporation's Registration Statement on Form 8-A,
dated May 16, 1995, pursuant to which the Corporation registered
its 6-1/4% Cumulative Convertible Preferred Stock, Series B under
the Exchange Act.
Financial and other information included in the reports
incorporated by reference herein do not reflect stock splits or
dividends declared subsequent to the respective dates of such
reports.
Each document or report subsequently filed by the
Corporation with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the termination of the offering of the Offered
Securities shall be deemed to be incorporated by reference into
this Prospectus and to be a part of this Prospectus from the date
of filing of such document. Any statement contained herein, or
in the document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to
be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement
or this Prospectus.
The Corporation will provide without charge to any person to
whom this Prospectus is delivered, on the written or oral request
of such person, a copy of any or all of the foregoing documents
incorporated by reference, other than certain exhibits to such
documents. Written requests should be directed to Sovereign
Bancorp, Inc., P.O. Box 12646, Reading, Pennsylvania 19612;
Attention: Investor Relations Officer (telephone: 610 320-8400).
SOVEREIGN BANCORP, INC.
Sovereign Bancorp, Inc. ("Sovereign" or the "Corporation")
is a Pennsylvania multi-thrift holding corporation headquartered
in a suburb of Reading, Pennsylvania. Sovereign's subsidiaries
consist of Sovereign Bank, a Federal Savings Bank ("Sovereign
Bank"), Sovereign Community Bank ("Community Bank") and Sovereign
Investment Corporation. At June 30, 1996, Sovereign and its
subsidiaries had total consolidated assets, deposits, and
shareholders' equity of $9.2 billion, $5.0 billion and
$461 million, respectively. Based on total assets at June 30,
1996, Sovereign is the largest thrift holding corporation and
fourth largest financial institution headquartered in
Pennsylvania. (Sovereign Bank and Community Bank are
collectively referred to herein as the "Banks.")
Sovereign's primary business consists of attracting deposits
from its network of 122 community banking offices, located in
Pennsylvania, New Jersey and Delaware, and originating
residential mortgage loans and home equity lines of credit in
those communities. The Banks originate mortgage loans through
their community banking offices, commissioned employees who
conduct business out of loan production offices, and a network of
independent mortgage bankers and brokers. Substantially all loan
underwriting is performed by the Banks.
Sovereign's operating strategy emphasizes consistent
profitability and growth. Accordingly, Sovereign seeks to
(1) maintain superior asset quality through emphasis on the
origination of single family mortgage loans; (2) limit interest
rate risk through the origination of adjustable rate mortgages
for retention in its portfolio; (3) maintain low overhead expense
and high employee productivity; and (4) encourage a strong sales
and service culture. In addition, Sovereign intends, over the
course of the next 5 years, to increase the size of its
commercial loan portfolio and consumer loan portfolio to
approximately 10% and 25%, respectively, of Sovereign's total
loan portfolio. In its effort to increase the size of the
commercial loan and consumer loan portfolios, Sovereign will
endeavor to maintain its emphasis on superior asset quality, low
interest rate risk, low overhead expense and strong sales and
service culture.
Sovereign operates in a heavily regulated environment.
Changes in laws and regulations affecting it and its subsidiaries
may have an impact on its operations. See "Supervision and
Regulation."
The principal executive offices of Sovereign are located at
1130 Berkshire Boulevard, Wyomissing, Pennsylvania 19610,
telephone (610) 320-8400.
Holding Company Structure
Sovereign is a legal entity separate and distinct from its
subsidiaries. Accordingly, the right of Sovereign, and
consequently the right of creditors of Sovereign, to participate
in any distribution of the assets or earnings of any subsidiary
is necessarily subject to the prior claims of creditors of the
subsidiary, except to the extent that claims of Sovereign in its
capacity as a creditor may be recognized. The principal source
of Sovereign's revenue and cash flow is dividends from its
subsidiaries. See "Supervision and Regulation -- Restrictions on
Capital Distributions" for a discussion of regulatory and other
restrictions on the ability of the subsidiaries to pay dividends
to Sovereign.
SUPERVISION AND REGULATION
General
Sovereign is a "savings and loan holding company" registered
with the Office of Thrift Supervision (the "OTS") under the Home
Owners' Loan Act (the "HOLA") and, as such, Sovereign is subject
to OTS regulations, examinations, supervision and reporting. The
Banks are subject to examination and comprehensive regulation by
the OTS. The deposits of Sovereign Bank are insured by the
Savings Association Insurance Fund (the "SAIF") of the Federal
Deposit Insurance Corporation (the "FDIC"). The deposits of
Community Bank are insured by the Bank Insurance Fund (the "BIF")
of the FDIC, and the Banks are subject to FDIC regulation. The
Banks are members of the Federal Home Loan Bank (the "FHLB")
system. The Banks are also subject to regulation by the Board of
Governors of the Federal Reserve System with respect to reserves
maintained against deposits and certain other matters.
Sovereign
The HOLA prohibits a registered savings and loan holding
company from directly or indirectly acquiring control, including
through an acquisition by merger, consolidation or purchase of
assets, of any savings association (as defined to include a
federal savings bank) or any other savings and loan holding
company, without prior OTS approval. Generally, a savings and
loan holding company may not acquire more than 5% of the voting
shares of any savings association unless by merger, consolidation
or purchase of assets. Certain regulations of the OTS describe
standards for control under the HOLA (see "Control of
Sovereign").
Federal law empowers the Director of OTS to take substantive
action when it determines that there is reasonable cause to
believe that the continuation by a savings and loan holding
company of any particular activity constitutes a serious risk to
the financial safety, soundness, or stability of a savings and
loan holding company's subsidiary savings institution. The
Director of OTS has oversight authority for all holding company
affiliates, not just the insured institution. Specifically, the
Director of OTS may, as necessary, (i) limit the payment of
dividends by the savings institution; (ii) limit transactions
between the savings institution, the holding company and the
subsidiaries or affiliates of either; or (iii) limit any
activities of the savings institution that might create a serious
risk that the liabilities of the holding company and its
affiliates may be imposed on the savings institution. Any such
limits would be issued in the form of a directive having the
legal efficacy of a cease and desist order.
Control of Sovereign
Under the Savings and Loan Holding Company Act and the
related Change in Bank Control Act (the "Control Act"),
individuals, corporations or other entities acquiring shares of
Sovereign's common stock may, alone or "in concert" with other
investors, be deemed to control Sovereign and thereby the Banks.
If deemed to control Sovereign, such person or group will be
required to obtain OTS approval to acquire shares of Sovereign's
common stock and will be subject to certain ongoing reporting
procedures and restrictions under federal law and regulations.
Under the regulations, ownership of 25% of the capital stock of
Sovereign will be deemed to constitute "control," and ownership
of more than 10% of the capital stock may also be deemed to
constitute "control" if certain other control factors are
present. It is possible that even lower levels of ownership of
such securities could constitute "control" under the regulations.
Sovereign Bank and Community Bank
The Banks are members of the FHLB system and are required to
file reports with the OTS describing their activities and
financial condition and are periodically examined to test
compliance with various regulatory requirements. The Banks are
also subject to examination by the FDIC. Such examinations are
conducted with the purpose of protecting depositors and the
insurance fund and not with the purpose of protecting holders of
equity or debt securities of Sovereign, Sovereign Bank, or
Community Bank.
Regulatory Capital Requirements
OTS regulations require savings associations to maintain a
minimum tangible capital ratio of not less than 1.5%, a minimum
core capital, or "leverage", ratio of not less than 3% of
tangible assets and 4% of risk-adjusted assets, and a minimum
risk-based capital ratio (based upon credit risk) of not less
than 8%. These standards are the same as the capital standards
that are applicable to other insured depositary institutions,
such as banks. Regulations adopted by the OTS require a minimum
leverage capital requirement of 3% for associations rated
composite 1 under the OTS MACRO rating system. For all other
savings associations, the minimum leverage capital requirement is
3% plus at least an additional 100 to 200 basis points.
In August, 1995, the federal banking agencies, including the
OTS, issued a rule modifying their then-existing risk-based
capital standards to provide for consideration of interest rate
risk when assessing the capital adequacy of an institution. The
new rule does not establish a measurement framework for assessing
an institution's interest rate risk exposure level. Examiners
will use data collected by the banking agencies to determine the
adequacy of an individual institution's capital in light of
interest rate risk. Examiners will also consider historical
financial performance, earnings exposure to interest rate
movements and the adequacy of internal interest rate risk
management, among other things.
The federal banking agencies, including the OTS, also
adopted final rules relating to concentration of credit risk and
risks of non-traditional activities effective on January 17,
1995. The agencies declined to adopt a quantitative test for
concentrations of credit risk and, instead, provided that such
risk would be considered in addition to other risks in assessing
an institution's overall capital adequacy. Institutions with
higher concentration of credit risk will be required to maintain
greater levels of capital. Similarly, the federal agencies
incorporated the evaluation of the risks of non-traditional
activities into the overall assessment of capital adequacy. The
agencies also indicated that proposed rules regarding specific
types of non-traditional activities will be promulgated from time
to time.
Under the Federal Deposit Insurance Act ("FDIA") insured
depository institutions must be classified in one of five defined
categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized). Under OTS regulations, an institution will be
considered "well capitalized" if it has (i) a total risk-based
capital ratio of 10% or greater, (ii) a Tier 1 risk-based capital
ratio of 6% or greater, (iii) a leverage ratio of 5% or greater
and (iv) is not subject to any order or written directive to meet
and maintain a specific capital level. An "adequately
capitalized" institution is one that has (i) a total risk-based
capital ratio of 8% or greater, (ii) a Tier 1 risk-based capital
ratio of 4% or greater, (iii) a leverage ratio of 4% or greater
(or 3% or greater in the case of a bank with the highest
composite regulatory examination rating) and (iv) does not meet
the definition of a well capitalized institution. An institution
will be considered (A) "undercapitalized" if it has (i) a total
risk-based capital ratio of less than 8%, (ii) a Tier 1 risk-
based capital ratio of less than 4% or (iii) a leverage ratio of
less than 4% (or 3% in the case of an institution with the
highest regulatory examination rating); (B) "significantly
undercapitalized" if the institution has (i) a total risk-based
capital ratio of less than 6%, (ii) a Tier 1 risk-based capital
ratio of less than 3% or (iii) a leverage ratio of less than 3%;
and (C) "critically undercapitalized" if the institution has a
ratio of tangible equity to total assets of equal to or less than
2%. The OTS may, under certain circumstances, reclassify a "well
capitalized" institution as "adequately capitalized" or require
an "adequately capitalized" or "undercapitalized" institution to
comply with supervisory actions as if it were in the next lower
category. Such a reclassification could be made if the OTS
determines that the institution is in an unsafe or unsound
condition (which could include unsatisfactory examination
ratings). A savings institution's capital category is determined
with respect to its most recent thrift financial report filed
with the OTS. In the event an institution's capital deteriorates
to the undercapitalized category or below, the FDIA and OTS
regulations prescribe an increasing amount of regulatory
intervention, including the adoption by the institution of a
capital restoration plan, a guarantee of the plan by its parent
holding company and the placement of a hold on increases in
assets, number of branches and lines of business.
If capital has reached the significantly or critically
undercapitalized levels, further material restrictions can be
imposed, including restrictions on interest payable on accounts,
dismissal of management and (in critically undercapitalized
situations) appointment of a receiver or conservator. Critically
undercapitalized institutions generally may not, beginning 60
days after becoming critically undercapitalized, make any payment
of principal or interest on their subordinated debt. All but
well capitalized institutions are prohibited from accepting
brokered deposits without prior regulatory approval. Pursuant to
the FDIA and OTS regulations, savings associations which are not
categorized as well capitalized or adequately capitalized are
restricted from making capital distributions which include cash
dividends, stock redemptions or repurchases, cash-out mergers,
interest payments on certain convertible debt and other
transactions charged to the capital account of a savings
association. At March 31, 1996, Sovereign Bank and Community
Bank each met the criteria to be classified as "well
capitalized."
Standards for Safety and Soundness.
The federal banking agencies adopted, effective in August
1995, certain operational and managerial standards for depository
institutions, including internal audit system components, loan
documentation requirements, asset growth parameters, and
compensation standards for officers, directors and employees.
Sovereign does not anticipate that the implementation or
enforcement of these guidelines will have a material adverse
effect on its results of operations.
Restrictions on Capital Distributions
OTS regulations govern capital distributions by savings
associations, which include cash dividends, stock redemptions or
repurchases, cash-out mergers, interest payments on certain
convertible debt and other transactions charged to the capital
account of a savings association. Generally, the regulation
creates a safe harbor for specified levels of capital
distributions from associations meeting at least their minimum
capital requirements, so long as such associations notify the OTS
and receive no objection to the distribution from the OTS.
Associations that do not qualify for the safe harbor are required
to obtain prior OTS approval before making any capital
distributions.
The OTS rule generally provides for three tiers of savings
associations: (i) Tier 1 associations, associations that have
capital ("total capital" as calculated under the OTS capital
regulations) equal to or greater than their capital requirements
prior to, and on a pro forma basis after giving effect to, a
proposed capital distribution; (ii) Tier 2 associations,
associations that have capital equal to or greater than their
minimum capital requirements, but less than their Tier 1 capital
requirements prior to, and on a pro forma basis after giving
effect to, a proposed capital distribution; and (iii) Tier 3
associations, associations that do not meet their minimum capital
requirements, either before or after giving effect to a proposed
capital distribution. Under the OTS capital distributions rule,
a Tier 1 association may make capital distributions without OTS
approval of up to the greater of 100% of its net income during a
calendar year plus the amount that would reduce by one-half its
surplus capital ratio (the percentage by which the association's
capital-to-assets ratio exceeds the ratio of its Tier 1 capital
requirements to its assets) at the beginning of the calendar
year, or 75% of its net income over the most recent four-quarter
period. A Tier 1 association may make capital distributions in
excess of the foregoing limits if the OTS does not object after
receiving notice thereof. At December 31, 1995, each of the
Banks was a "Tier 1 association." A Tier 2 association is
authorized without OTS approval to make distributions of up to
75% of net income over the most recent four-quarter period if it
satisfies its fully phased-in risk-based capital requirement, or
up to 50% of such net income if it satisfies its interim (90% of
fully phased-in amount) risk-based capital requirement. A Tier 2
association may, through a written approval process, obtain OTS
approval to make distributions in excess of these amounts.
Tier 3 associations are not authorized to make any capital
distributions without prior written OTS approval unless, in the
case of an association operating in compliance with an approved
capital plan, the capital distribution is consistent with the
association's capital plan. The OTS has supervisory authority to
prohibit the payment of capital distributions for Tier 1 and
Tier 2 associations.
As a condition of obtaining approval from the OTS for the
reorganization whereby Sovereign was formed as a "savings and
loan holding company" Sovereign agreed that Sovereign Bank would
not pay cash dividends in an amount in excess of 50% of Sovereign
Bank's net income for any year. Amounts not used in any one year
may be accumulated and used in subsequent years.
Insurance of Deposit Accounts
The FDIC has implemented a risk-related premium schedule for
all insured depository institutions that results in the
assessment of premiums based on capital and supervisory measures.
Under the risk-related premium schedule, the FDIC assigns, on a
semiannual basis, each institution to one of three capital groups
(well-capitalized, adequately capitalized or undercapitalized)
and further assigns such institution to one of three subgroups
within a capital group. The institution's subgroup assignment is
based upon the FDIC's judgment of the institution's strength in
light of supervisory evaluations, including examination reports,
statistical analyses and other information relevant to measuring
the risk posed by the institution. Only institutions with a
total capital to risk-adjusted assets ratio of 10.00% or greater,
a Tier 1 capital to risk-based assets ratio of 6% or greater, and
a Tier 1 leverage ratio of 5.0% or greater, are assigned to the
well-capitalized group. As of December 31, 1995, Sovereign Bank
and Colonial Bank were classified as well capitalized for
purposes of calculating insurance assessments. Institutions are
prohibited from disclosing the risk classification to which they
have been assigned. As of December 31, 1995, the FDIC calculated
deposit insurance assessments at the rate of $.23 for every $100
of deposits for the members of SAIF in the lowest risk-based
premium category and $0.31 for every $100 of insured deposits for
members of SAIF in the highest risk-based premium category.
In August 1995, the FDIC adopted an amendment to the BIF
risk-based assessment schedule that lowers the deposit insurance
assessment rate for most (90% or more) commercial banks and other
depository institutions with deposits insured by BIF to $.04 per
$100 of insured deposits. On November 14, 1995, the FDIC further
reduced the BIF assessment rates to a range of $.00 per $100 of
insured deposits (subject to a minimum annual premium of $2,000)
for those institutions with the least risk to $0.27 for every
$100 of insured deposits for institutions deemed to have the
highest risk, beginning January 1, 1996. At the same time, the
FDIC voted to retain the existing assessment rates for SAIF-
insured institutions. The reduced BIF assessment rates result in
a substantial disparity in the deposit insurance premiums paid by
BIF and SAIF members and could place SAIF-insured savings
associations at a significant competitive disadvantage to
BIF-insured institutions.
Sovereign Bank is subject to FDIC deposit insurance
assessments at the rate applicable to SAIF-insured institutions
except, however, that the deposits acquired, on January 15, 1993
and May 31, 1996, when Sovereign acquired Harmonia Bancorp, Inc.
("Harmonia") and West Jersey Bancshares, Inc. ("WJB"),
respectively, remain subject to BIF insurance assessment rates.
The balance of these Harmonia and WJB deposits were estimated to
be approximately $756.0 million and $88.3, respectively, at
June 30, 1996. Community Bank, acquired by Sovereign on
November 15, 1995, is subject to FDIC deposit insurance
assessments at the rate applicable to BIF insured institutions.
Federal savings banks like the Banks are required by OTS
regulations to pay assessments to the OTS to fund the operations
of the OTS. The general assessment is paid on a quarterly basis
and is computed based on total assets of the institution,
including subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the Corporation
including its consolidated subsidiaries is computed by dividing
earnings by fixed charges. The ratio of earnings to combined
fixed charges and preferred stock dividends is computed by
dividing earnings by the sum of fixed charges and preferred stock
dividend requirements. Earnings consist primarily of income
(loss) before income taxes adjusted for fixed charges. Fixed
charges consist primarily of interest expense on short-term and
long-term borrowings.
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings
to Fixed Charges
Excluding interest
on deposits 1.68x 1.79x 1.97x 2.30x 2.58x 2.13x
Including interest
on deposits 1.28x 1.27x 1.38x 1.38x 1.29x 1.17x
Ratio of Earnings to
Combined Fixed
Charges and
Preferred Stock
Dividends
Excluding interest
on deposits 1.51x 1.68x 1.97x 2.30x 2.58x 2.13x
Including interest
on deposits 1.23x 1.24x 1.38x 1.38x 1.29x 1.17x
</TABLE>
USE OF PROCEEDS
The net proceeds of the Offered Securities will be used for
general corporate purposes, which may include without limitation
funding investments in, or extensions of credit to, the
Corporation's subsidiaries, repayment of obligations, redemption
of outstanding indebtedness and financing possible future
acquisitions. Pending such use, the Corporation may temporarily
invest the net proceeds or may use them to reduce short-term
indebtedness.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt
Securities sets forth certain general terms and provisions of the
Debt Securities to which any Prospectus Supplement may relate.
The particular terms of the Debt Securities offered by any
Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered
will be described in the Prospectus Supplement relating to such
Debt Securities. Except where specifically noted, the following
description applies to both Senior Securities and Subordinated
Securities.
General
The Debt Securities will be unsecured obligations of the
Corporation and will not be insured by the Savings Association
Insurance Fund or the Bank Insurance Fund of the Federal Deposit
Insurance Corporation.
The Debt Securities will be issued either as Senior
Securities or Subordinated Securities. The Senior Securities
will be issued under an Indenture dated as of February 1, 1994
(the "Senior Indenture"), between the Corporation and Harris
Trust and Savings Bank, as Trustee. The Subordinated Securities
will be issued under an Indenture dated as of February 1, 1994
(the "Subordinated Indenture"), between the Corporation and
Harris Trust and Savings Bank, as Trustee. The Senior Indenture
and the Subordinated Indenture are collectively referred to
herein as the "Indentures." Copies of the Indentures have been
filed with the Commission. References to the "Trustee" shall
mean Harris Trust and Savings Bank as trustee under the Senior
Indenture or the Subordinated Indenture, as applicable.
The statements which follow under this caption are brief
summaries of certain provisions contained in the Indentures, do
not purport to be complete and are qualified in their entirety by
reference to all the provisions of the applicable Indenture,
copies of which have been filed with the Commission as exhibits
to the Registration Statement. Whenever defined terms are used
but not defined herein, such terms shall have the meanings
ascribed to them in the applicable Indenture, it being intended
that such defined terms shall be incorporated herein by
reference. References to Sections are references to Sections in
both Indentures unless otherwise indicated.
Neither Indenture limits the aggregate principal amount of
Debt Securities that may be issued thereunder and each Indenture
provides that Debt Securities of any series may be issued
thereunder up to the aggregate principal amount which may be
authorized from time to time by the Corporation. Except as may
be set forth in a Prospectus Supplement, neither the Indentures
nor the Debt Securities will limit or otherwise restrict the
amount of other indebtedness which may be incurred or the other
securities which may be issued by the Corporation or any of its
affiliates.
Because the Corporation is a holding company, the rights of
its creditors, including the holders of the Debt Securities, to
share in the distribution of the assets of any subsidiary upon
the subsidiary's liquidation or recapitalization, will be subject
to the prior claims of the subsidiary's creditors (including in
the case of the Corporation's banking subsidiaries, their
depositors), except to the extent that the Corporation may itself
be a creditor with recognized claims against the subsidiary. In
addition, there are certain regulatory limitations on the payment
of dividends and on loans and other transfers to the Corporation
by its banking subsidiaries. See "Supervision and Regulation."
The amount of Debt Securities offered by this Prospectus
will be limited to the amounts described on the cover of this
Prospectus. Each indenture provides that Debt Securities in an
unlimited amount may be issued thereunder from time to time in
one or more series. (Section 301)
The Senior Securities will be unsecured and will rank
pari passu with other unsecured Senior Debt of the Corporation.
The Subordinated Securities will be unsecured and, except as may
be set forth in a Prospectus Supplement, will rank pari passu
with other Subordinated Debt of the Corporation and, together
with such other Subordinated Debt, will be subordinate and junior
in right of payment to the prior payment in full of the Senior
Debt of the Corporation as described below under "Subordination."
Reference is hereby made to the Prospectus Supplement
relating to the particular series of Debt Securities for the
terms of such Debt Securities, including, where applicable:
(i) the designation and any limit on the aggregate principal
amount of such Debt Securities; (ii) the price (expressed as a
percentage of the aggregate principal amount thereof) at which
such Debt Securities will be issued; (iii) the date or dates on
which such Debt Securities will mature or method by which such
dates can be determined; (iv) the currency or currencies in which
such Debt Securities are being sold and are denominated and the
circumstances, if any, under which any Debt Securities may be
payable in a currency other than the currency in which such Debt
Securities are denominated, and if so, the exchange rate, the
exchange rate agent and, if the Holder of any such Debt
Securities may elect the currency in which payments thereon are
to be made, the manner of such election; (v) the denomination in
which any Debt Securities which are Registered Securities will be
issuable, if other than denominations of $1,000 and any integral
multiple thereof, and the denomination or denominations in which
any Debt Securities which are Bearer Securities will be issuable,
if other than the denomination of $5,000; (vi) the rate or rates
(which may be fixed or variable) at which such Debt Securities
will bear interest, which rate may be zero in the case of certain
Debt Securities issued at an issue price representing a discount
from the principal amount payable at maturity; (vii) the date
from which interest on such Debt Securities will accrue, the
dates on which such interest will be payable or method by which
such dates can be determined, the date on which payment of such
interest will commence and the circumstances, if any, in which
the Corporation may defer interest payments; (viii) the dates on
which, and the price or prices at which, such Debt Securities
will, pursuant to any mandatory sinking fund provision, or may,
pursuant to any optional redemption or required repayment
provisions, be redeemed or repaid and the other terms and
provisions of any such optional redemption or required repayment;
(ix) any terms by which such Debt Securities may be convertible
into Common Stock (see "Description of Common Stock"), Preferred
Shares (see "Description of Preferred Shares"), or any other
Capital Securities (see "Description of Capital Securities") of
the Corporation and, in case of Debt Securities convertible into
Preferred Shares, the terms of such Preferred Shares, (x) any
terms by which the principal of such Debt Securities will be
exchangeable for Capital Securities and any terms creating a fund
(the "Securities Fund") pursuant to which the proceeds of sales
of Capital Securities may be designated on the books of the
Corporation for the payment of any of the principal of such Debt
Securities; (xi) whether such Debt Securities are to be issuable
as Bearer Securities and/or Registered Securities and, if
issuable as Bearer Securities, the terms upon which any Bearer
Securities may be exchanged for Registered Securities;
(xii) whether such Debt Securities are to be issued in the form
of one or more temporary or permanent Global Securities and, if
so, the identity of the depositary for such Global Security or
Securities; (xiii) if a temporary global Debt Security is to be
issued with respect to such series, the extent to which, and the
manner in which, any interest thereon payable on an interest
payment date prior to the issuance of a permanent Global Security
or definitive Bearer Securities will be credited to the accounts
of the persons entitled thereto on such interest payment date;
(xiv) if a temporary Global Security is to be issued with respect
to such series, the terms upon which interests in such temporary
Global Security may be exchanged for interests in a permanent
Global Security or for definitive Debt Securities of the series
and the terms upon which interests in a permanent Global
Security, if any, may be exchanged for definitive Debt Securities
of the Series; (xv) any additional restrictive covenants included
for the benefit of Holders of such Debt Securities; (xvi) any
additional Events of Default provided with respect to such Debt
Securities; (xvii) information with respect to book-entry
procedures, if any; (xviii) whether the Debt Securities will be
repayable at the option of the Holder in the event of a change in
control of the Corporation; (xix) any other terms of the Debt
Securities not inconsistent with the provisions of the applicable
indenture; (xx) the terms of any securities being offered
together with or separately from the Debt Securities; and
(xxi) if such Debt Securities are Original Issue Discount
Securities, the accreted or notational value thereof (or method
of determining such amount) upon acceleration of maturity. Such
Prospectus Supplement will also describe any special provisions
for the payment of additional amounts with respect to the Debt
Securities and certain United States federal income tax
consequences and other special considerations applicable to such
series of Debt Securities. If a Debt Security is denominated in
a foreign currency, such Debt Security may not trade on a U.S.
national securities exchange unless and until the Commission has
approved appropriate rule changes pursuant to the Act to
accommodate the trading of such Debt Security.
Form, Exchange, Registration and Transfer
Debt Securities of a series may be issuable in definitive
form solely as Registered Securities, solely as Bearer Securities
or as both Registered Securities and Bearer Securities. Unless
otherwise indicated in the Prospectus Supplement, Bearer
Securities other than Bearer Securities in temporary or permanent
global form will have interest coupons attached. (Section 201)
Each Indenture also provides that Bearer Securities or Registered
Securities of a series may be issuable in permanent global form.
(Section 203) See "Permanent Global Securities."
Registered Securities of any series will be exchangeable for
other Registered Securities of the same series of authorized
denominations and of a like aggregate principal amount, tenor and
terms. In addition, if Debt Securities of any series are
issuable as both Registered Securities and Bearer Securities, at
the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable Indenture, Bearer
Securities (with all unmatured coupons, except as provided below,
and all matured coupons in default) of such series will be
exchangeable into Registered Securities of the same series of any
authorized denominations and of a like aggregate principal
amount, tenor and terms. Bearer Securities surrendered in
exchange for Registered Securities between the close of business
on a Regular Record Date or a Special Record Date and the
relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest,
and interest will not be payable in respect of the Registered
Security issued in exchange for such Bearer Security, but will be
payable only to the Holder of such coupon when due in accordance
with the terms of the applicable Indenture. Bearer Securities
will not be issued in exchange for Registered Securities.
(Section 305) Each Bearer Security, other than a temporary
global Bearer Security, and each interest coupon will bear the
following legend: "Any United States Person who holds this
obligation will be subject to limitations under the United States
federal income tax laws including the limitations provided in
Sections 165(j) and 1287(a) of the Internal Revenue Code."
Debt Securities may be presented for exchange as provided
above, and Registered Securities may be presented for
registration of transfer (duly endorsed or accompanied by a
satisfactory written instrument of transfer), at the office of
the Security Registrar or at the office of any transfer agent
designated by the Corporation for such purpose with respect to
such series of Debt Securities, without service charge and upon
payment of any taxes and other governmental charges.
(Section 305) If the applicable Prospectus Supplement refers to
any transfer agent (in addition to the Security Registrar)
initially designated by the Corporation with respect to any
series of Debt Securities, the Corporation may at any time
rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent (or
Security Registrar) acts, except that, if Debt Securities of a
series are issuable solely as Registered Securities, the
Corporation will be required to maintain a transfer agent in each
Place of Payment for such series and, if Debt Securities of a
series are issuable as Bearer Securities, the Corporation will be
required to maintain (in addition to the Security Registrar) a
transfer agent in a Place of Payment for such series located
outside the United States. The Corporation may at any time
designate additional transfer agents with respect to any series
of Debt Securities. (Section 1002)
The Corporation shall not be required (i) to issue, register
the transfer of or exchange Debt Securities of any particular
series to be redeemed or exchanged for Capital Securities for a
period of fifteen days preceding the first publication of the
relevant notice of redemption or, if Registered Securities are
outstanding and there is no publication, the mailing of the
relevant notice of redemption, (ii) to register the transfer of
or exchange any Registered Security so selected for redemption or
exchange in whole or in part, except the unredeemed or
unexchanged portion of any Registered Security being redeemed or
exchanged in part, or (iii) to exchange any Bearer Security so
selected for redemption or exchange except that such a Bearer
Security may be exchanged for a Registered Security of like tenor
and terms of that series, provided that such Registered Security
shall be surrendered for redemption or exchange. (Section 305)
Additional information regarding restrictions on the issuance,
exchange and transfer of, and special United States federal
income tax considerations relating to Bearer Securities will be
set forth in the applicable Prospectus Supplement.
Temporary Global Securities
If so specified in the applicable Prospectus Supplement, all
or any portion of the Debt Securities of a series which are
issuable as Bearer Securities will initially be represented by
one or more temporary Global Securities, without interest
coupons, to be deposited with a common depositary in London for
Morgan Guaranty Trust Corporation of New York, Brussels Office,
as operator of the Euroclear System ("Euroclear") and Cedel S.A.
("Cedel") for credit to designated accounts. On and after the
date determined as provided in any such temporary Global Security
and described in the applicable Prospectus Supplement, but within
a reasonable time, each such temporary Global Security will be
exchangeable for definitive Bearer Securities, definitive
Registered Securities or all or a portion of a permanent global
Bearer Security, or any combination thereof, as specified in such
Prospectus Supplement. No definitive Bearer Security or
permanent global Bearer Security delivered in exchange for a
portion of a temporary Global Security shall be mailed or
otherwise delivered to any location in the United States in
connection with such exchange.
Additional information regarding restrictions on and special
United States federal income tax consequences relating to
temporary Global Securities will be set forth in the Prospectus
Supplement relating thereto.
Permanent Global Securities
If any Debt Securities of a series are issuable in permanent
global form, the applicable Prospectus Supplement will describe
the circumstances, if any, under which beneficial owners of
interest in any such permanent Global Security may exchange such
interests for Debt Securities of such series and of like tenor
and principal amount of any authorized form and denomination.
Principal of and any premium and interest on a permanent Global
Security will be payable in the manner described in the
Prospectus Supplement relating thereto.
Payments and Paying Agents
Unless otherwise indicated in the applicable Prospectus
Supplement, payments of principal of and premium, if any, and
interest, if any, on Bearer Securities will be payable in the
currency designated in the Prospectus Supplement, subject to any
applicable laws and regulations, at such paying agencies outside
the United States as the Corporation may appoint from time to
time. Unless otherwise provided in the Prospectus Supplement,
such payments may be made, at the option of the Holder, by a
check in the designated currency or by transfer to an account in
the designated currency maintained by the payee with a bank
located outside the United States. Unless otherwise indicated in
the applicable Prospectus Supplement, payment of interest on
Bearer Securities on any Interest Payment Date will be made only
against surrender of the coupon relating to such Interest Payment
Date to a paying agent outside the United States. (Section 1001)
No payment with respect to any Bearer Security will be made at
any office or paying agency maintained by the Corporation in the
United States nor will any such payment be made by transfer to an
account, or by mail to an address, in the United States.
Notwithstanding the foregoing, payments of principal of and
premium, if any, and interest, if any, on Bearer Securities
denominated and payable in U.S. dollars will be made in U.S.
dollars at an office or agency of, and designated by, the
Corporation located in the United States, if payment of the full
amount thereof in U.S. dollars at all paying agencies outside the
United States is illegal or effectively precluded by exchange
controls or other similar restrictions, and the Trustee receives
an opinion of counsel that such payment within the United States
is legal. (Section 1002) As used in this Prospectus, "United
States" means the United States of America (including the States
and the District of Columbia) and its possessions including
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Marianas Islands.
Unless otherwise indicated in the applicable Prospectus
Supplement, payment of principal of and premium, if any, and
interest, if any, on a Registered Security will be payable in the
currency designated in the Prospectus Supplement, and interest
will be payable at the office of such paying agent or paying
agents as the Corporation may appoint from time to time, except
that at the option of the Corporation payment of any interest may
be made by a check in such currency mailed to the Holder at such
Holder's registered address or by wire transfer to an account in
such currency designated by such Holder in writing not less than
ten days prior to the date of such payment. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of any
installment of interest on a Registered Security will be made to
the Person in whose name such Registered Security is registered
at the close of business on the Regular Record Date for such
payments. (Section 307) Unless otherwise indicated in the
applicable Prospectus Supplement, principal payable at maturity
will be paid to the registered holder upon surrender of the
Registered Security at the office of a duly appointed paying
agent.
The paying agents outside the United States initially
appointed by the Corporation for a series of Debt Securities will
be named in the applicable Prospectus Supplement. The
Corporation may terminate the appointment of any of the paying
agents from time to time, except that the Corporation will
maintain at least one paying agent outside the United States so
long as any Bearer Securities are outstanding where Bearer
Securities may be presented for payment and may be surrendered
for exchange, provided that so long as any series of Debt
Securities is listed on The Stock Exchange of the United Kingdom
and the Republic of Ireland or the Luxembourg Stock Exchange or
any other stock exchange located outside the United States and
such stock exchange shall so require, the Corporation will
maintain a paying agent in London or Luxembourg or any other
required city located outside the United States, as the case may
be, for such series of Debt Securities. (Section 1002)
All moneys paid by the Corporation to a paying agent for the
payment of principal of or premium, if any, or interest, if any,
on any Debt Security that remains unclaimed at the end of two
years after such principal, premium or interest shall have become
due and payable will, at request of the Corporation, be repaid to
the Corporation, and the Holder of such Debt Security or any
coupon appertaining thereto will thereafter look only to the
Corporation for payment thereof. (Section 1003)
Covenants Contained in Indentures
The Indentures provide that the Corporation (a) will not
sell, transfer, or otherwise dispose of any shares of Voting
Stock of Sovereign Bank or permit Sovereign Bank to issue, sell,
or otherwise dispose of any shares of its Voting Stock unless
Sovereign Bank remains a Controlled Subsidiary, and (b) will not
permit Sovereign Bank to (i) merge or consolidate unless the
surviving corporation is a Controlled Subsidiary or (ii) convey
or transfer its properties and assets substantially as an
entirety to any person, except to a Controlled Subsidiary.
(Section 1005) "Controlled Subsidiary" means any corporation
more than 80% of the outstanding shares of "Voting Stock" (except
for directors' qualifying shares) of which is at the time owned
directly by the Corporation. With the consent of the Holders of
a majority in aggregate principal amount of the Outstanding Debt
Securities of each series issued under the Indentures, such
definition in the Indentures may be modified so as to reduce the
required percentage of ownership from 80% to a majority.
(Section 902) The term "Voting Stock" of Sovereign Bank refers
to stock of any class or classes, however designated, having
ordinary voting power for the election of a majority of the Board
of Directors of Sovereign Bank, other than stock having such
power only by reason of the happening of a contingency.
(Section 101)
The Senior Indenture also prohibits the Corporation from
creating, assuming, incurring or suffering to exist, as security
for indebtedness for borrowed money, any mortgage, pledge,
encumbrance or lien or charge of any kind upon the Voting Stock
of Sovereign Bank (other than directors' qualifying shares)
without effectively providing that the Senior Securities shall be
secured equally and ratably with (or prior to) such indebtedness;
provided, however, that the Corporation may create, assume, incur
or suffer to exist any such mortgage, pledge, encumbrance or lien
or charge without regard to the foregoing provisions so long as
after giving effect thereto, the Corporation will own at least
80% of the Voting Stock of Sovereign Bank then issued and
outstanding, free and clear of any such mortgage, pledge,
encumbrance, or lien or charge. (Section 1004 of the Senior
Indenture) The Subordinated Indenture does not contain this
covenant.
The Corporation is not restricted by the Indentures from
incurring, assuming or becoming liable for any type of debt or
other obligations, from creating liens on its property (other
than in the case of the Senior Indentures, the Voting Stock of
Sovereign Bank as described above) for any purposes or from
paying dividends or making distributions on its capital stock or
purchasing or redeeming its capital stock. The Indentures do not
require the maintenance of any financial ratios or specified
levels of net worth or liquidity. In addition, the Indentures do
not contain any provision which would require the Corporation to
repurchase or redeem or otherwise modify the terms of any of its
Debt Securities upon a change in control or other events
involving the Corporation which may adversely affect the
creditworthiness of the Debt Securities.
Modification and Waiver
Except as to the definition of Controlled Subsidiary in the
Senior Indenture and certain other modifications and amendments
not adverse to Holders of Debt Securities, modifications and
amendments of and waivers of compliance with certain restrictive
provisions under each Indenture may be made only with the consent
of the Holders of not less than 66-2/3% in principal amount of
the Outstanding Debt Securities of each series thereunder
affected by such modification, amendment or waiver; provided that
no such modification or amendment may, without the consent of the
Holder of each Outstanding Debt Security or coupon affected
thereby; (i) change the Stated Maturity of the principal or any
installment of principal or any installment of interest, if any;
(ii) reduce the amount of principal or interest thereon, or any
premium payable upon redemption or repayment thereof or in the
case of an Original Issue Discount Security the amount of
principal payable upon acceleration of the Maturity thereof;
(iii) change the place of payment or the currency in which
principal or interest is payable, if any; (iv) impair the right
to institute suit for the enforcement of any payment of the
principal, premium, if any, and interest, if any, or adversely
affect the right of repayment, if any, at the option of the
Holder; (v) reduce the percentage in principal amount of
Outstanding Debt Securities of any series, the consent of whose
Holders is required for modification or amendment of the
applicable Indenture or for waiver of compliance with certain
provisions of the applicable Indenture or for waiver of certain
defaults; (vi) reduce the requirements contained in the
applicable Indenture for quorum or voting; (vii) in the case of
Debt Securities exchangeable for Capital Securities, impair any
right to the delivery of Capital Securities in exchange for such
Debt Securities or the right to institute suit for the
enforcement of any such delivery or, in the case of Debt
Securities convertible into Common Stock or Preferred Shares,
impair any right to convert such Debt Securities; or
(viii) modify any of the above provisions. (Section 902)
Each Indenture contains provisions for convening meetings of
the Holders of Debt Securities of a series issued thereunder if
Debt Securities of that series are issuable in whole or in part
as Bearer Securities. (Section 1601) A meeting may be called at
any time by the Trustee for such Debt Securities, or upon the
request of the Corporation or the Holders of at least 10% in
principal amount of the Outstanding Debt Securities of such
series, in any such case upon notice given in accordance with the
Indenture with respect thereto. (Section 1602) Except as
limited by the proviso in the preceding paragraph, any resolution
presented at a meeting or adjourned meeting at which a quorum is
present may be adopted by the affirmative vote of the Holders of
a majority in principal amount of the Outstanding Debt Securities
of that series; provided, however, that, except as limited by the
proviso in the preceding paragraph, any resolution with respect
to any consent or waiver which may be given by the Holders of not
less than 66-2/3% in principal amount of the Outstanding Debt
Securities of a series issued under an Indenture may be adopted
at a meeting or an adjourned meeting at which a quorum is present
only by the affirmative vote of the Holders of 66-2/3% in
principal amount of such Outstanding Debt Securities of that
series; and provided further, that, except as limited by the
proviso in the preceding paragraph, any resolution with respect
to any demand, consent, waiver or other action which may be made,
given or taken by the Holders of a specified percentage, which is
less than a majority, in principal amount of the Outstanding Debt
Securities of a series issued under an Indenture may be adopted
at a meeting or adjourned meeting at which a quorum is present by
the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Debt Securities of that
series. (Section 1604)
Any resolution passed or decision taken at any meeting of
Holders of Debt Securities of any series duly held in accordance
with the applicable Indenture with respect thereto will be
binding on all Holders of Debt Securities of that series and the
related coupons issued under that Indenture. The quorum at any
meeting of Holders of a series of Debt Securities called to adopt
a resolution, and at any reconvened meeting, will be persons
holding or representing a majority in principal amount of the
Outstanding Debt Securities of such series; provided, however,
that if any action is to be taken at such meeting with respect to
a consent or waiver which may be given by the Holders of not less
than 66-2/3% in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing
66-2/3% in principal amount of the Outstanding Debt Securities of
such series issued under that Indenture will constitute a quorum.
(Section 1604)
Events of Default
Unless otherwise provided in the applicable Prospectus
Supplement, any series of Senior Securities issued under the
Senior Indenture will provide that the following shall constitute
Events of Default with respect to such series: (i) default in
payment of principal of or premium, if any, on any Senior
Security of such series when due; (ii) default for 30 days in
payment of interest, if any, on any Senior Security of such
series or related coupon, if any, when due; (iii) default in the
deposit of any sinking fund payment on any Senior Security of
such series when due; (iv) default in the performance of any
other covenant in such Indenture, continued for 90 days after
written notice thereof by the Trustee thereunder or the Holders
of at least 25% in principal amount of the Outstanding Senior
Securities of such series issued under that Indenture; and
(v) certain events of bankruptcy, insolvency or reorganization of
the Corporation or Sovereign Bank. (Section 501 of the Senior
Indenture)
Unless otherwise provided in the applicable Prospectus
Supplement, any series of Subordinated Securities issued under
the Subordinated Indenture will provide that the only Event of
Default will be certain events of bankruptcy of the Corporation.
(Section 501 of the Subordinated Indenture) Unless specifically
stated in the applicable Prospectus Supplement for a particular
series of Subordinated Securities, there is no right of
acceleration of the payment of principal of the Subordinated
Securities upon a default in the payment of principal, premium,
if any, or interest, if any, or in the performance of any
covenant or agreement in the Subordinated Securities or
Subordinated Indenture. In the event of a default in the payment
of principal, premium, if any, or interest, if any, or the
performance of any covenant (including, if applicable, any
covenant to deliver any Capital Securities required to be
delivered or any covenant to sell Capital Securities in a
Secondary Offering) or agreement in the Subordinated Securities
or Subordinated Indenture, the Trustee, subject to certain
limitations and conditions, may institute judicial proceedings to
enforce payment of such principal, premium, if any, or interest,
if any, or to obtain the performance of such covenant or
agreement or any other proper remedy, including, in the case of
the failure to deliver Capital Securities, a proceeding to
collect money equal to the principal amount of any Subordinated
Securities for which Capital Securities were to be exchanged.
(Section 503 of the Subordinated Indenture)
The Corporation is required to file with each Trustee
annually an Officers' Certificate as to the absence of certain
defaults under the terms of the Indentures. (Section 1007 of the
Senior Indenture, Section 1004 of the Subordinated Indenture)
Each Indenture provides that if an Event of Default specified
therein shall occur and be continuing, either the Trustee
thereunder or the Holders of not less than 25% in principal
amount of the Outstanding Debt Securities of such series issued
under that Indenture may declare the principal of all such Debt
Securities (or in the case of Original Issue Discount Series,
such portion of the principal amount thereof as may be specified
in the terms thereof) to be due and payable. (Section 502) In
certain cases, the Holders of a majority in principal amount of
the Outstanding Debt Securities of any series may, on behalf of
the Holders of all Debt Securities of any such series and any
related coupons, waive any past default or Event of Default
except a default (i) in payment of the principal of or premium,
if any, on any of the Debt Securities of such series and (ii) in
respect of a covenant or provision of the Indenture which cannot
be modified or amended without the consent of the Holder of each
Outstanding Debt Security of such series or coupons affected.
(Section 513)
Each Indenture contains a provision entitling the Trustee
thereunder subject to the duty of such Trustee during default to
act with the required standard of care, to be indemnified by the
Holders of the Debt Securities of any series thereunder or any
related coupons before proceeding to exercise any right or power
under such Indenture with respect to such series at the request
of such Holders. (Section 603) Each Indenture provides that no
Holder of any Debt Securities of any series thereunder or any
related coupons may institute any proceeding, judicial or
otherwise, to enforce such Indenture except in the case of
failure of the Trustee thereunder, for 60 days, to act after it
is given notice of default, a request to enforce such Indenture
by the Holders of not less than 25% in aggregate principal amount
of the Outstanding Debt Securities of such series and an offer of
indemnity reasonable to the Trustee. (Section 507) This
provision will not prevent any Holder of Debt Securities or any
related coupons from enforcing payment of the principal thereof
and premium, if any, and interest, if any, thereon at the
respective due dates thereof. (Section 508) The Holders of a
majority in aggregate principal amount of the Outstanding Debt
Securities of any series issued under an Indenture may direct the
time, method and place of conducting any proceedings for any
remedy available to the Trustee for such Debt Securities or
exercising any trust or power conferred on it with respect to the
Debt Securities of such series. However, such Trustee may refuse
to follow any direction that conflicts with law or the Indenture
under which it serves or which would be unjustly prejudicial to
Holders not joining therein. (Section 512)
Each Indenture provides that the Trustee thereunder will,
within 90 days after the occurrence of a default with respect to
any series of Debt Securities thereunder known to it, give to the
Holders of Debt Securities of such series notice of such default
if not cured or waived, but, except in the case of a default in
the payment of principal of or premium, if any, or interest, if
any, on any Debt Securities of such series or any related coupons
or in the payment of any sinking fund installment with respect to
Debt Securities of such series or in the exchange of Capital
Securities for Debt Securities of such series, the Trustee for
such Debt Securities shall be protected in withholding such
notice if it determines in good faith that the withholding of
such notice is in the interest of the Holders of such Debt
Securities. (Section 602)
Defeasance
The Corporation may terminate certain of its obligations
under each Indenture with respect to the Debt Securities of any
series thereunder, including its obligations to comply with the
covenants described under the heading "Covenants Contained in
Indentures" above, with respect to such Debt Securities, on the
terms and subject to the conditions contained in such Indentures,
by depositing in trust with the Trustee money and/or, to the
extent such Debt Securities are denominated and payable in U.S.
dollars only, Eligible Instruments which, through the payment of
principal and interest in accordance with their terms, will
provide money in an amount sufficient to pay the principal and
premium, if any, and interest, if any, on such Debt Securities,
and any mandatory sinking fund, repayment or analogous payments
thereon, on the scheduled due dates therefor. Such deposit and
termination is conditioned upon the Corporation's delivery of an
opinion of counsel that the Holders of such Debt Securities will
have no federal income tax consequences as a result of such
deposit and termination. Such termination will not relieve the
Corporation of its obligation to pay when due the principal of or
interest on such Debt Securities if such Debt Securities of such
series are not paid from the money or Eligible Instruments held
by the Trustee for the payment thereof. (Section 401) The
applicable Prospectus Supplement may further describe the
provisions, if any, permitting or restricting such defeasance
with respect to the Debt Securities of a particular series.
Subordination
The Subordinated Securities shall be subordinate and junior
in right of payment, to the extent set forth in the Subordinated
Indenture, to all Senior Debt (as defined below) of the
Corporation. In the event that the Corporation shall default in
the payment of any principal, premium, if any, or interest, if
any, on any Senior Debt when the same becomes due and payable,
whether at Maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and until
such default shall have been cured or waived or shall have ceased
to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to
be made for principal, premium, if any, or interest, if any, on
the Subordinated Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of
the Subordinated Securities. (Section 1801 of the Subordinated
Indenture) "Senior Debt" means any obligation of the Corporation
to its creditors, whether now outstanding or subsequently
incurred other than (i) any obligation as to which it is provided
that such obligation is not Senior Debt and (ii) the Subordinated
Securities. (Section 101 of the Subordinated Indenture). A
series of Subordinated Debt Securities may be issued that is
subordinate to the Senior Debt, but is senior as to right of
payment to some or all other series of Subordinated Debt
Securities.
In the event of (i) any insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment,
composition or other similar proceeding relating to the
Corporation, its creditors or its property, (ii) any proceeding
for the liquidation, dissolution or other winding up of the
Corporation, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings, (iii) any assignment by the
Corporation for the benefit of creditors or (iv) any other
marshalling of the assets of the Corporation, all Senior Debt
(including any interest thereon accruing after the commencement
of any such proceedings) shall first be paid in full before any
payment or distribution, whether in cash, securities or other
property, shall be made on account of the principal or interest
on the Subordinated Securities. In such event, any payment or
distribution on account of the principal of or interest on the
Subordinated Securities, whether in cash, securities or other
property (other than securities of the Corporation or any other
corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the
extent provided in the subordination provisions with respect to
the Subordinated Securities, to the payment of all Senior Debt at
the time outstanding, and to any securities issued in respect
thereof under any such plan of reorganization or adjustment),
which would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Subordinated Securities
shall be paid or delivered directly to the holders of Senior Debt
in accordance with the priorities then existing among such
holders until all Senior Debt (including any interest thereon
accruing after the commencement of any such proceedings) shall
have been paid in full. (Section 1801 of the Subordinated
Indenture)
In the event of any such proceeding, after payment in full
of all sums owing with respect to Senior Debt, the Holders of
Subordinated Securities, together with the holders of any
obligations of the Corporation ranking on a parity with the
Subordinated Securities, shall be entitled to be repaid from the
remaining assets of the Corporation the amounts at the time due
and owing on account of unpaid principal, premium, if any, and
interest, if any, on the Subordinated Securities and such other
obligations before any payment or other distribution, whether in
cash, property or otherwise, shall be made on account of any
capital stock or obligations of the Corporation ranking junior to
the Subordinated Securities and such other obligations. If any
payment or distribution on account of the principal of or
interest on the Subordinated Securities of any character or any
security, whether in cash, securities or other property (other
than securities of the Corporation or any other corporation
provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided
in the subordination provisions with respect to the Subordinated
Securities, to the payment of all Senior Debt at the time
outstanding and to any securities issued in respect thereof under
any such plan of reorganization or readjustment) shall be
received by any Holder of any Subordinated Securities in
contravention of any of the terms hereof and before all the
Senior Debt shall have been paid in full, such payment or
distribution or security shall be received in trust for the
benefit of, and shall be paid over or delivered and transferred
to, the holders of the Senior Debt at the time outstanding in
accordance with the priorities then existing among such holders
for application to the payment of all Senior Debt remaining
unpaid to the extent necessary to pay all such Senior Debt in
full. (Section 1801 of the Subordinated Indenture) By reason of
such subordination, in the event of the insolvency of the
Corporation, holders of Senior Debt may receive more, ratably,
and holders of the Subordinated Securities having a claim
pursuant to such securities may receive less, ratably, than the
other creditors of the Corporation. Such subordination will not
prevent the occurrence of any Event of Default in respect of the
Subordinated Securities.
The Subordinated Indenture may be modified or amended as
provided under "Modification and Waiver" above, provided that no
such modification or amendment may, without the consent of the
holders of all Senior Debt outstanding, modify any of the
provisions of the Subordinated Indenture relating to the
subordination of the Subordinated Securities and any related
coupons in a manner adverse to such holders. (Section 902 of the
Subordinated Indenture)
Conversion of Convertible Debt Securities
The Holders of Debt Securities of a specified series that
are convertible into Common Stock or Preferred Shares of the
Corporation ("Convertible Debt Securities") will be entitled at
certain times specified in the applicable Prospectus Supplement,
subject to prior redemption, repayment or repurchase, to convert
any Convertible Debt Securities of such series (in denominations
set forth in the applicable Prospectus Supplement) into Common
Stock or Preferred Shares, as the case may be, at the conversion
price set forth in the applicable Prospectus Supplement, subject
to adjustment as described below and in the applicable Prospectus
Supplement. Except as described below, no adjustment will be
made on conversion of any Convertible Debt Securities for
interest accrued thereon or for dividends on any Common Stock or
Preferred Shares issued. (Section 1803 of the Senior Indenture,
Section 1903 of the Subordinated Indenture) If any Convertible
Debt Securities not called for redemption are converted between a
Regular Record Date for the payment of interest and the next
succeeding Interest Payment Date, such Convertible Debt
Securities must be accompanied by funds equal to the interest
payable on such succeeding Interest Payment Date on the principal
amount so converted. (Section 1803 of the Senior Indenture,
Section 1903 of the Subordinated Indenture) The Corporation is
not required to issue fractional shares of Common Stock upon
conversion of Convertible Debt Securities that are convertible
into Common Stock and, in lieu thereof, will pay a cash
adjustment based upon the Closing Price (as defined in the
Indenture) of the Common Stock on the last business day prior to
the date of conversion. (Section 1804 of the Senior Indenture,
Section 1904 of the Subordinated Indenture) In the case of
Convertible Debt Securities called for redemption, conversion
rights will expire at the close of business on the redemption
date. (Section 1802 of the Senior Indenture, Section 1902 of the
Subordinated Indenture)
Unless otherwise indicated in the applicable Prospectus
Supplement, the conversion price for Convertible Debt Securities
that are convertible into Common Stock is subject to adjustment
under formulas set forth in the applicable Indenture in certain
events, including: the issuance of the Corporation's capital
stock as a dividend or distribution on the Common Stock;
subdivisions and combinations of the Common Stock; the issuance
to all holders of Common Stock of certain rights or warrants
entitling them to subscribe for or purchase Common Stock within
45 days after the date fixed for the determination of the
stockholders entitled to receive such rights or warrants, at less
than the current market price (as defined in the Indenture); and
the distribution to all holders of Common Stock of evidences of
indebtedness or assets of the Corporation (excluding certain cash
dividends and distributions described in the next paragraph) or
rights or warrants (excluding those referred to above).
(Section 1806 of the Senior Indenture, Section 1906 of the
Subordinated Indenture) In the event that the Corporation shall
distribute any rights or warrants to acquire capital stock
("Capital Stock Rights") pursuant to which separate certificates
representing such Capital Stock Rights will be distributed
subsequent to the initial distribution of such Capital Stock
Rights (whether or not such distribution shall have occurred
prior to the date of the issuance of a series of Convertible Debt
Securities), such subsequent distribution shall be deemed to be
the distribution of such Capital Stock Rights; provided that the
Corporation may, in lieu of making any adjustment in the
conversion price upon a distribution of separate certificates
representing such Capital Stock Rights, make proper provision so
that each Holder of such a Convertible Debt Security who converts
such Convertible Debt Security (or any portion thereof)
(a) before the record date for such distribution of separate
certificates shall be entitled to receive upon such conversion
shares of Common Stock issued with Capital Stock Rights and
(b) after such record date and prior to the expiration,
redemption or termination of such Capital Stock Rights shall be
entitled to receive upon such conversion, in addition to the
shares of Common Stock issuable upon such conversion, the same
number of such Capital Stock Rights as would a holder of the
number of shares of Common Stock that such Convertible Debt
Security so converted would have entitled the holder thereof to
acquire in accordance with the terms and provisions applicable to
the Capital Stock Rights if such Convertible Debt Security were
converted immediately prior to the record date for such
distribution. Common Stock owned by or held for the account of
the Corporation or any majority owned subsidiary shall not be
deemed outstanding for the purpose of any adjustment.
No adjustment in the conversion price of Convertible Debt
Securities that are convertible into Common Stock will be made
for regular quarterly or other periodic or recurring cash
dividends or distributions or for cash dividends or distributions
to the extent paid from retained earnings. No adjustment in the
conversion price of Convertible Debt Securities that are
convertible into Common Stock will be required unless such
adjustment would require a change of at least 1% in the
conversion price then in effect, provided, that any such
adjustment not so made will be carried forward and taken into
account in any subsequent adjustment; and provided further that
any such adjustment not so made shall be made no later than three
years after the occurrence of the event requiring such adjustment
to be made or carried forward. The Corporation reserves the
right to make such reductions in the conversion price in
addition to those required in the foregoing provisions as the
Corporation in its discretion shall determine to be advisable in
order that certain stock-related distributions hereafter made by
the Corporation to its stockholders shall not be taxable.
(Section 1806 of the Senior Indenture, Section 1906 of the
Subordinated Indenture) Except as stated above, the conversion
price will not be adjusted for the issuance of Common Stock or
any securities convertible into or exchangeable for Common Stock
or securities carrying the right to purchase any of the
foregoing.
In the case of (i) a reclassification or change of the
Common Stock, (ii) a consolidation or merger involving the
Corporation or (iii) a sale or conveyance to another corporation
of the property and assets of the Corporation as an entirety or
substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock,
securities, other property or assets (including cash) with
respect to or in exchange for such Common Stock, the Holders of
the Convertible Debt Securities then outstanding that are
convertible into Common Stock will be entitled thereafter to
convert such Convertible Debt Securities into the kind and amount
of shares of stock and other securities or property which they
would have received upon such reclassification, change,
consolidation, merger, sale or conveyance had such Convertible
Debt Securities been converted into Common Stock immediately
prior to such reclassification, change, consolidation, merger,
sale or conveyance. (Section 1807 of the Senior Indenture,
Section 1907 of the Subordinated Indenture)
In the event of a taxable distribution to holders of Common
Stock (or other transaction) which results in any adjustment of
the conversion price of Convertible Debt Securities that are
convertible into Common Stock, the Holders of such Convertible
Debt Securities may, in certain circumstances, be deemed to have
received a distribution subject to United States income tax as a
dividend; in certain other circumstances, the absence of such an
adjustment may result in a taxable dividend to the holders of
Common Stock or such Convertible Debt Securities.
Exchange for Capital Securities
To the extent set forth in a Prospectus Supplement, a
specified series of Debt Securities may be mandatorily
exchangeable for Capital Securities as described under
"Description of Capital Securities" below.
Information Concerning the Trustees
The Trustee serves as trustee under indentures for other
debt of the Corporation and as Rights Agent under the
Corporation's Rights Agreement, described in "Description of
Common Stock -- Shareholder Rights Plan," below.
The Trustee may, from time to time make loans to the
Corporation and perform other services for the Corporation in the
normal course of business. Under the provisions of the Trust
Indenture Act of 1939, as recently amended (the "Trust Indenture
Act"), upon the occurrence of a default under an indenture, if a
trustee has a conflicting interest (as defined in the Trust
Indenture Act) the trustee must, within 90 days, either eliminate
such conflicting interest or resign. Under the provisions of the
Trust Indenture Act, an indenture trustee shall be deemed to have
a conflicting interest if the trustee is a creditor of the
obligor. If the trustee fails either to eliminate the
conflicting interest or to resign within 10 days after the
expiration of such 90-day period, the trustee is required to
notify debt holders to this effect and any debt holder who has
been a bona fide holder for at least six months may petition a
court to remove the trustee and to appoint a successor trustee.
DESCRIPTION OF CAPITAL SECURITIES
The following description of Capital Securities is included
in this Prospectus because a Prospectus Supplement may provide
that Capital Securities will be issuable in exchange for a series
of mandatory convertible Debt Securities or upon conversion of a
series of mandatory convertible Preferred Shares. Whenever
Capital Securities are exchangeable for Debt Securities, the
Corporation will be obligated to deliver Capital Securities with
a Market Value (as defined below) equal to the principal amount
of such Debt Securities. In addition, the Corporation will
unconditionally undertake to sell the Capital Securities in a
sale (the "Secondary Offering") on behalf of any Holders who
elect to receive cash for the Capital Securities. The
Corporation will bear all expenses of the Secondary Offering,
including underwriting discounts and commissions. However, there
is no assurance that there will be a market for the Capital
Securities when issued or at any time thereafter. If the
Corporation fails to deliver any Capital Securities when
required to be delivered, the Trustee may institute judicial
proceedings for (i) specific performance, (ii) money equal to the
principal amount of the Debt Securities for which Capital
Securities were to be exchanged or (iii) any other proper remedy.
(Section 503) If the Corporation fails to effect the Secondary
Offering, it will deliver to the Holders Capital Securities, and
not cash, upon exchange of the Debt Securities. In such event,
the Corporation will have no specifically enforceable obligation
to effect the Secondary Offering, but will not be relieved of any
liability for money damages it would have for breach of its
obligation to effect a Secondary Offering of sufficient amounts
of Capital Securities. The "Market Value" of any Capital
Securities means their sale price in the Secondary Offering. If
the Corporation does not effect the Secondary Offering, the
Market Value of such Capital Securities shall be their fair value
when exchanged as determined by three independent nationally
recognized investment banking firms selected by the Corporation.
Whenever Preferred Shares are mandatorily convertible into
Capital Securities, the Corporation will be obligated to deliver
Capital Securities in an amount either based upon a conversion
price or with a required conversion value. The conversion value
will be determined by then market prices, by an auction or
bidding procedure or by such other method as set forth in the
applicable Prospectus Supplement.
The staff of the Commission has advised that Rules 13e-4 and
14e-1 of the Commission's rules and regulations relating to
tender offers by issuers, as currently in effect and interpreted,
would be applicable to the exchange of Capital Securities for
Debt Securities of any series and the Secondary Offering. If, at
the time of the exchange of Capital Securities for Debt
Securities of any series and the Secondary Offering, Rule 13e-4
or Rule 14e-1 (or any successor rule or rules) applies to such
transactions, the Corporation will comply with such rule (or any
successor rule or rules) and will afford holders of such Debt
Securities all rights and will make all filings required by such
rule (or successor rule or rules). Rule 13e-4 and Rule 14e-1 may
also be deemed to apply to mandatorily convertible Preferred
Shares.
The Capital Securities may consist of Common Stock,
Perpetual Preferred Stock (as defined below) or other capital
securities of the Corporation acceptable to its primary federal
regulator. All Capital Securities which will be exchangeable for
Debt Securities or issuable upon conversion of Preferred Shares
will, upon issuance, be duly authorized, validly issued and, if
applicable, fully paid and nonassessable. The Common Stock of
the Corporation is described below under "Description of Common
Stock."
The Corporation may select any preferred stock ("Perpetual
Preferred Stock") that is not mandatorily, or at the option of
the holder, redeemable or repayable, otherwise than in shares of
Common Stock or Perpetual Preferred Stock of another class or
series or with the proceeds of the sale of Common Stock or
Perpetual Preferred Stock, as Capital Securities to be exchanged
for Debt Securities or issued upon conversion of Preferred
Shares. Any shares of Perpetual Preferred Stock to be so issued
will have such designations, preferences, dividend and other
rights, qualifications, limitations and restrictions as may be
determined by the Corporation and approved by the Board of
Directors. A general description of the preferred stock of the
Corporation is set forth below under "Description of Preferred
Shares."
The Corporation may also select any other securities to be
exchanged for Debt Securities or issued upon conversion of
Preferred Shares which qualify at the time of exchange or
conversion as Capital Securities as determined by the
Corporation's primary federal regulator. Such other Capital
Securities will have such terms as may be determined by the
Corporation.
DESCRIPTION OF PREFERRED SHARES
The following description of the terms of the Preferred
Shares sets forth certain general terms and provisions of the
Preferred Shares offered by any Prospectus Supplement, and the
extent, if any, to which such general provisions may apply to the
Preferred Shares so offered will be described in the Prospectus
Supplement relating to such Preferred Shares. The description of
certain provisions of the Preferred Shares set forth below and in
the Prospectus Supplement does not purport to be complete and is
subject to and qualified in its entirety by reference to the
Certificate of Designation relating to the particular series of
Preferred Shares, which will be filed with the Commission at or
prior to the time of the sale of such Preferred Shares.
General
Under the Corporation's Certificate of Incorporation, the
Board of Directors of the Corporation is authorized without
further stockholder action to adopt resolutions providing for the
issuance of up to 7,500,000 shares of preferred stock (the
"Preferred Stock"), in one or more series, with such voting
powers, full or limited, and with such par value, designations,
preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions,
as may be determined by the Board of Directors. As of June 30,
1996, the Corporation had 2,000,000 shares of its 6-1/4%
Cumulative Convertible Preferred Stock, Series B issued and
outstanding.
The Preferred Shares shall have the dividend, liquidation
redemption, voting rights and, if applicable, conversion rights
set forth below unless otherwise provided in the Prospectus
Supplement relating to a particular series of Preferred Shares.
Reference is made to the Prospectus Supplement relating to the
particular series of Preferred Shares offered thereby for
specific terms, including, where applicable: (i) the title of
such Preferred Shares; (ii) the price at which such Preferred
Shares will be issued; (iii) the dividend rates and dates on
which dividends shall be payable, as well as the dates from which
dividends shall commence to cumulate; (iv) the dates on which the
Preferred Shares will be subject to redemption and the redemption
price, (v) any mandatory redemption or sinking fund provisions;
(vi) any rights on the part of the holder to convert the
Preferred Shares into shares of Common Stock; (vii) any
provisions for the mandatory conversion of such Preferred Shares
into Capital Securities; and (viii) any additional dividend,
liquidation, redemption, sinking fund, voting and other rights,
preferences, privileges, limitations and restrictions; and
(ix) the terms of any securities being offered together with or
separately from such Preferred Shares. The Preferred Shares will
be fully paid and nonassessable, and for each share issued, a sum
equal to the par value (if any) will be credited to the
Corporation's preferred stock account.
Dividends
Holders of Preferred Shares will be entitled to receive cash
dividends, when and as declared by the Board of Directors of the
Corporation out of assets of the Corporation legally available
for payment, at such rates and on such dates as will be set forth
in the applicable Prospectus Supplement. Each dividend will be
payable to holders of record as they appear on the stock books of
the Corporation on the record dates fixed by the Board of
Directors of the Corporation. Dividends will be cumulative from
and after the date set forth in the applicable Prospectus
Supplement. If, for any dividend period or periods, full
cumulative dividends on any shares of preferred stock have not
been paid or declared and set apart for payment or the
Corporation is in default or in arrears with respect to any
sinking fund or other arrangement for the purchase or redemption
of any shares of preferred stock, the Corporation may not declare
any dividends on, or make any payment on account of the purchase,
redemption or other retirement of, its Common Stock or any other
stock of the Corporation ranking as to dividends or distribution
of assets junior to the preferred stock. If dividends on
Preferred Shares are in arrears, and there shall be outstanding
shares of any other series of preferred stock ranking on a parity
as to dividends with the Preferred Shares, the Corporation, in
making any dividend payment on account of such arrears, is
required to make payments ratably upon all outstanding Preferred
Shares and shares of such other series of preferred stock in
proportion to the respective amounts of dividends in arrears on
such Preferred Shares and shares of such other series of
preferred stock. See "Supervision and Regulation" for a
description of certain legal restrictions placed on the ability
of the Corporation's banking subsidiaries to provide funds to the
Corporation.
Liquidation Rights
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of
Preferred Shares will be entitled to receive out of assets of the
Corporation available for distribution to stockholders, before
any distribution of assets is made to holders of Common Stock,
liquidating distributions in the amount of the par value per
share (as set forth in the applicable Prospectus Supplement) plus
all accrued and unpaid dividends. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, the amounts payable with respect to the Preferred
Shares and any other shares of stock of the Corporation ranking
as to any such distribution on a parity with the Preferred Shares
are not paid in full, the holders of the Preferred Shares and of
such other shares will share ratably in any such distribution of
assets of the Corporation in proportion to the full respective
preferential amounts to which they are entitled. After payment
of the full amount of the liquidating distribution to which they
are entitled, the holder of Preferred Shares will not be entitled
to any further participation in any distribution of assets by the
Corporation. A consolidation or merger of the Corporation with
or into any other corporation or corporations or a sale of all or
substantially all of the assets of the Corporation shall not be
deemed to be liquidation, dissolution or winding up of the
Corporation.
Redemption
The Preferred Shares will be redeemable in whole or in part,
at the option of the Corporation, at the times and at the
redemption prices set forth in the applicable Prospectus
Supplement.
The Corporation may not redeem less than all the outstanding
shares of any series of Preferred Shares unless full cumulative
dividends have been paid or declared and set apart for payment
upon all outstanding shares of such series of Preferred Shares
for all past dividend periods, and unless all matured obligations
of the Corporation with respect to all sinking funds, retirement
funds or purchase funds for all series of preferred stock then
outstanding have been met.
Voting Rights
Except as indicated below or in the applicable Prospectus
Supplement, or except as expressly required by applicable law,
the holders of the Preferred Shares will not be entitled to vote.
If the equivalent of six quarterly dividends payable on any
series of the Preferred Shares or any other series of preferred
stock are in default (whether or not declared or consecutive),
the holders of all outstanding series of preferred stock, voting
as a single class with regard to series, will be entitled to
elect two directors until all dividends in default have been paid
or declared and set apart for payment.
The affirmative vote of the holders of at least two-thirds
of the outstanding shares of the Preferred Shares and any other
series of preferred stock, voting as a single class without
regard to series, will be required (i) for any amendment of the
Corporation's Certificate of Incorporation (or any certificate
supplemental thereto providing for the capital stock of the
Corporation) or Bylaws that will materially and adversely change
the preferences, privileges, rights, or powers of the preferred
stock, but, in any case in which one or more, but not all, series
of preferred stock would be so affected as to their preferences,
privileges, rights or powers, only the consent of holders of at
least two-thirds of the shares of each series that would be so
affected, voting separately as a class, shall be required or
(ii) to issue any class of stock that shall have preference as to
dividends or distribution of assets over any outstanding series
of preferred stock.
All stockholder action must be taken at a meeting.
Stockholder action by written consent is not permitted.
The Corporation's Certificate of Incorporation may be
amended to increase the number of authorized shares of the
preferred stock without the vote of the holders of outstanding
Preferred Shares.
Preferred Stock Conversion Rights
The Prospectus Supplement for any series of Preferred Shares
will state whether shares in that series are convertible into
Common Stock. See "Description of Capital Stock," below. Unless
otherwise provided in the applicable Prospectus Supplement, if a
series of Preferred Shares is convertible into shares of Common
Stock ("Convertible Preferred Shares"), holders of such
Convertible Preferred Shares will have the right, at their option
and at any time, to convert any of such Convertible Preferred
Shares, initially at the conversion rate set forth in the
Prospectus Supplement relating to such Convertible Preferred
Shares, provided that if such series of Convertible Preferred
Shares is called for redemption, the conversion rights pertaining
thereto will terminate at the close of business on the date fixed
for redemption. No fractional shares will be issued upon
conversion of the Convertible Preferred Shares, but if such
conversion results in a fraction, an equivalent amount will be
paid in cash by the Corporation, based on the Closing Price, as
defined in the Certificate of Designation for such series of
Convertible Preferred Shares, of the Common Stock on the business
day immediately preceding the day on which the Convertible
Preferred Shares are converted.
Unless otherwise indicated in the applicable Prospectus
Supplement, the conversion rate is subject to adjustment in
certain events, including: the issuance of capital stock as a
dividend or distribution on the Common Stock; subdivisions and
combinations of the Common Stock; the issuance to all holders of
Common Stock of certain rights or warrants entitling them to
subscribe for or purchase Common Stock (or securities convertible
into Common Stock) within 45 days after the date fixed for the
determination of the stockholders entitled to receive such rights
or warrants, at less than the current market price (as defined in
the Certificate of Designation for such series of Convertible
Preferred Shares); and the distribution to all holders of Common
Stock of evidences of indebtedness or assets of the Corporation
(excluding certain cash dividends and distributions described
below) or rights or warrants (excluding those referred to above).
In the event that the Corporation shall distribute any Rights
pursuant to which separate certificates representing such Rights
will be distributed subsequent to the initial distribution of
such Rights (whether or not such distribution shall have occurred
prior to the date of the issuance of a series of Convertible
Preferred Shares), such subsequent distribution shall be deemed
to be the distribution of such Rights; provided, that the
Corporation may, in lieu of making any adjustment in the
conversion rate upon a distribution of separate certificates
representing such Rights, make proper provision so that each
holder of such a Convertible Preferred Share who converts such
Convertible Preferred Share (or any portion thereof) (a) before
the record date for such distribution of separate certificates
shall be entitled to receive upon such conversion shares of
Common Stock issued with Rights and (b) after such record date
and prior to the expiration, redemption or termination of such
Rights shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such
conversion, the same number of such Rights as would a holder of
the number of shares of Common Stock that such Convertible
Preferred Share so converted would have entitled the holder
thereof to acquire in accordance with the terms and provisions
applicable to the Rights if such Convertible Preferred Share were
converted immediately prior to the record date for such
distribution. Common Stock owned by or held for the account of
the Corporation or any majority owned subsidiary shall not be
deemed outstanding for the purpose of any adjustment.
No adjustment in conversion rate will be made for regular
quarterly or other periodic or recurring cash dividends or
distributions or for cash distributions to the extent paid from
retained earnings. No adjustment in the Conversion Price will be
required unless such adjustment would require a change of at
least 1% in the Conversion Price then in effect or a period of
three years shall have elapsed from the date of occurrence of any
event requiring any such adjustment; provided, that any
adjustment that would otherwise be required to be made shall be
carried forward and taken into account in any subsequent
adjustment. Notwithstanding any of the foregoing, neither the
issuance of Common Stock under the Corporation's Dividend
Reinvestment Plan or any successor plans providing for the
purchase of shares of Common Stock by the Corporation's
securityholders or employees at a price not less than 90% of the
"fair market value" of the Common Stock as such term, or
equivalent term, is defined in, and as calculated pursuant to,
such plans from time to time, nor the granting of any rights
thereunder, shall require an adjustment to the conversion rate.
The Corporation reserves the right to make such increases in the
conversion rate in addition to those required in the foregoing
provisions as the Corporation, in its discretion, shall determine
to be advisable in order that certain stock related distributions
hereafter made by the Corporation to its stockholders shall not
be taxable. Except as stated above, the conversion rate will not
be adjusted for the issuance of Common Stock or any securities
convertible into or exchangeable for Common Stock, or securities
carrying the right to purchase any of the foregoing.
In the case of (i) any reclassification or change of the
Common Stock, or (ii) a consolidation or merger involving the
Corporation, or (iii) a sale or conveyance to another corporation
of the property and assets of the Corporation as an entirety or
substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock,
securities, other property or assets (including cash) with
respect to or in exchange for such Common Stock, the holders of
the Convertible Preferred Shares then outstanding will be
entitled thereafter to convert such Convertible Preferred Shares
into the kind and amount of shares of stock and other securities
or property which they would have received upon such
reclassification, change, consolidation, merger, combination,
sale or conveyance.
If at any such time the Corporation makes a distribution of
property to its shareholders that would be taxable to such
shareholders as a dividend for federal income tax purposes (for
example, distributions of evidences of indebtedness or assets of
the Corporation, but generally not stock dividends or rights to
subscribe to capital stock) and, pursuant to the antidilution
provisions described above, the conversion rate of the
Convertible Preferred Shares is increased, such increase may be
deemed to be the receipt of taxable income by Holders of the
Convertible Preferred Shares.
Outstanding Preferred Stock
The Preferred Shares will rank on a parity in all respects
with the outstanding preferred stock of the Corporation. The
Common Stock, including Common Stock that may be issued upon
conversion of the Preferred Shares or in exchange for or upon
conversion of Subordinated Debt Securities, will be subject to
any prior rights of the preferred stock then outstanding.
Therefore, the rights of any other preferred stock that may be
subsequently issued may limit the rights of the holders of the
Preferred Shares.
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital of Sovereign consists of 100,000,000
shares of Common Stock, no par value, and 7,500,000 shares of
preferred stock, such preferred stock to be issuable, in series
and classes having such par value, rights, preferences,
privileges and restrictions as the Board of Directors of
Sovereign may determine. Except as described below, each share
of Common Stock will have the same relative rights as, and will
be identical in all respects with, each other share of Common
Stock.
The following summaries of certain provisions of the
Corporation's Articles of Incorporation, as amended, and Bylaws
and the Rights Agreement (defined below) do not purport to be
complete and are qualified in their entirety by reference to such
instruments, each of which is an exhibit to the Registration
Statement of which this Prospectus forms a part.
Common Stock
Voting Rights. Prior to the issuance of any preferred stock
which possesses voting rights (see "Preferred Stock" below), the
holders of the Common Stock will possess exclusive voting rights
in Sovereign. Each holder of shares of Common Stock will be
entitled to one vote for each share held on matters upon which
stockholders have the right to vote. Stockholders will not be
entitled to cumulate their votes for the election of directors.
The holders of Common Stock are entitled to share ratably in
dividends when and if declared by the Board of Directors of
Sovereign from funds legally available therefor. Payment of
dividends by Sovereign is dependent upon dividend payments to
Sovereign by its subsidiaries, which payments are subject to
regulatory restrictions. See "Supervision and Regulation --
Restrictions on Capital Distributions." Payment of dividends by
Sovereign is also subject to certain limitations imposed by a
loan agreement between Sovereign and an institutional lender.
See "Supervision and Regulation -- Restrictions on Capital
Distributions."
Liquidation. In the event of any liquidation, dissolution,
or winding up of Sovereign, after payment of all debts and
liabilities of Sovereign and payment of any liquidation
preference plus accrued dividends applicable to any outstanding
shares of preferred stock, the holders of the Common Stock will
be entitled to receive all assets of Sovereign available for
distribution in cash or in kind.
Preemptive Rights; Redemption. Holders of the Common Stock
will not be entitled to preemptive rights with respect to any
shares of Sovereign which may be issued. The Common Stock will
not be subject to redemption. Upon receipt by Sovereign of the
full specified purchase price therefor, the Common Stock will be
fully paid and nonassessable.
Preferred Stock
Sovereign's Board of Directors is authorized to approve the
issuance of preferred stock, without any required approval of
stockholders. The rights, qualifications, limitations and
restrictions of each series of preferred stock issued will be
determined by the Board of Directors at the time of issuance and
may include, among other things, rights to participating
dividends, voting and convertibility into the Common Stock.
Shares of preferred stock may be issued with dividend,
redemption, voting, and liquidation rights taking priority over
Common Stock, and may be convertible into Common Stock, as
determined by the Board of Directors at the time of issuance.
At June 30, 1996, the only series of Sovereign Preferred
Stock outstanding was Sovereign's 6-1/4% Cumulative Convertible
Preferred Stock, Series B (the "Series B Preferred"), of which
2,000,000 shares were outstanding at June 30, 1996. The Series B
Preferred is convertible at the option of the holder at any time,
unless previously redeemed, into Common Stock. The Series B
Preferred may not be redeemed prior to May 15, 1998. Thereafter,
the Series B Preferred is redeemable at the option of Sovereign
in whole or in part. The Series B Preferred has a liquidation
preference of $50 per share.
Holders of Series B Preferred are not entitled to vote
except in limited circumstances.
If the equivalent of six quarterly dividends payable on any
series of preferred stock of Sovereign are in default (whether or
not declared or consecutive), the holders of all outstanding
series of preferred stock, voting as a single class without
regard to series, will be entitled to elect two directors until
all dividends in default have been paid or declared and set apart
for payment. The affirmative vote or consent of the holders of
at least two-thirds of the outstanding shares of preferred stock,
voting as a single class without regard to series, will be
required (i) for any amendment to Sovereign's Articles of
Incorporation (or any certificate supplemental thereto providing
for the capital stock of the Corporation) or Bylaws which will
materially and adversely change the preferences, privileges,
rights or powers of the preferred stock, but, in any case in
which one or more, but not all, series of preferred stock would
be affected as to their preferences, privileges, rights or
powers, only the consent of holders of at least two-thirds of the
shares of all such series that would be so affected, voting
separately as a class, shall be required or (ii) to issue any
class of stock which shall have preference as to dividends or
distribution of assets over any outstanding series of preferred
stock.
Sovereign's Articles of Incorporation may be amended to
increase the number of authorized shares of preferred stock
without the vote of the holders of outstanding preferred stock.
The brief description of the terms of the Series B Preferred
set forth above does not purport to be complete and is subject to
and qualified in its entirety by reference to the Statement with
Respect to Shares for the Series B Preferred, a form of which is
filed with the Commission pursuant to Sovereign's Registration
Statement on Form 8-A dated May 16, 1995.
Sovereign's Shareholder Rights Plan provides for the
issuance of a series of junior participating preferred stock.
See the description of such series of preferred stock under
"Shareholder Rights Plan" below.
Shareholder Rights Plan
Sovereign maintains a Shareholder Rights Plan (the "Rights
Plan") designed to protect shareholders from attempts to acquire
control of Sovereign at an inadequate price. Under the Rights
Plan, each outstanding share of the Common Stock has attached to
it one right to purchase one one-hundredth of a share of a series
of junior participating preferred stock at an initial exercise
price of $40. The rights are not currently exercisable or
transferable, and no separate certificates evidencing such rights
will be distributed, unless certain events occur.
The rights become exercisable to purchase shares of the
junior participating preferred stock if a person, group or other
entity acquires or commences a tender offer or an exchange offer
for 9.9% or more of total voting power. They can also be
exercised if a person or group who has become a beneficial owner
of at least 4.9% of the Common Stock or total voting power is
declared by Sovereign's Board of Directors to be an "adverse
person," as defined in the Rights Plan.
After the rights become exercisable, under certain
circumstances, the rights (other than rights held by a 9.9% or an
"adverse person") will entitle the holders to purchase either the
Common Stock or the common stock of the potential acquirer, in
lieu of the junior participating preferred stock, at a
substantially reduced price.
Sovereign is generally entitled to redeem the rights at
$.001 per right at any time until the tenth business day
following the public announcement that a 9.9% position has been
acquired. At any time prior to the date the rights have become
nonredeemable, the Board can extend the redemption period.
Rights are not redeemable following an "adverse person"
determination.
Articles of Incorporation and Bylaws
Sovereign's Articles of Incorporation and Bylaws contain
certain provisions which may have the effect of deterring or
discouraging, among other things, a non-negotiated tender or
exchange offer for the Common Stock, a proxy contest for control
of Sovereign, the assumption of control of Sovereign by a holder
of a large block of the Common Stock and the removal of
Sovereign's management. These provisions: (1) empower the Board
of Directors, without shareholder approval, to issue preferred
stock the terms of which, including voting power, are set by the
Board; (2) divide the Board of Directors into three classes
serving staggered three-year terms; (3) restrict the ability of
shareholders to remove directors; (4) require that shares with at
least 80% of total voting power approve mergers and other similar
transactions with a person or entity holding stock with more than
5% of Sovereign's voting power, if the transaction is not
approved, in advance, by the Board of Directors; (5) prohibit
shareholders' actions without a meeting; (6) require that shares
with at least 80%, or in certain instances a majority, of total
voting power approve the repeal or amendment of the Articles of
Incorporation; (7) require any person who acquires stock of
Sovereign with voting power of 25% or more to offer to purchase
for cash all remaining shares of Sovereign's voting stock at the
highest price paid by such person for shares of Sovereign's
voting stock during the preceding year; (8) eliminate cumulative
voting in elections of directors; (9) require that shares with at
least 66-2/3% of total voting power approve, repeal or amend the
Bylaws; (10) require advance notice of nominations for the
election of directors and the presenting of shareholder proposals
at meetings of shareholders; and (11) provide that officers,
directors, employees, agents and persons who own 5% or more of
the voting securities of any other corporation or other entity
that owns 66-2/3% or more of Sovereign's outstanding voting stock
cannot constitute a majority of the members of Sovereign's Board
of Directors.
Pennsylvania Law
The Pennsylvania Business Corporation Law contains certain
provisions applicable to Sovereign which may have similar
effects. These provisions, among other things: (1) require
that, following any acquisition by any person or group of 20% of
a public corporation's voting power, the remaining stockholders
have the right to receive payment for their shares, in cash, from
such person or group in an amount equal to the "fair value" of
the shares, including an increment representing a proportion of
any value payable for control of the corporation; and
(2) prohibit for five years, subject to certain exceptions, a
"business combination" (which includes a merger or consolidation
of the corporation or a sale, lease or exchange of assets) with a
stockholder or group of stockholders beneficially owning 20% or
more of a public corporation's voting power.
In April 1990, Pennsylvania adopted legislation further
amending the Pennsylvania Business Corporation Law. To the
extent applicable to Sovereign at the present time, this
legislation generally (1) expands the factors and groups
(including shareholders) which the Board of Directors can
consider in determining whether a certain action is in the best
interests of the corporation, (2) provides that the Board need
not consider the interests of any particular group as dominant or
controlling, (3) provides that directors, in order to satisfy the
presumption that they have acted in the best interests of the
corporation, need not satisfy any greater obligation or higher
burden of proof with respect to actions relating to an
acquisition or potential acquisition of control, (4) provides
that actions relating to acquisitions of control that are
approved by a majority of "disinterested directors" are presumed
to satisfy the directors' standard unless it is proved by clear
and convincing evidence that the directors did not assent to such
action in good faith after reasonable investigation, and
(5) provides that the fiduciary duty of directors is solely to
the corporation and may be enforced by the corporation or by a
shareholder in a derivative action, but not by a shareholder
directly. One of the effects of the new fiduciary duty
provisions may be to make it more difficult for a shareholder to
successfully challenge the actions of the Board of Directors in a
potential change in control context. Sovereign opted out of
coverage by the disgorgement and control-share acquisition
statutes, also adopted in April 1990, pursuant to a Bylaw
amendment as permitted by the legislation. Sovereign can reverse
this action under certain circumstances.
DESCRIPTION OF SECURITIES WARRANTS
The Corporation may issue Securities Warrants for the
purchase of Debt Securities, Preferred Shares or Common Stock.
Securities Warrants may be issued independently or together with
Common Stock, Debt Securities or Preferred Shares offered by any
Prospectus Supplement and may be attached to or separate from
such Common Stock, Debt Securities or Preferred Shares. Each
series of Securities Warrants will be issued under a separate
warrant agreement (a "Securities Warrant Agreement") to be
entered into between the Corporation and a bank or trust
corporation, as Securities Warrant Agent, all as set forth in the
Prospectus Supplement relating to the particular issue of offered
Securities Warrants. The Securities Warrant Agent will act
solely as an agent of the Corporation in connection with the
Securities Warrant Certificates and will not assume any
obligation or relationship of agency or trust for or with any
holders of Securities Warrant Certificates or beneficial owners
of Securities Warrants. Copies of the forms of Securities
Warrant Agreements, including the forms of Securities Warrant
Certificates representing the Securities Warrants, are filed as
exhibits to the Registration Statement to which this Prospectus
pertains. The following summaries of certain provisions of the
forms of Securities Warrant Agreements and Securities Warrant
Certificates do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the
provisions of the Securities Warrant Agreements and the
Securities Warrant Certificates.
General
If Securities Warrants are offered, the applicable
Prospectus Supplement will describe the terms of such Securities
Warrants, including, in the case of Securities Warrants for the
purchase of Debt Securities, the following where applicable:
(i) the offering price; (ii) the currencies in which such
Securities Warrants are being offered; (iii) the designation,
aggregate principal amount, currencies, denominations and terms
of the series of Debt Securities purchasable upon exercise of
such Securities Warrants; (iv) the designation and terms of any
series of Debt Securities or Preferred Shares with which such
Securities Warrants are being offered and the number of such
Securities Warrants being offered with each such share of Common
Stock, Debt Security or Preferred Share; (v) the date on and
after which such Securities Warrants and the related Common Stock
or series of Debt Securities or Preferred Shares will be
transferable separately; (vi) the principal amount of the series
of Debt Securities purchasable upon exercise of each such
Securities Warrant and the price at which and currencies in which
such principal amount of Debt Securities of such series may be
purchased upon such exercise; (vii) the date on which the right
to exercise such Securities Warrants shall commence and the date
(the "Expiration Date") on which such right shall expire;
(viii) whether the Securities Warrants will be issued in
registered or bearer form; (ix) United States federal income tax
consequences; and (x) any other terms of such Securities
Warrants.
In the case of Securities Warrants for the purchase of
Preferred Shares or Common Stock, the applicable Prospectus
Supplement will describe the terms of such Securities Warrants,
including the following where applicable: (i) the offering
price; (ii) the aggregate number of shares purchasable upon
exercise of such Securities Warrants and, in the case of
Securities Warrants for Preferred Shares, the designation,
aggregate number and terms of the series of Preferred Shares
purchasable upon exercise of such Securities Warrants; (iii) the
designation and terms of the series of Common Stock, Debt
Securities or Preferred Shares with which such Securities
Warrants are being offered and the number of such Securities
Warrants being offered with each share of Common Stock or such
Debt Security or Preferred Share; (iv) the date on and after
which such Securities Warrants and the related Common Stock or
series of Debt Securities or Preferred Shares will be
transferable separately; (v) the number of Preferred Shares or
shares of Common Stock purchasable upon exercise of each such
Securities Warrant and the price at which such number of
Preferred Shares of such series or shares of Common Stock may be
purchased upon such exercise; (vi) the date on which the right to
exercise such Securities Warrants shall commence and the
Expiration Date on which such right shall expire; (vii) United
States federal income tax consequences; and (viii) any other
terms of such Securities Warrants. Securities Warrants for the
purchase of Preferred Shares, or Common Stock will be offered and
exercisable for U.S. dollars only and will be in registered form
only.
Securities Warrant Certificates may be exchanged for new
Securities Warrant Certificates of different denominations, may
(if in registered form) be presented for registration of
transfer, and may be exercised at the corporate trust office of
the Securities Warrant Agent or any other office indicated in the
applicable Prospectus Supplement. Prior to the exercise of any
Securities Warrant to purchase Debt Securities, holders of such
Securities Warrants will not have any of the rights of Holders of
the Debt Securities purchasable upon such exercise, including the
right to receive payments of principal of, premium, if any, or
interest, if any, on the Debt Securities purchasable upon such
exercise or to enforce covenants in the applicable indenture.
Prior to the exercise of any Securities Warrants to purchase
Preferred Shares or Common Stock, holders of such Securities
Warrants will not have any rights of holders of the Preferred
Shares or Common Stock purchasable upon such exercise, including
the right to receive payments of dividends, if any, on the
Preferred Shares or Common Stock purchasable upon such exercise
or to exercise any applicable right to vote.
Exercise of Securities Warrants
Each Securities Warrant will entitle the holder thereof to
purchase such principal amount of Debt Securities or number of
Preferred Shares or shares of Common Stock, as the case may be,
at such exercise price as shall in each case be set forth in, or
calculable from the Prospectus Supplement relating to the offered
Securities Warrants. After the close of business on the
Expiration Date (or such later date to which such Expiration Date
may be extended by the Corporation), unexercised Securities
Warrants will become void.
Securities Warrants may be exercised by delivering to the
Securities Warrant Agent payment as provided in the applicable
Prospectus Supplement of the amount required to purchase the Debt
Securities, Preferred Shares or Common Stock, as the case may be,
purchasable upon such exercise together with certain information
set forth on the reverse side of the Securities Warrant
Certificate. Securities Warrants will be deemed to have been
exercised upon receipt of payment of the exercise price, subject
to the receipt, within five business days, of the Securities
Warrant Certificate evidencing such Securities Warrants. Upon
receipt of such payment and the Securities Warrant Certificate
properly completed and duly executed at the corporate trust
office of the Securities Warrant Agent or any other office
indicated in the applicable Prospectus Supplement, the
Corporation will, as soon as practicable, issue and deliver the
Debt Securities, Preferred Shares or Common Stock, as the case
may be, purchasable upon such exercise. If fewer than all of the
Securities Warrants represented by such Securities Warrant
Certificate are exercised, a new Securities Warrant Certificate
will be issued for the remaining amount of Securities Warrants.
Amendments and Supplements to Securities Warrant Agreements
The Securities Warrant Agreements may be amended or
supplemented without the consent of the holders of the Securities
Warrants issued thereunder to effect changes that are not
inconsistent with the provisions of the Securities Warrants and
that do not adversely affect the interests of the holders of the
Securities Warrants.
Common Stock Warrant Adjustments
Unless otherwise indicated in the applicable Prospectus
Supplement, the exercise price of, and the number of shares of
Common Stock covered by, a Common Stock Warrant are subject to
adjustment in certain events, including: (i) the issuance of
Common Stock as a dividend or distribution on the Common Stock;
(ii) subdivisions and combinations of the Common Stock; (iii) the
issuance to all holders of Common Stock of certain rights or
warrants entitling them to subscribe for or purchase Common Stock
within 45 days after the date fixed for the determination of the
stockholders entitled to receive such rights or warrants, at less
than the current market price (as defined in the Warrant
Agreement for such series of Common Stock Warrants); and (iv) the
distribution to all holders of Common Stock of evidences of
indebtedness or assets of the Corporation (excluding certain cash
dividends and distributions described below) or rights or
warrants (excluding those referred to above). In the event that
the Corporation shall distribute any rights or warrants to
acquire capital stock pursuant to clause (iii) above (the
"Capital Stock Rights"), pursuant to which separate certificates
representing such Capital Stock Rights will be distributed
subsequent to the initial distribution of such Capital Stock
Rights (whether or not such distribution shall have occurred
prior to the date of the issuance of a series of Common Stock
Warrants), such subsequent distribution shall be deemed to be the
distribution of such Capital Stock Rights; provided that the
Corporation may, in lieu of making any adjustment in the exercise
price of, and the number of shares of Common Stock covered by, a
Common Stock Warrant upon a distribution of separate certificates
representing such Capital Stock Rights, make proper provision so
that each holder of such a Common Stock Warrant who exercises
such Common Stock Warrant (or any portion thereof) (a) before the
record date for such distribution of separate certificates shall
be entitled to receive upon such exercise shares of Common Stock
issued with Capital Stock Rights and (b) after such record date
and prior to the expiration, redemption or termination of such
Capital Stock Rights shall be entitled to receive upon such
exercise, in addition to the shares of Common Stock issuable upon
such exercise, the same number of such Capital Stock Rights as
would a holder of the number of shares of Common Stock that such
Common Stock Warrants so exercised would have entitled the holder
thereof to acquire in accordance with the terms and provisions
applicable to the Capital Stock Rights if such Common Stock
Warrant was exercised immediately prior to the record date for
such distribution. Common Stock owned by or held for the account
of the Corporation or any majority owned subsidiary shall not be
deemed outstanding for the purpose of any adjustment.
No adjustment in the exercise price of, and the number of
shares of Common Stock covered by, a Common Stock Warrant will be
made for regular quarterly or other periodic or recurring cash
dividends or distributions or for cash dividends or distributions
to the extent paid from retained earnings. No adjustment will be
required unless such adjustment would require a change of at
least 1% in the exercise price then in effect; provided that any
such adjustment not so made will be carried forward and taken
into account in any subsequent adjustment; and provided further
that any such adjustment not so made shall be made no later than
three years after the occurrence of the event requiring such
adjustment to be made or carried forward. Except as stated
above, the exercise price of, and the number of shares of Common
Stock covered by, a Common Stock Warrant will not be adjusted for
the issuance of Common Stock or any securities convertible into
or exchangeable for Common Stock, or securities carrying the
right to purchase any of the foregoing.
In the case of (i) a reclassification or change of the
Common Stock, (ii) a consolidation or merger involving the
Corporation or (iii) sale or conveyance to another corporation of
the property and assets of the Corporation as an entirety or
substantially as an entirety, in each case as a result of which
holders of the Corporation's Common Stock shall be entitled to
receive stock, securities, other property or assets (including
cash) with respect to or in exchange for such Common Stock, the
holders of the Common Stock Warrants then outstanding will be
entitled thereafter to convert such Common Stock Warrants into
the kind and amount of shares of stock and other securities or
property which they would have received upon such
reclassification, change, consolidation, merger, sale or
conveyance had such Common Stock Warrants been exercised
immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance.
CERTAIN TAX CONSIDERATIONS
The Prospectus Supplement may contain information concerning
certain tax considerations relating to the Offered Securities.
Holders of Offered Securities should consult their tax advisors
as to the applicability to the Offered Securities and interest or
dividends, if any, payable thereon of federal, state and local
taxes.
PLAN OF DISTRIBUTION
The Corporation may offer and sell the Offered Securities in
any of three ways: (i) through agents; (ii) through underwriters
or dealers; or (iii) directly to one or more purchasers. The
Prospectus Supplement with respect to any of the Offered
Securities will set forth the terms of the offering of such
Offered Securities, including the name or names of any
underwriters or agents, the purchase price of such Offered
Securities, the proceeds to the Corporation from such sale, any
underwriting discounts or agency fees and other items
constituting underwriters' or agents' compensation, the initial
public offering price, any discounts or concessions allowed or
reallowed or paid to dealers, and any securities exchanges on
which such Offered Securities may be listed.
The distribution of the Offered Securities may be effected
from time to time in one or more transactions at a fixed price or
prices, which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices
or at negotiated prices.
The Corporation may also issue contracts under which the
counterparty may be required to purchase Common Stock, Debt
Securities, or Preferred Shares. Such contracts would be issued
with Common Stock, Debt Securities, Preferred Shares, and/or
Securities Warrants in amounts, at prices and on terms to be set
forth in a Prospectus Supplement. See "Plan of Distribution."
If so indicated in the Prospectus Supplement relating to any
Offered Securities, the Corporation will authorize underwriters,
dealers and agents to solicit offers by certain specified
institutions to purchase such Offered Securities from the
Corporation at the public offering price set forth in such
Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions
set forth in such Prospectus Supplement, and such Prospectus
Supplement will set forth the commission payable for solicitation
of such contracts.
Underwriters, dealers and agents may be entitled, under
agreements entered into with the Corporation, to indemnification
by the Corporation against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contributions
with respect to payments which the underwriters or agents may be
required to make in respect thereof. Underwriters and agents,
and affiliates thereof, may be customers of, engage in
transactions with, or perform services for the Corporation and
its affiliates in the ordinary course of business.
Each underwriter, dealer and agent participating in the
distribution of any Debt Securities that are issuable as Bearer
Securities will agree that, in connection with the original
issuance of such Bearer Securities, it will not offer, sell or
deliver, directly or indirectly, Bearer Securities to a United
States person or to any person within the United States, except
to the extent permitted under United States Treasury Regulations.
Except for Common Stock, all Offered Securities will be new
issues of securities with no established trading market. Any
underwriters to whom Offered Securities are sold by the
Corporation for public offering and sale may make a market in
such Offered Securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any
time without notice. No assurance can be given as to the
liquidity of the trading market for any Offered Securities.
LEGAL MATTERS
The legality of the Offered Securities and, if any Offered
Securities are by their terms convertible into Common Stock, the
Common Stock into which the Offered Securities may be converted,
will be passed upon for the Corporation by Stevens & Lee,
111 North Sixth Street, Reading, Pennsylvania 19601, special
counsel to the Corporation. Joseph E. Lewis, a director of the
Sovereign Bank, is a principal of the firm of Stevens & Lee. At
June 30, 1996, certain attorneys at Stevens & Lee and members of
their immediate families owned or had investment discretion with
respect to an aggregate of less than 300,000 shares of Common
Stock. Unless otherwise indicated in the Prospectus Supplement
relating thereto, if the Offered Securities are being distributed
in an underwritten offering, certain legal matters with respect
to the Offered Securities and, if the Offered Securities are by
their terms convertible or exchangeable, the securities into
which the Offered Securities may be converted or exchanged, will
be passed upon for the underwriters by the law firm named in such
Prospectus Supplement as representing the underwriters.
EXPERTS
The consolidated financial statements of Sovereign Bancorp,
Inc. appearing in Sovereign Bancorp, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1995 have been audited
by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by
reference which, as to the year 1993 is based in part on the
report of B.D.O. Seidman, LLP, independent auditors. Such
consolidated financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority
of such firms as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
Securities and Exchange Commission
registration fee $ 68,966
Printing 15,000
Trustees' fees and expenses 5,000
Accountant's fees and expenses 15,000
Rating agencies' fees 50,000
Attorneys' fees and expenses 20,000
Blue sky and legal investment fees
and expenses 10,000
Miscellaneous $ 1,034
Total $185,000
____________
* Estimated except for the registration fee.
</TABLE>
Item 15. Indemnification of Directors and Officers.
Pennsylvania law provides that a Pennsylvania corporation
may indemnify directors, officers, employees, and agents of the
corporation against liabilities they may incur in such capacities
for any action taken or any failure to act, whether or not the
corporation would have the power to indemnify the person under
any provision of law, unless such action or failure to act is
determined by a court to have constituted recklessness or willful
misconduct. Pennsylvania law also permits the adoption of a
bylaw amendment, approved by shareholders, providing for the
elimination of a director's liability for monetary damages for
any action taken or any failure to take any action unless (1) the
director has breached or failed to perform the duties of his
office and (2) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
The Bylaws of the Corporation provide for
(1) indemnification of directors, officers, employees, and agents
of the Corporation and its subsidiaries and (2) the elimination
of a director's liability for monetary damages to the fullest
extent permitted by Pennsylvania law.
Directors and officers are also insured against certain
liabilities for their actions, as such, by an insurance policy
obtained by the Corporation.
Item 16. Exhibits.
The following exhibits are filed herewith or incorporated by
reference herein as part of this Registration Statement:
Number Description
1.1 Form of Underwriting Agreement.
1.2 Form of Underwriting Agreement Standard Provisions for
Senior Debt Securities, Subordinated Debt Securities,
Preferred Stock, Common Stock, Warrants to Purchase
Debt Securities, Warrants to Purchase Common Stock, and
Warrants to Purchase Preferred Stock.
1.3 Form of Distribution Agreement.
3.1 Articles of Incorporation of Sovereign Bancorp, Inc.
(Incorporated by reference to Exhibit 3.1 to
Sovereign's Annual Report on Form 10-K for the year
ended December 31, 1995.)
3.2 Bylaws of Sovereign Bancorp, Inc. (Incorporated by
reference to Exhibit 2.3 to Sovereign's Registration
Statement on Form 8-A dated May 9, 1995.)
4.1 Subordinated Trust Indenture dated as of February 1,
1994, between Sovereign Bancorp, Inc. and Harris Trust
and Savings Bank, as Trustee. (Incorporated by
reference to Exhibit 4.1 to Sovereign's Registration
Statement No. 33-75472 on Form S-3.)
4.2 Senior Trust Indenture dated as of February 1, 1994,
between Sovereign Bancorp, Inc. and Harris Trust and
Savings Bank, as Trustee. (Incorporated by reference
to Exhibit 4.2 to Sovereign's Registration Statement
No. 33-75472 on Form S-3.)
4.3 Indenture dated as of September 15, 1992, relating to
$20,000,000 8/1-2% Subordinated Debentures due
September 15, 2002 of Sovereign Bancorp, Inc.
(Incorporated by reference to Exhibit 4.1 to
Sovereign's Registration Statement No. 33-50734 on
Form S-2).
4.4 Subordinated Trust Indenture dated as of March 5, 1993,
between Sovereign Bancorp, Inc. and Harris Trust and
Savings Bank, as Trustee (Incorporated by reference to
Exhibit 4.1 to Sovereign's Registration Statement
No. 33-56264 on Form S-3).
4.5 Senior Trust Indenture dated as of March 5, 1993,
between Sovereign Bancorp, Inc. and Harris Trust and
Savings Bank, as Trustee (Incorporated by reference to
Exhibit 4.2 to Sovereign's Registration Statement
No. 33-56264 on Form S-3).
4.6 First Supplemental Indenture to the Subordinated Trust
Indenture dated as of March 5, 1993 between Sovereign
Bancorp, Inc. and Harris Trust and Savings Bank, as
Trustee (Incorporated by reference to Exhibit 4.5 to
Sovereign's Registration Statement No. 33-56264 on
Form S-3).
4.7 Second Supplemental Indenture to the Subordinated Trust
Indenture dated as of March 5, 1993 between Sovereign
Bancorp, Inc. and Harris Trust and Savings Bank, as
Trustee (Incorporated by reference to Exhibit 4.6 to
Sovereign's Registration Statement No. 33-56264 on
Form S-3).
4.8 Form of Registered Medium-Term Note.
4.9 Rights Agreement, dated September 19, 1989, between
Sovereign Bancorp, Inc. and Harris Trust Corporation of
New York. (Incorporated by reference to Exhibit 4 to
Sovereign's Current Report on Form 8-K dated
October 12, 1989).
4.10 Form of Certificate of Designations relating to
Preferred Shares.
4.11 Form of Debt Warrant Agreement (including form of Debt
Warrant certificate).
4.12 Form of Preferred Stock Warrant Agreement (including
form of Preferred Stock Warrant certificate).
4.13 Form of Common Stock Warrant Agreement (including form
of Common Stock Warrant certificate).
4.14 Sovereign Bancorp, Inc. has outstanding certain long-
term debt. None of such debt exceeds 10% of the total
assets of Sovereign Bancorp, Inc. and its consolidated
subsidiaries; therefore, copies of the constituent
instruments defining the rights of the holders of such
debt are not included as exhibits to this Registration
Statement. Sovereign Bancorp, Inc. agrees to furnish
copies of such instruments to the Commission upon
request.
4.15 Amendment to Rights Agreement dated as of September 27,
1995, between Sovereign Bancorp, Inc. and Chemical
Bank, as successor to Harris Trust Company of New York,
as Rights Agent (Incorporated by reference to
Exhibit 4.1 to Sovereign's Current Report on Form 8-K/A
No. 1 dated January 8, 1996).
5.1 Opinion and Consent of Stevens & Lee as to the legality
of the Debt Securities and Capital Stock being
registered.*
12.1 Computation of Ratios of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of B.D.O. Seidman, LLP.*
23.3 Consent of Stevens & Lee (included in Exhibit 5.1).*
24.1 Powers of Attorney of Directors and Officers (included
on signature page hereof).
25.1 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 with respect to the Subordinated
Trust Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 with respect to the Senior Trust
Indenture.
* To be filed by Amendment.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement: (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
Registration Statement; and (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any
material change to such information in the Registration
Statement; provided, however, that the undertakings in
clauses (i) and (ii) shall not apply if the information
required to be included in a post-effective amendment by
those clauses is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for purposes of determining any liability
under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating
to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as
of the time it was declared effective.
(6) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment
that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions described under Item 15 above or otherwise, the
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted against
the registrant by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-3 and that it has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Borough of Wyomissing, Commonwealth of
Pennsylvania, on July 24, 1996
SOVEREIGN BANCORP, INC.
By /s/ Jay S. Sidhu
Jay S. Sidhu,
President and Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Jay S. Sidhu,
Karl D. Gerhart, Lawrence M. Thompson, Jr. or Joseph M. Harenza,
and each of them, his true and lawful attorney-in-fact, as agent
with full power of substitution and resubstitution for him and in
his name, place and stead, in any and all capacity, to sign any
or all amendments to this Registration Statement and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto such attorney-in-fact and agent full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as they might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title
/s/ Richard E. Mohn Chairman of the July 24, 1996
Richard E. Mohn Board and Director
/s/ Jay S. Sidhu President, Chief July 24, 1996
Jay S. Sidhu Executive Officer
and Director
/s/ Howard D. Mackey Director July 24, 1996
Howard D. Mackey
/s/ Rhoda S. Oberholtzer Director July 24, 1996
Rhoda S. Oberholtzer
/s/ Patrick J. Petrone Director July 24, 1996
Patrick J. Petrone
/s/ Daniel K. Rothermel Director July 24, 1996
Daniel K. Rothermel
/s/ G. Arthur Weaver Director July 24, 1996
G. Arthur Weaver
________________________ Director July 24, 1996
Theodore Ziaylek, Jr.
/s/ Karl D. Gerhart Chief Financial July 24, 1996
Karl D. Gerhart Officer
/s/ Mark R. McCollom Chief Accounting July 24, 1996
Mark R. McCollom Officer
<PAGE>
EXHIBIT INDEX
Number Description
1.1 Form of Underwriting Agreement.
1.2 Form of Underwriting Agreement Standard
Provisions for Senior Debt Securities,
Subordinated Debt Securities, Preferred
Stock, Common Stock, Warrants to Purchase
Debt Securities, Warrants to Purchase
Common Stock and Warrants to Purchase
Preferred Stock.
1.3 Form of Distribution Agreement.
3.1 Articles of Incorporation of Sovereign Bancorp,
Inc. (Incorporated by reference to Exhibit 3.1
to Sovereign's Annual Report on Form 10-K for
the year ended December 31, 1995.)
3.2 Bylaws of Sovereign Bancorp, Inc. (Incorporated
by reference to Exhibit 2.3 to Sovereign's
Registration Statement on Form 8-A dated
May 9, 1995.)
4.1 Subordinated Trust Indenture dated as of
February 1, 1994, between Sovereign Bancorp,
Inc. and Harris Trust and Savings Bank, as
Trustee. (Incorporated by reference to
Exhibit 4.1 to Sovereign's Registration
Statement No. 33-75472 on Form S-3.)
4.2 Senior Trust Indenture dated as of February 1,
1994, between Sovereign Bancorp, Inc. and Harris
Trust and Savings Bank, as Trustee.
(Incorporated by reference to Exhibit 4.2
to Sovereign's Registration Statement
No. 33-75472 on Form S-3.)
4.3 Indenture dated as of September 15, 1992,
relating to $20,000,000 8/1-2% Subordinated
Debentures due September 15, 2002 of Sovereign
Bancorp, Inc. (Incorporated by reference to
Exhibit 4.1 to Sovereign's Registration Statement
No. 33-50734 on Form S-2).
4.4 Subordinated Trust Indenture dated as of March 5,
1993, between Sovereign Bancorp, Inc. and Harris
Trust and Savings Bank, as Trustee (Incorporated
by reference to Exhibit 4.1 to Sovereign's
Registration Statement No. 33-56264 on Form S-3).
4.5 Senior Trust Indenture dated as of March 5, 1993,
between Sovereign Bancorp, Inc. and Harris Trust
and Savings Bank, as Trustee (Incorporated by
reference to Exhibit 4.2 to Sovereign's
Registration Statement No. 33-56264 on Form S-3).
4.6 First Supplemental Indenture to the Subordinated
Indenture dated as of March 5, 1993 between
Sovereign Bancorp, Inc. and Harris Trust and
Savings Bank, as Trustee (Incorporated by
reference to Exhibit 4.5 to Sovereign's
Registration Statement No. 33-56264 on Form S-3).
4.7 Second Supplemental Indenture to the Subordinated
Indenture dated as of March 5, 1993 between
Sovereign Bancorp, Inc. and Harris Trust and
Savings Bank, as Trustee (Incorporated by
reference to Exhibit 4.6 to Sovereign's
Registration Statement No. 33-56264 on Form S-3).
4.8 Form of Registered Medium-Term Note.
4.9 Rights Agreement, dated September 19, 1989,
between Sovereign Bancorp, Inc. and Harris
Trust Corporation of New York. (Incorporated
by reference to Exhibit 4 to Sovereign's
Current Report on Form 8-K dated October 12, 1989).
4.10 Form of Certificate of Designations relating
to Preferred Shares.
4.11 Form of Debt Warrant Agreement (including form
of Debt Warrant certificate).
4.12 Form of Preferred Stock Warrant Agreement
(including form of Preferred Stock Warrant
certificate).
4.13 Form of Common Stock Warrant Agreement
(including form of Common Stock Warrant
certificate).
4.14 Sovereign Bancorp, Inc. has outstanding certain
long-term debt. None of such debt exceeds 10%
of the total assets of Sovereign Bancorp, Inc.
and its consolidated subsidiaries; therefore,
copies of the constituent instruments defining
the rights of the holders of such debt are not
included as exhibits to this Registration
Statement. Sovereign Bancorp, Inc. agrees to
furnish copies of such instruments to the
Commission upon request.
4.15 Amendment to Rights Agreement dated as of
September 27, 1995, between Sovereign
Bancorp, Inc. and Chemical Bank, as successor
to Harris Trust Company of New York, as
Rights Agent (Incorporated by reference to
Exhibit 4.1 to Sovereign's Current Report on
Form 8-K/A No. 1 dated January 8, 1996).
5.1 Opinion and Consent of Stevens & Lee as to the
legality of the Debt Securities and Capital
Stock being registered.*
12.1 Computation of Ratios of Earnings to Fixed
Charges.
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of B.D.O. Seidman, LLP.*
23.3 Consent of Stevens & Lee (included in
Exhibit 5.1).*
24.1 Powers of Attorney of Directors and Officers
(included on signature page).
25.1 Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939 with respect to
the Subordinated Trust Indenture.
25.2 Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939 with respect to
the Senior Trust Indenture.
- ---------------------------
* To be filed by Amendment
EXHIBIT 1.1
UNDERWRITING AGREEMENT
_____________, 199_
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, PA 19610
Ladies and Gentlemen:
We understand that Sovereign Bancorp, Inc., a Pennsylvania
corporation (the "Company"), proposes to issue and sell
$________________ aggregate principal amount of [Insert Title of
Debt Securities (the "Offered Debt Securities")] [_____ shares of
Preferred Stock, Series ____ (the "Offered Preferred Stock")]
[____ shares of Common Stock (the "Offered Common Stock")]
[_____ warrants to purchase [Insert Title of Securities] (the
"Offered Warrants")] [to be sold in units (the "Offered Units")
each consisting of the amount of [Offered Debt Securities]
[Offered Preferred Stock] [Offered Common Stock] [Offered
Warrants] set forth in Schedule I hereto] (the "Offered
Securities) covered by Registration Statement No. 33-________, as
amended. The specific terms of the Offered Securities are set
forth in Schedule I hereto. Subject to the terms and conditions
set forth herein and incorporated by reference herein, the
Company hereby agrees to sell and the underwriter or underwriters
named on Schedule II hereto (such underwriter or underwriters
being herein called the "Underwriters") agree to purchase,
severally and not jointly, the amounts of such Offered Securities
at a purchase price equal to [____% of their principal amount
plus accrued interest, if any, from ______________, 199_ to the
date of payment and delivery and accrued amortization of original
issue discount, if any, from _____________, 199_ to the date of
payment and delivery] [_____________].
The Underwriters will pay for the Offered Securities at the
office of ____________, _____________, ____________, __________,
at __:00 _.m. (____________ time) on __________________, 199_
(the "Closing Date") or at such time on the same or such other
date, not later than _____________, 199_ as shall be mutually
agreed upon, upon confirmation of delivery to the Underwriters in
The City of New York, or such other place as shall be mutually
agreed upon, of certificates for the Offered Securities in such
names and denominations as the Underwriters request. Payment
shall be made in the following funds: _________________________.
The Company agrees to have the Offered Securities available
for inspection, checking and packaging by the Underwriters in
______________, not later than __:00 _.m. (____________ time) on
the business day next preceding the Closing Date.
[The Company agrees that it will not offer, sell or contract
to sell or otherwise dispose of, directly or indirectly, or
announce the offering of any of the Company's [debt securities]
[preferred stock] [common stock] [debt securities warrants]
[preferred stock warrants] [common stock warrants] [securities
convertible into or exchangeable for the Company's common stock
or preferred stock] [securities ranking on a parity with the
Offered Securities] [with substantially similar terms of the
Offered Securities] [common stock] [until ______________]].
[The Representatives, as defined below, have received at the
time this Agreement is executed a letter from Ernst & Young,
independent public accountants (or other independent accountants
acceptable to the Representatives), dated the date of this
Agreement, as described in Section 5(e) of the Underwriting
Agreement Standard Provisions (July 1996), incorporated in this
Agreement.]
[Upon request of the Company, _________________ will
promptly advise the Company as to whether, to its knowledge, the
offering of the Offered Securities as contemplated by this
Agreement has been completed.] [___________________ will
promptly advise the Company as to when, based on information
provided to it by the Underwriters, the offering of the Offered
Securities as contemplated by this Agreement has been completed.]
[If any one or more Underwriters shall fail to purchase and
pay for any of the Offered Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the nondefaulting
Underwriters shall be obligated severally to take up and pay for
(in the respective proportions which the amount of Offered
Securities set forth opposite their names in Schedule II hereto
bear to the aggregate amount of Offered Securities set forth
opposite the name of all the nondefaulting Underwriters) the
Offered Securities which the defaulting Underwriter of
Underwriters agreed but failed to purchase; provided, however,
that in the event that the aggregate amount of Offered Securities
which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of
Offered Securities set forth in Schedule II hereto, the
nondefaulting Underwriters shall have the right to purchase all,
but shall not be under any obligation to purchase any, of the
Offered Securities, and if such nondefaulting Underwriters do not
purchase all the Offered Securities, this Agreement will
terminate without liability to any nondefaulting Underwriter as
set forth in this paragraph, the Closing Date shall be postponed
for such period, not exceeding seven days, as the nondefaulting
Underwriters shall determine in order that the required changes
in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. Nothing contained in
this paragraph shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any nondefaulting
Underwriter for damages occasioned by its default hereunder.]
All the provisions contained in the document entitled
Sovereign Bancorp, Inc. Underwriting Agreement Standard
Provisions (July 1996), a copy of which we have previously
received, are herein incorporated by reference in their entirety
and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein.
For purposes of the Standard Provisions, the term Representatives
shall mean _____________________________________________________.
Notice shall be sent to the Underwriters at the following
address: ________________________________________________________
_________________________________________________________________
________________________________________________________________.
This Agreement will be governed by and construed in
accordance with the laws of the State of ________________.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Please confirm your agreement by having an authorized person
sign an copy of this Agreement in the space set forth below and
returning the signed copy to us.
Very truly yours,
(Signed on behalf of the
Underwriters)*
By_________________________________
Title:
Dated:
SOVEREIGN BANCORP, INC.
___________________________
Title:
Dated:_______________, 199_
* To be executed by all the Underwriters
listed on Schedule II hereto or by one or
more of such Underwriters on behalf of
itself (themselves) and the other
Underwriters listed on Schedule II.
<PAGE>
SCHEDULE I
Underwriting Agreement dated _______________, 19__
Debt Securities
Title:
Principal amount and currency:
Purchase Price (include accrued interest and amortization,
if any):
Sinking fund provisions:
Redemption provisions:
Conversion price:
Interest rate:
Date of maturity:
Other provisions:
Preferred Stock
Title:
Number:
Purchase Price (include accrued dividends, if any):
Liquidation value:
Dividend:
Conversion rate:
Sinking fund provisions:
Redemption provisions:
Other provisions:
Warrants
Title:
Number:
Securities issuable upon exercise of one Warrant:
Warrant exercise price and currency:
Purchase price and currency:
Date after which Warrants are exercisable:
Expiration date:
Warrant agent:
Other provisions:
Common Stock
Number:
Purchase price:
____________
Title and principal amount of Debt Securities or title and
number of shares of Preferred Stock or number of shares of
Common Stock and title and number of Warrants included in
one Unit:
Purchase price and currency:
Detachable date:
Other provisions:
<PAGE>
SCHEDULE II
Underwriter Principal Amount or Number
Total $____________
EXHIBIT 1.2
July 1996
SOVEREIGN BANCORP, INC.
UNDERWRITING AGREEMENT
STANDARD PROVISIONS FOR SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES,
PREFERRED STOCK, COMMON STOCK,
WARRANTS TO PURCHASE DEBT SECURITIES,
WARRANTS TO PURCHASE COMMON STOCK, AND
WARRANTS TO PURCHASE PREFERRED STOCK
(July 1996)
<PAGE>
From time to time, Sovereign Bancorp, Inc. (the
"Company") may enter into underwriting agreements that provide
for the sale of designated securities to the several underwriters
named therein. The standard provisions set forth herein may be
incorporated by reference in any such underwriting agreement (an
"Underwriting Agreement"). The Underwriting Agreement, including
the provisions incorporated therein by reference, is herein
sometimes referred to as "this Agreement" or "the Underwriting
Agreement." Unless otherwise defined herein, terms defined in
the Underwriting Agreement are used herein as therein defined.
1. Securities; Prospectus; Representations and
Warranties.
(a) The Company proposes to issue and sell from
time to time its senior debt securities (the "Senior Securities")
and subordinated debt securities (the "Subordinated Securities")
(the Senior Securities and the Subordinated Securities being
herein collectively referred to as the "Debt Securities"). The
Senior Securities are to be issued under an Indenture dated as of
___________, as amended or supplemented (the "Senior Indenture")
between the Company and ______________________________________,
as trustee (the "Senior Trustee", and together with the
Subordinated Trustee, the "Trustees"). The Subordinated
Securities are to be issued under an Indenture dated as of
__________________, as amended or supplemented, (the
"Subordinated Indenture"), between the Company and
______________________ (the "Subordinated Trustee"). The Senior
Indenture and the Subordinated Indenture are collectively
referred to herein as the "Indentures." The Debt Securities may
have varying designations, maturities, rates and times of payment
of interest, if any, selling prices, redemption terms, if any,
exchange terms, if any, conversion terms, if any, and other
specific terms.
The Company also proposes to issue and sell from time
to time common stock (the "Common Stock") and preferred stock
(the "Preferred Stock"). The Preferred Stock will be issuable in
series with varying conversion rights, if any, dividend
provisions, redemption terms and other specific terms.
The Company also proposes to issue and sell from time
to time warrants to purchase Debt Securities (the "Debt
Securities Warrants"), Common Stock (the "Common Stock Warrants")
or Preferred Stock (the "Preferred Stock Warrants"; the Debt
Securities Warrants, the Common Stock Warrants and the Preferred
Stock Warrants being herein collectively referred to as the
"Warrants"). The Warrants are to be issued pursuant to a warrant
agreement (the "Warrant Agreement") to be entered into between
the Company and a warrant agent. The Warrants may have varying
designations, terms for exercising, selling prices and other
specific terms.
The Debt Securities, Common Stock, Preferred Stock and
Warrants may be sold either separately or as units (the "Units").
As used herein, "Offered Debt Securities," "Offered
Preferred Stock," "Offered Common Stock," "Offered Debt
Securities Warrants," "Offered Common Stock Warrants," "Offered
Preferred Stock Warrants," "Offered Warrants," and "Offered
Units" shall mean the specific Debt Securities, Preferred Stock,
Common Stock, Debt Securities Warrants, Common Stock Warrants,
Preferred Stock Warrants, Warrants, and Units, respectively
described in the Underwriting Agreement. The Offered Debt
Securities, Offered Preferred Stock, Offered Common Stock,
Offered Debt Securities Warrants, Offered Common Stock Warrants,
Offered Preferred Stock Warrants, Offered Warrants, and Offered
Units described in the Underwriting Agreement shall collectively
be referred to as the "Offered Securities."
(b) The Company has filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities
Act of 1933 (the "1933 Act") a registration statement (File
No. 33-_________) including a prospectus relating to the Debt
Securities, the Preferred Stock, the Common Stock, the Debt
Securities Warrants, the Common Stock Warrants, and the Preferred
Stock Warrants and such registration statement has become
effective. The term "Registration Statement" means the
registration statement as amended to the date of this Agreement.
The term "Basic Prospectus" means the prospectus included in the
Registration Statement. The term "Preliminary Prospectus" means
the Basic Prospectus together with a preliminary prospectus
supplement specifically relating to the Offered Securities. The
Company will file with, or mail for filing to, the Commission a
prospectus supplement specifically relating to the Offered
Securities pursuant to Rule 424 under the 1933 Act (the
"Prospectus Supplement"), together, if required, with the Basic
Prospectus (collectively, the "Prospectus"). As used herein, the
terms "Registration Statement," "Basic Prospectus," "Prospectus"
and "Preliminary Prospectus" shall include in each case the
material, if any, incorporated by reference therein and the terms
"amend," "amendment" and "supplement" with respect to the
Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934
Act") after the effective date of the Registration Statement, or
the date of any Preliminary Prospectus or the Prospectus, as the
case may be, and deemed to be incorporated therein by reference.
(c) The Company represents and warrants to each
Underwriter that (i) each document, if any, filed or to be filed
pursuant to the 1934 Act and incorporated by reference in the
Prospectus complied or will comply when so filed in all material
respects with the 1934 Act and the rules and regulations
thereunder, (ii) each part of the Registration Statement
(including the documents incorporated by reference therein), when
such part became effective or was filed, as the case may be,
complied in all material respects with the 1933 Act, the Trust
Indenture Act of 1939 (the "Trust Indenture Act") and the
respective rules and regulations thereunder and did not contain
any untrue statements of material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, (iii) the Registration
Statement at the date of the Prospectus Supplement and at the
Closing Date will meet the requirements set forth in
Rule 415(a)(1)(x) under the 1933 Act and will comply in all other
material respects with said rule, (iv) each Preliminary
Prospectus, if any, filed pursuant to Rule 424 under the 1933 Act
will comply when so filed in all material respects with the 1933
Act, and the rules and regulations thereunder, (v) the
Registration Statement, the Prospectus and the applicable
Indenture comply and, as amended or supplemented, will comply in
all material respects with the 1933 Act and the Trust Indenture
Act and the respective rules and regulations thereunder, (vi) at
the date of the Prospectus Supplement, at the date of any further
amendment to the Registration Statement or supplement to the
Prospectus and at the Closing Date, the Registration Statement
and the Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except that these representations and warranties do
not apply to: (a) that part of the Registration Statement which
shall constitute the Statements of Eligibility and Qualification
(Forms T-1) under the Trust Indenture Act of the Trustees or
(b) statements in or omissions from any such documents based upon
information furnished to the Company in writing by or in any
document prepared by any Underwriter, any Warrant Agent or by the
Trustees expressly for use therein, (vii) the Company has
furnished to the Representatives such information, financial and
other, regarding the Company as is expected to be included in the
Prospectus Supplement, and (viii) the Company has complied and
will comply with the provisions of that certain Florida act
relating to the disclosure of doing business with Cuba, codified
as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder or is exempt therefrom.
(d) The Company represents and warrants to each
Underwriter that there has been no material adverse change in the
condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries considered as one
enterprise, whether or not arising from transactions in the
ordinary course of business, since the date of the most recent
financial statements included or incorporated in the Prospectus,
as amended or supplemented as of the Closing Date, except as set
forth or contemplated in such Prospectus.
2. Offering of Offered Securities. The Company is
advised by the Representatives that the Underwriters propose to
offer the Offered Securities in the manner set forth in the
Prospectus.
3. Delivery and Payment. Payment for the Offered
Securities shall be made in such funds and at the time and place
set forth in this Agreement, upon delivery of the Offered
Securities to the Representatives for the respective accounts of
the several Underwriters, registered in such names and in such
denominations as the Representatives shall request in writing not
less than two full business days prior to the date of delivery.
The time and date of such payment and delivery of the Offered
Securities are herein referred to as the Closing Date.
4. Agreements. The Company agrees with the
Underwriters that:
(a) The Company will cause the Prospectus
Supplement and, if required, the Basic Prospectus to be filed
pursuant to Rule 424 under the 1933 Act and, for so long as,
within the opinion of counsel to the Company and counsel to the
Underwriters, the delivery of a Prospectus is required in
connection with the offering or sale of the Offered Securities,
will promptly advise the Representatives (i) when any amendment
to the Registration Statement shall have become effective or any
further supplement to the Prospectus shall have been filed,
(ii) of any request by the Commission for any amendment of the
Registration Statement or further supplement to the Prospectus or
for any additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Offered Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purpose. For so long as, within the opinion of counsel
to the Company and counsel to the Underwriters, the delivery of a
Prospectus is required in connection with the offering or sale of
the Offered Securities and prior to the expiration or exercise of
Offered Warrants, if any, the Company will not file any amendment
to the Registration Statement or any further supplement to the
Prospectus unless the Company has furnished the Representatives a
copy for review prior to filing and will not file any such
proposed amendment or supplement to which the Representatives
reasonably object promptly after notice thereof. The Company
will use its best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when, within the opinion of
counsel to the Company and counsel to the Underwriters, a
prospectus relating to the Offered Securities is required to be
delivered under the 1933 Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein in the
light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the 1933 Act or the 1934 Act or the
respective rules thereunder, the Company promptly will prepare
and file with the Commission, subject to paragraph (a) of this
Section 4, an amendment or supplement which will correct such
statement or omission or an amendment which will effect such
compliance.
(c) The Company will make generally available to
its security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the 12-
month period beginning at the end of the fiscal quarter of the
Company during which the filing of the Prospectus pursuant to
Rule 424 under the 1933 Act first occurs (except not later than
90 days if such filing date is in the Company's last fiscal
quarter), an earnings statement of the Company and its
consolidated subsidiaries which will satisfy the provisions of
Section 11(a) of the 1933 Act and Rule 158 under the 1933 Act.
(d) The Company will furnish to counsel for the
Underwriters, without charge, a signed copy of the Registration
Statement (including exhibits thereto and materials incorporated
by reference therein) and to each Representative a copy of the
Registration Statement (including exhibits thereto and materials
incorporated by reference therein) and, so long as, within the
opinion of counsel to the Company and counsel to the
Underwriters, delivery of a prospectus by an Underwriter or
dealer in connection with the sale of the Offered Securities may
be required by the 1933 Act, as many copies of each Preliminary
Prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Representatives may reasonably
request.
(e) The Company will pay (i) all expenses
incident to the performance of its obligations under this
Agreement, (ii) the expenses of printing all documents relating
to the offering of the Offered Securities, (iii) any fees charged
for rating the Offered Securities, (iv) any filing fees in
connection with the review of the offering by the National
Association of Securities Dealers, Inc. ("NASD"), (v) any costs
of printing the Offered Securities, (vi) any fees of any
trustees, depository, and paying agents, and (vii) any filing
fees in connection with qualifying the Offered Securities for
sale as provided in paragraph (g) below. It is understood,
however, that except as provided in this Section and in the
Underwriting Agreement, the Underwriters and the Representatives
shall, respectively, pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes due
upon resale of any of the Securities by them and any advertising
expenses incurred in connection with any offers they make.
(f) If the sale of the Offered Securities is not
consummated, the Company shall reimburse the Underwriters for all
reasonable out of pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in
connection with any investigation or preparation made by them in
respect of the marketing of the Offered Securities or in
contemplation of the performance by them of their obligations
hereunder in the event this Agreement is terminated by the
Underwriters pursuant to Section 5 hereof; provided, further,
that the Company shall pay fifty percent of such expenses in the
event this Agreement is terminated by the Underwriters pursuant
to Section 8 hereof; and provided, further, that in no event
shall the Company be obligated to pay such expenses if the
Underwriters shall default on their obligations hereunder or if
this Agreement is terminated pursuant to the Underwriting
Agreement.
(g) The Representatives will arrange for the
qualification of the Offered Securities and the Common Stock
which may be issuable pursuant to the Offered Securities for sale
under the laws of such jurisdictions as the Representatives may
propose to offer the Offered Securities (the "Blue Sky
Applications"), and will arrange for the determination of the
eligibility of the Offered Securities for purchase by certain
institutional investors under the laws of such jurisdictions as
the Representatives may propose to offer the Offered Securities.
The Company will maintain such qualifications in effect so long
as required for the distribution of the Offered Securities.
(h) The Company will arrange for the listing of
the Offered Securities upon notice of issuance on the New York
Stock Exchange or such other national securities exchange or
NASDAQ as may be designated in the Underwriting Agreement.
(i) The Company will arrange for the listing of
any Common Stock, no par value (the "Common Stock"), issuable
upon conversion or exercise of Offered Securities on all national
securities exchanges or NASDAQ on which the Company's outstanding
Common Stock is then listed.
5. Conditions to the Obligations of the Underwriters.
The obligations of the Underwriters to purchase the Offered
Securities shall be subject to the accuracy of the
representations and warranties on the part of the Company
contained herein as of the date hereof and the Closing Date, to
the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) No stop order suspending the effectiveness of
the Registration Statement shall be in effect and no proceedings
for that purpose shall have been instituted or threatened.
(b) The Representatives shall have received on
the Closing Date the opinion of the counsel for the Company (or
other counsel for the Company acceptable to the Representatives),
dated the Closing Date, to the effect set forth in Exhibit A
hereto.
(c) The Representatives shall have received on
the Closing Date the opinion of counsel for the Underwriters,
dated the Closing Date, with respect to the issuance and sale of
the Offered Securities, the Registration Statement, the
Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purposes of
enabling them to pass upon such matters.
(d) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the
Chairman of the Board, the Chief Executive Officer, President, a
Vice Chairman of the Board or a Vice Chairman, the Chief
Financial Officer or Chief Accounting Officer of the Company (or,
in either such case, another officer or officers acceptable to
the Representatives), in their capacities as such, without
personal liability, dated the Closing Date, to the effect that
the signatories of such certificate have carefully examined the
Registration Statement, the Prospectus and this Agreement and
that based upon their personal knowledge after due inquiry:
(i) the representations and warranties of
the Company in this Agreement are true and correct in all
material respects on and as of the Closing Date with the
same effect as if made on the Closing Date, and the Company
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or,
to the Company's knowledge, threatened; and
(iii) since the date of the most recent
financial statements included in the Prospectus, there has
been no material adverse change, nor any presently known and
existing development that the Company expects to result in a
material adverse change, in the financial condition,
earnings, business or properties of the Company and its
subsidiaries considered as one enterprise, whether or not
arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the
Prospectus.
(e) The Representatives shall have received on
the Closing Date a letter from Ernst & Young, independent public
accountants (or other independent public accountants acceptable
to the Representatives), dated the Closing Date, in form and
substance satisfactory to the Representatives containing
statements and information of the type ordinarily included in
accountants "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained
or incorporated by reference in the Registration Statement and
the Prospectus.
(f) There shall not have been any material change
or decrease specified in the letter referred to in paragraph (e)
of this Section (5) or, subsequent to the date of the
Underwriting Agreement, there shall not have been any change, or
any development involving a prospective change, in or affecting
the business or properties of the Company and its subsidiaries
the effect of which, in any case referred to in this
paragraph (f), is, in the judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to
proceed with the delivery or offering of the Offered Securities
as contemplated by the Prospectus.
(g) Prior to the Closing Date, the Company shall
have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably
request.
If any of the conditions specified in this Section 5
shall not have been fulfilled in all material respects when and
as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall
not be in all material respects reasonably satisfactory in form
and substance to the Representatives and their counsel, this
Agreement and all obligations of the Underwriters hereunder may
be cancelled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to
the Company in writing or by telephone or telegraph confirmed in
writing.
6. Reimbursement of Underwriters' Expenses. If the
sale of the Offered Securities provided for in this Agreement is
not consummated because any condition to the obligations of the
Underwriters set forth in Section 5 hereof is not satisfied or
because of any refusal, inability or failure on the part of the
Company to perform any agreement in this Agreement or comply with
any provisions in this Agreement other than by reason of a
default by any of the Underwriters, the Company will reimburse
the Underwriters severally upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel)
that shall have been reasonably incurred by them in connection
with the proposed purchase and sale of the Offered Securities and
shall have no further obligations to the Underwriters with
respect thereto. In no event shall the Company be liable to the
Underwriters for loss of anticipated profits from the
transactions contemplated by this Agreement.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold
harmless each Underwriter and each person who controls any
Underwriter within the meaning of either the 1933 Act or the 1934
Act against any and all losses, claims, damages or liabilities,
as incurred, insofar as such losses, claims, damages or
liabilities arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company will not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of such untrue statement or alleged untrue
statement or omission or alleged omission made therein in
reliance upon written information furnished to the Company by or
on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation thereof,
or the Statement of Eligibility and Qualification (Form T-1)
under the Trust Indenture Act of any of the Trustees, and
(ii) such indemnity with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom the person asserting any
such loss, claim, damage or liability purchased the Offered
Securities which are the subject thereof, if such person did not
receive a copy of the Prospectus (or the Prospectus as amended or
supplemented), excluding documents incorporated therein by
reference, at or prior to the confirmation of the sale of such
Offered Securities to such person in any case where such delivery
is required by the 1933 Act and the untrue statement or omission
of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as amended or
supplemented).
(b) Each Underwriter severally, but not jointly,
agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the
meaning of either the 1933 Act or the 1934 Act, to the same
extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to written information
furnished to the Company by or on behalf of such Underwriter
through the Representatives specifically for use in the
preparation of the documents referred to in the foregoing
indemnity.
(c) Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any
action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which
it may have to any indemnified party, except to the extent such
indemnified party has been prejudiced in any material respect by
such failure, or from any liability it may have otherwise than on
account of this indemnity agreement. In case any such action is
brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent
that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party
and the indemnifying party, and the indemnified party shall have
reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select
separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 7 for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance
with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel
representing the indemnified parties who are parties to such
action), or (ii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of
the indemnifying party.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification
provided for in this Section 7 is due in accordance with its
terms but is for any reason held by a court to be unavailable on
grounds of public policy or otherwise, the Company and the
Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending
the same) to which the Company and one or more of the
Underwriters may be subject in such proportion so that the
Underwriters are responsible for that portion represented by the
percentage that the aggregate underwriting discount appearing on
the cover page of the Prospectus Supplement bears to the
aggregate public offering price appearing thereon and the Company
is responsible for the balance; provided, however, that (y) in no
case shall any Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the
Offered Securities) be responsible for any amount in excess of
the underwriting discount applicable to the Offered Securities
purchased by such Underwriter hereunder and (z) no person guilty
of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1993 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
who controls an Underwriter within the meaning of the 1933 Act
shall have the same rights to contribution as such Underwriter,
and each person who controls the Company within the meaning of
either the 1933 Act or the 1934 Act, each officer of the Company
who shall have signed the Registration Statement and each
director of the Company shall have the same rights to
contribution as the Company, subject in each case to clause (y)
of this paragraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action,
suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom
contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may
have hereunder except to the extent such party has been
prejudiced in any material respect by such failure or from any
liability it may have otherwise than under this paragraph (d).
This notice requirement shall be deemed satisfied by the delivery
of the notice contemplated by the first sentence of
subparagraph (c) of this Section 7.
8. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by
notice given to the Company prior to delivery of and payment for
the Offered Securities, if prior to such time (i) there shall
have been such a material adverse change in general economic or
financial conditions as to make it, in the Representatives'
reasonable judgment, inadvisable or impractical to market the
Offered Securities, (ii) trading in securities generally on the
New York Stock Exchange shall have been suspended or materially
limited, (iii) a banking moratorium shall have been declared by
either Federal or Pennsylvania authorities, or (iv) the United
States becomes engaged in hostilities or there is an escalation
of hostilities involving the United States or there is a
declaration of war or national emergency by the United States.
9. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities
and other statements of the Company or its officers and of the
Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in
Section 7 hereof, but the representations, warranties and
statements of the Company or its officers or of the Underwriters
will not survive delivery of and payment for the Offered
Securities. The provisions of Sections 4(f), 6, and 7 hereof
shall survive the termination or cancellation of this Agreement.
10. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and
controlling persons referred to in Section 7 hereof, and no other
person will have any right or obligation hereunder. No purchaser
of Offered Securities from any Underwriter shall be deemed a
successor because of such purchase.
<PAGE>
EXHIBIT A
FORM OF OPINION OF
COUNSEL TO THE COMPANY
The opinion of counsel for the Company, to be delivered
pursuant to Section 5(b) of the Underwriting Agreement, shall be
to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the Commonwealth of Pennsylvania, with full corporate power
and authority to own its properties and conduct its business as
described in the Prospectus and is duly registered as a savings
and loan holding company under the Savings and Loan Holding
Company Act, as amended;
(ii) Sovereign Bank, a Federal Savings Bank (the
"Bank") is duly incorporated as a federal savings bank under the
laws of the United States and has full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus; and all the outstanding shares of
capital stock of the Bank have been duly and validly authorized
and issued, are fully paid and nonassessable, and are directly
owned by the Company free and clear of liens and encumbrances
except that under applicable federal and state banking laws, the
Company may be required in certain circumstances to contribute
capital to the Bank;
(iii) [If the Offered Securities include or are
exercisable or exchangeable for or convertible into equity
securities of the Company insert -- the Company's authorized
capital stock was as set forth in the Prospectus as of the dates
set forth therein;] the Offered Securities conform to the
description thereof contained in the Prospectus;
[If the Offered Securities include Offered Debt
Securities insert --
(iv) the Indenture has been duly authorized,
executed and delivered by the Company, has been duly qualified
under the Trust Indenture Act and constitutes a valid and binding
instrument of the Company enforceable against the Company in
accordance with its terms (subject, as to enforcement of
remedies, (1) to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally, the application of usual equitable principles when
equitable remedies are sought, the effect of certain applicable
court decisions and statutes, and the enforceability of choice of
forum provisions, and (2) to further action by the Company's
Board of Directors to authorize the issuance of Capital
Securities to be exchanged for Subordinated Debt Securities or
sold to be designated for inclusion in a securities fund, as
provided in the Indenture);
(v) the Offered Debt Securities have been duly
authorized by the Company, executed in accordance with the
provisions of the Indenture and, when delivered to and paid for
by the Underwriters pursuant to the Underwriting Agreement and
authenticated by the Trustee or its agent in accordance with the
terms of the Indenture, will constitute valid and binding
obligations enforceable against the Company in accordance with
their terms and will be entitled to the benefits of the Indenture
(subject as aforesaid);]
[If the Offered Debt Securities include Offered
Debt Securities which are to be exchangeable for Capital
Securities insert --
(vi) the Offered Debt Securities are exchangeable
for Capital Securities, as defined in the Indenture, of the
Company in accordance with the terms of the Offered Securities
and the Indenture (subject as aforesaid);]
[If the Offered Securities include Offered
Preferred Stock insert --
(vii) the Offered Preferred Stock has been duly
authorized for issuance and sale, and, when issued and delivered
to and paid for by the Underwriters pursuant to the Underwriting
Agreement will be validly issued, fully paid, and nonassessable;
the certificates for the Offered Preferred Stock are in valid and
sufficient form;
(viii) the Offered Preferred Stock ranks on a
parity with all issued and outstanding shares of Preferred Stock
as to dividends and as to distributions of assets except as set
forth in the Prospectus;]
[If the Offered Securities include Common Stock or
are convertible into Common Stock or Capital Securities insert --
(ix) the Offered Common Stock has been duly
authorized for issuance and sale, and, when issued and delivered
to and paid for by the Underwriters pursuant to the Underwriting
Agreement, will be validly issued, fully paid, and nonassessable;
the certificates for the Offered Common Stock are in valid and
sufficient form;
(x) the Offered Securities are convertible in
accordance with their terms [and the Indenture] and the
__________ issuable upon conversion thereof have been duly and
validly authorized and reserved for issuance upon such
conversion, and when issued upon such conversion in accordance
with the terms of the Offered Securities will be duly authorized,
validly issued, fully paid and nonassessable;]
[If the Offered Securities include Offered
Warrants insert --
(xi) the Offered Warrants have been duly
authorized and duly executed by the proper officers of the
Company and, when authenticated by the warrant agent under the
Warrant Agreement, will constitute legal, valid and binding
obligations of the Company; [the Debt Securities initially
issuable upon exercise thereof have been duly authorized, and
when executed and authenticated in accordance with the Warrant
Agreement and the Indenture upon exercise of the Warrants in
accordance with the terms of the Warrant Agreement and at the
price therein provided for, will be valid and binding obligations
enforceable against the Company in accordance with their terms
and will be entitled to the benefits of the Indenture (subject as
aforesaid);] [the Preferred stock initially issuable upon
exercise thereof has been duly and validly authorized and
reserved for issuance upon such exercise and such shares, when
issued upon such exercise in accordance with the terms of the
Warrant Agreement and at the price therein provided for, will be
duly authorized, validly issued, fully paid and nonassessable;]
[the Common Stock initially issuable upon exercise thereof has
been duly and validly authorized and reserved for issuance upon
such exercise and such shares, when issued upon such exercise in
accordance with the terms of the Warrant Agreement and at the
price therein provided for, will be duly authorized, validly
issued, fully paid and nonassessable;]
(xii) assuming due authorization, execution and
delivery of the Warrant Agreement by the Warrant Agent, the
Warrant Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding instrument of
the Company enforceable in accordance with its terms (subject as
aforesaid);]
(xiii) (a) the Registration Statement has become
effective under the 1933 Act; (b) to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened; and (c) the
Registration Statement, the Prospectus and each amendment thereof
or supplement thereto (other than the Statements of Eligibility
and Qualification (Forms T-1) under the Trust Indenture Act of
the Trustees and the financial statements and other financial and
statistical information contained therein as to which such
counsel need express no opinion), as of their respective
effective or issues dates, complied as to form in all material
respects with the applicable requirements of the 1933 Act and the
1934 Act and the respective rules thereunder; and nothing has
come to the attention of such counsel to believe that the
Registration Statement, or any amendment thereof, at the time it
became effective contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading or that the Prospectus, as of the date of this
Agreement and as of the Closing Date contained or contains an
untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading;
(xiv) the Underwriting Agreement has been duly
authorized, executed and delivered by the Company;
(xv) no consent, approval, authorization or order
of any court or governmental agency or body is required for the
consummation of the transactions contemplated in the Underwriting
Agreement [or the Warrant Agreement], except such as have been
obtained under the 1933 Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase
and distribution of the Offered Securities by the Underwriters
and the following other approvals, which have been obtained:
_________________________________;
(xvi) neither the issue and sale of the Offered
Securities, nor the consummation of any other of the transactions
contemplated in the Underwriting Agreement [or the Warrant
Agreement] nor the fulfillment of the terms thereof will conflict
with resolutions of or constitute a default under the certificate
of incorporation or by-laws of the Company or, to the best
knowledge of such counsel, under the terms of any indenture or
other agreement or instrument to which the Company or the Bank is
a party or is bound, or any order or regulation of any court,
administrative agency, or governmental body having jurisdiction
over the Company or the Bank which in the case of any indenture,
agreement, instrument or order, the breach of which would have a
material adverse effect on the holders of the Offered Securities
or the financial condition, earnings, business or properties of
the Company and its subsidiaries, taken as one enterprise; and
(xvii) there are no holders of securities of the
Company having rights to the registration of such securities
under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as
to matters involving the application of laws of any jurisdiction
other than the Commonwealth of Pennsylvania or the United states,
to the extent such counsel shall deem proper and specifying such
opinion, upon the opinion of other counsel of good standing whom
such counsel believes to be reliable and who are satisfactory to
counsel for the Underwriters; and (B) as to matters of fact, to
the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
EXHIBIT 1.3
SOVEREIGN BANCORP, INC.
Medium-Term Notes, Series ____
Distribution Agreement (Domestic)
_________ __, 199_
_____________________
_____________________
_____________________
Ladies and Gentlemen:
Sovereign Bancorp, Inc., a Pennsylvania corporation (the
"Company"), confirms its agreement with you (sometimes referred
to herein as the "Agent") with respect to the issue and sale by
the Company of up to [an additional] $__________ aggregate
principal amount of its Medium-Term Notes, Series ____ (the
"Securities"), to be issued pursuant to, in the case of senior
Securities, an indenture dated as of _________________, between
the Company and ___________________________, as trustee, or, in
the case of subordinated securities, pursuant to an indenture
dated as of __________, between the Company and ________, as
trustee (collectively, the "Indentures").
Subject to the terms and conditions stated herein, the
Company hereby (i) appoints you as agent of the Company for the
purpose of soliciting purchases of the Securities from the
Company by others and (ii) agrees that whenever the Company
determines to sell Securities directly to you as principal for
resale to others it will enter into a Terms Agreement relating to
such sale in accordance with the provisions of Section 2(b)
hereof; provided, however, that the Company reserves the right to
appoint additional agents for the purpose of soliciting offers to
purchase the Securities, provided that they are appointed
pursuant to agreements with terms substantially similar to the
terms of this Agreement (except with respect to commissions and
payment of expenses), and provided further that the Company
reserves the right to sell and may accept offers to purchase the
Securities directly on its own behalf or through or to
underwriters.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on
Form S-3 relating to the Securities and the offering thereof from
time to time in accordance with Rule 415 of the Securities Act of
1933 (the "1933 Act"). Such registration statement has been
declared effective by the Commission, and the Indentures have
been qualified under the Trust Indenture Act of 1939 (the "1939
Act"). Such registration statement and the prospectus relating
to the Securities filed pursuant to Rule 424 under the 1933 Act,
including all documents incorporated therein by reference, as
from time to time amended or supplemented, are referred to herein
as the "Registration Statement" and the "Prospectus,"
respectively. The Securities will be issuable in registered
form. This Agreement relates only to the sale of, and the
obligations hereunder of you shall be applicable only with
respect to, Securities issuable in registered form.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to you as of
the date hereof, as of the Commencement Time (as defined in
Section 2(d)) and each Settlement Date hereinafter referred to,
and as of the times referred to in Sections 6(a) and 6(b) hereof
(in each case the "Representation Date"), as follows:
(i) The Registration Statement and the
Prospectus, at the time the Registration Statement became
effective, complied, and as of the applicable Representation
Date will comply, in all material respects with the
requirements of the 1933 Act, and the rules and regulations
thereunder (the "Regulations") and the 1939 Act. The
Registration Statement, at the time it became effective did
not, and as of the applicable Representation Date will not,
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
The Prospectus, at the time the Registration Statement
became effective did not, and as of the applicable
Representation Date will not, contain 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; provided, however, that the representations and
warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by you
expressly for use in the Registration Statement or
Prospectus or to that part of the Registration Statement
which shall constitute the Statement of Eligibility and
Qualification under the 1939 Act (Form T-1) of the Trustee.
(ii) The documents incorporated by reference in
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 Securities
Exchange Act of 1934 (the "1934 Act") and the rules and
regulations thereunder (the "1934 Regulations"), and, when
read together and with the other information in the
Prospectus, at the time the Registration Statement became,
and any amendments thereto become, effective, did not and
will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of
the circumstances under which they were or are made, not
misleading.
(iii) the Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the Commonwealth of Pennsylvania, with full
corporate power and authority to own its properties and
conduct its business as described in the Prospectus, as
amended and supplemented as of the Representation Date, and
is duly registered as a savings and loan holding company
under the Home Owners' Loan Act, as amended;
(iv) Sovereign Bank, a Federal Savings Bank (the
"Bank") holds a valid charter from the Office of Thrift
Supervision to do business as a federal savings bank under
the laws of the United States and has full corporate power
and authority to own its properties and conduct its business
as described in the Prospectus, as amended or supplemented
as of the Representation Date, and all the outstanding
shares of capital stock of the Bank have been duly and
validly authorized and issued, are fully paid and
nonassessable, and are directly owned by the Company free
and clear of liens and encumbrances except that under
applicable federal and state banking laws, the Company may
be required in certain circumstances to contribute capital
to the Bank;
(v) there is no pending or, to the Company's
knowledge, threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries,
of a character required to be disclosed in the Registration
Statement, as amended as of the Representation Date, which
is not adequately disclosed in the Prospectus, as amended or
supplemented as of the Representation Date, and there is no
franchise, contract or other document of a character
required to be described in the Registration Statement, as
amended as of the Representation Date, or the Prospectus, as
amended or supplemented as of the Representation Date, or to
be filed as an exhibit, which is not described or filed as
required;
(vi) this Agreement and any applicable Terms
Agreement have been duly authorized, executed and delivered
by the Company;
(vii) no consent, approval, authorization or
order of any court or governmental agency or body is
required for the consummation of the transactions
contemplated by this Agreement, except such as have been
obtained under the 1933 Act and the 1939 Act and such as may
be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the
Securities;
(viii) neither the issue and sale of any
Securities, nor the consummation of any other of the
transactions contemplated by this Agreement nor the
fulfillment of the terms hereof will conflict with, result
in a breach of, or constitute a default under the
certificate of incorporation or by-laws of the Company or
the terms of any indenture or other agreement or instrument
to which the Company or the Bank is a party or bound which
default could be material to the holders of the Securities,
or any order or regulation of any court, regulatory body,
administrative agency, governmental body or arbitrator
having jurisdiction over the Company or the Bank; and
(ix) the Company has complied and will comply
with the provisions of that certain Florida act relating to
the disclosure of doing business with Cuba, codified as
Section 515.075 of the Florida statutes, and the rules and
regulations thereunder or is exempt therefrom.
(b) At the time of delivery of any Securities to any
purchaser or his agent whose offer to purchase such Securities
was delivered to the Company and on any Settlement Date:
(i) the Securities being delivered pursuant to
this Agreement on such date conform to the description
thereof contained in the Prospectus as supplemented or
amended, as of such time;
(ii) the applicable Indenture has been duly
authorized, executed and delivered by the Company, has been
duly qualified under the 1939 Act and constitutes a valid
and binding instrument enforceable against the Company in
accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors'
rights generally and the application of equitable principles
when equitable remedies are sought);
(iii) the Securities being delivered pursuant to
this Agreement on such date have been duly authorized,
issued, executed and authenticated in accordance with the
provisions of the applicable Indenture and, when delivered
to and paid for by the purchasers thereof, will constitute
valid and binding obligations enforceable against the
Company in accordance with their terms and will be entitled
to the benefits of such Indenture (subject, as to
enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally and the application of
equitable principles when equitable remedies are sought);
and
(iv) there has been no material adverse change,
nor any presently known and existing development that the
Company expects to result in a material adverse change, in
the financial condition, earnings, business or properties of
the Company and its subsidiaries considered as one
enterprise, whether or not arising from transactions in the
ordinary course of business, since the date of the most
recent financial statements included or incorporated in the
Prospectus, as amended or supplemented as of such time,
except as set forth in or contemplated in such Prospectus.
(c) Any certificate signed by any officer of the
Company and delivered to you or to your counsel in connection
with an offering of Securities and delivered to the Agents shall
be deemed a representation and warranty by the Company to you as
to the matters covered thereby.
SECTION 2. Solicitations as Agent; Purchases as Principal.
(a) Solicitations as Agent. On the basis of the
representations and warranties herein contained, but subject to
the terms and conditions herein set forth, you agree, as agent of
the Company to use your best efforts to solicit offers to
purchase the Securities upon the terms and conditions set forth
in the Prospectus. You are hereinafter sometimes referred to, in
your capacity as agent, as the "Agent."
The Company reserves the right, in its sole discretion,
to suspend your solicitation as Agent of purchases of Securities
from the Company commencing at any time for any period of time or
permanently. Upon receipt of instructions from the Company, you
will forthwith suspend solicitation of purchases from the Company
until such time as the Company has advised you that such
solicitation may be resumed.
The Company agrees to pay you a commission equal to the
percentage of the principal amount of Securities sold by the
Company as a result of a solicitation made by you as set forth in
Schedule A hereto unless otherwise agreed to by the parties
hereto. The Agents may reallow any portion of the commission
payable pursuant hereto to dealers or purchasers in connection
with the offer and sale of any Securities.
As Agent, you are authorized to solicit orders for the
Securities only in minimum principal amounts of $100,000 or any
amount in excess thereof which is an integral multiple of $1,000.
You shall communicate to the Company, orally or in writing, each
offer or indication of interest received by you as Agent to
purchase Securities. The Company shall have the sole right to
accept offers to purchase the Securities and may reject any such
offer in whole or in part. You shall have the right, in your
discretion reasonably exercised, to reject any offer received by
you to purchase the Securities, in whole or in part, and any such
rejection shall not be deemed a breach of your agreement
contained herein.
(b) Purchases as Principal. Each sale of Securities
to you as principal shall be made in accordance with the terms of
this Agreement and a separate agreement which will provide for
the sale of such Securities to, and the purchase thereof by, you
for reoffering. Each such separate agreement (which may be a
written agreement or an oral agreement confirmed in writing, and
which may be by facsimile transmission) shall contain all of the
information, as applicable, specified in Exhibit A hereto. Such
agreement is herein referred to as a "Terms Agreement." A
written confirmation of an oral Terms Agreement need not be
executed. Your commitment to purchase Securities pursuant to any
Terms Agreement shall be deemed to have been made on the basis of
the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein
set forth. Each Terms Agreement shall specify the principal
amount of Securities to be purchased by you pursuant thereto, the
price to be paid to the Company for such Securities, and the time
and place of delivery of any payment for such Securities (the
"Settlement Date"). Such Terms Agreement shall also specify any
requirements for officers' certificates, opinions of counsel and
letters from Ernst & Young pursuant to Section 5 hereof. The
Agent may utilize a dealer group in connection with the resale of
Securities purchased as principal.
(c) Procedures. Administrative procedures respecting
the sale of Securities and the specific terms of the offering of
such Securities shall be agreed upon from time to time by you and
the Company (the "Procedures"). You and the Company agree to
perform the respective duties and obligations specifically
provided to be performed by each of them herein and in the
Procedures.
(d) Delivery. The documents required to be delivered
by Section 5 hereof shall be delivered at the office of
________________________________________________________, on the
date hereof, or at such other time as you and the Company may
agree upon in writing (the "Commencement Time").
SECTION 3. Covenants of the Company. The Company covenants
with you as follows:
(a) If at any time when the Prospectus is required by
the 1933 Act to be delivered in connection with sales of the
Securities any event shall occur or condition exist as a result
of which it is necessary, in the reasonable opinion of your
counsel and counsel for the Company, 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 reasonable opinion of such counsel, at any such time to amend
or supplement the Registration Statement or the Prospectus in
order to comply with the requirements of the 1933 Act or the
Regulations, immediate notice shall be given, and confirmed in
writing, to you to cease the solicitation of offers to purchase
the Securities in your capacity as Agent and to cease sales of
any Securities you may then own as principal, and the Company
will promptly prepare and file with the Commission such amendment
or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement
comply with such requirements. The Company will also promptly
cause each such amendment or supplement to be filed with each
securities exchange, if any, on which any of the Securities are
listed.
(b) On or as soon as practicable after the date on
which there shall be released to the general public interim
financial statement information related to the Company with
respect to each of the first three quarters of any fiscal year or
preliminary financial statement information with respect to any
fiscal year, the Company shall furnish such information to you,
confirmed in writing, and shall cause the Prospectus to be
amended or supplemented (including by incorporation by reference)
to include financial information with respect to the results of
operations of the Company for the period between the end of the
preceding fiscal year and the end of such quarter or for such
fiscal year, as the case may be, and corresponding information
for the comparable period of the preceding fiscal year, as well
as such other information and explanations as shall be necessary
for an understanding of such amounts or as shall be required by
the 1933 Act or the Regulations; provided, however, that if on
the date of such release you shall have suspended solicitation of
purchases of the Securities in your capacity as Agent pursuant to
a request from the Company, and shall not then hold any
Securities as principal, the Company shall not be obligated so to
amend or supplement the Prospectus until such time as the Company
shall determine that solicitation of purchases of the Securities
should be resumed or shall subsequently enter into a new Terms
Agreement with you.
(c) The Company will (i) comply, in a timely manner,
with all requirements under the 1934 Act relating to the filing
with the Commission of the Company's reports pursuant to
Section 13(a) of the 1934 Act and (ii) undertake to obtain the
written consent of the Company's independent accountants as to
incorporation by reference in the Registration Statement of the
audited financial statements reported on by them and contained in
the Company's annual reports on Form 10-K under the 1934 Act.
(d) The Company will make generally available to its
security holders as soon as practicable, but not later than
45 days after the close of the period covered thereby (except not
later than 90 days if such period covers the Company's fiscal
year), earnings statements (in form complying with the provisions
of Rule 158 under the 1933 Act) covering a twelve month period
beginning not later than the first day of the Company's fiscal
quarter next following the period beginning not later than the
effective date of the Registration Statement (as defined in
Rule 158) with respect to each sale of Securities.
(e) The Company will give you notice of its intention
to file any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or to file or amend any
document that is or is to be incorporated by reference in the
Registration Statement or Prospectus and will furnish you with
copies of any such amendment or supplement proposed to be filed a
reasonable time in advance of filing.
(f) The Company will notify you immediately (i) of the
effectiveness of any amendment to the Registration Statement,
(ii) of the mailing or the delivery to the Commission for filing
of any supplement to the Prospectus or any document to be filed
pursuant to the 1934 Act which will be incorporated by reference
in the Prospectus, (iii) of the receipt of any comments from the
Commission with respect to the Registration Statement or the
Prospectus, (iv) of 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
(v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Company will
make every reasonable effort 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.
(g) The Company will deliver to you as many signed and
conformed copies of the registration statement (as originally
filed) and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents
incorporated by reference in the Prospectus) as you may
reasonably request. The Company will furnish to you as many
copies of the Prospectus (as amended or supplemented) as you
shall reasonably request so long as, in the opinion of counsel to
the Company, you are required to deliver a Prospectus in
connection with sales or solicitations of offers to purchase the
Securities.
(h) The Company will furnish to you, at the earliest
time the Company makes the same available to others, copies of
its annual reports and other financial reports furnished or made
available to the public generally.
(i) The Company will endeavor, in connection with you,
to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions
of the United States as you may designate, and will maintain such
qualifications in effect for as long as may be required for the
distribution of the Securities; provided, however, that the
Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. The Company will
file such statements and reports as may be required by the laws
of each jurisdiction in which the Securities have been qualified
as above provided. The Company will notify you immediately of
the suspension of any such qualification or the initiation or
threatening of any proceeding for such purpose, and in the event
of any order suspending any such qualification will make every
reasonable effort to obtain the lifting thereof at the earliest
possible moment.
(j) The Company, during the period when, in the
opinion of counsel to the Company, the Prospectus is required to
be delivered under the 1933 Act, will file promptly all documents
required to be filed with the Commission pursuant to the 1934
Act.
(k) If required by the applicable Terms Agreement,
between the date of any such Terms Agreement and the Settlement
Date with respect to such Terms Agreement, the Company will not,
without your prior consent, issue or announce the proposed
issuance of any of its debt securities with substantially similar
terms to the Securities being purchased pursuant to the Terms
Agreement (other than the Securities that are to be sold pursuant
to such Terms Agreement and commercial paper in the ordinary
course of business).
SECTION 4. Payment of Expenses.
(a) The Company will pay the following expenses
incident to the performance of its obligations under this
Agreement, including: (i) the cost of the preparation and filing
of the Registration Statement and all amendments thereto,
(ii) the cost of the preparation, issuance and delivery of the
Securities, (iii) the fees and disbursements of the Company's
accountants and of the Trustee and its counsel, (iv) the cost of
the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(i), including filing
fees and the reasonable fees and disbursements of your counsel in
connection therewith and in connection with the preparation of
any Blue Sky Survey and any Legal Investment Survey, (v) the cost
of the copying and delivery to you in quantities as hereinabove
stated of copies of the registration statement and all amendments
thereto, and the printing of the Prospectus and any amendments or
supplements thereto, (vi) the cost of the copying and delivery to
you of copies of the Indenture, any Blue Sky Survey and any Legal
Investment Survey, and (vii) the cost of any fees charged by
rating agencies for the rating of the Securities.
(b) The Company shall also reimburse you for the
reasonable fees and disbursements of counsel (including the
reasonable fees and expenses of special counsel in any state in
the event it should become necessary to obtain opinions of such
counsel as to usury or other matters of local law in order to
obtain or maintain the qualifications referred to in Section 3(i)
hereof) for you and any advertising (except tombstone
advertisements) and other out-of-pocket expenses incurred with
the approval of the Company. Any such out-of-pocket expenses
shall be payable upon the receipt by the Company from the Agent
of an itemized statement. You shall pay all other expenses
incident to the performance of your obligations under this
Agreement. Notwithstanding anything contained in this
Section 4(b) to the contrary, the Company shall only reimburse
you for fifty percent of such expenses if you terminate this
Agreement pursuant to the second sentence of Section 11 hereof;
and provided, further, that in no event shall the Company be
obligated to pay any of your expenses if you should default on
your obligations under any Terms Agreement.
SECTION 5. Conditions of Obligations. Your obligations to
solicit offers to purchase the Securities as agent of the Company
and your obligations to purchase Securities pursuant to any Terms
Agreement will be subject to the accuracy of the representations
and warranties on the part of the Company herein, to the accuracy
of the statements of the Company's officers made in any
certificate furnished pursuant to the provisions hereof, to the
performance and observance by the Company of all covenants and
agreements herein contained on its part to be performed and
observed and to the following additional conditions precedent:
(a) At the Commencement Time and at each Settlement
Date with respect to any applicable Terms Agreement, if called
for by such Terms Agreement, you shall have received:
(1) the opinion, dated as of such time, of the
counsel to the Company, in form and substance satisfactory
to you and your counsel, to the effect set forth in
Exhibit B; and
(2) the opinion or opinions of counsel to the
Agent, to be dated as of such time, with respect to the
issuance and sale of the Securities, the Indentures, the
Registration Statement, the Prospectus and other related
matters as the Agent may reasonably require.
(b) At the Commencement Time and at each Settlement
Date with respect to any Terms Agreement, if called for in any
Terms Agreement, you shall have received a certificate of the
President, the Chairman of the Board, the Vice Chairman of the
Board, the Chief Financial Officer, or the Vice Chairman and by
the Secretary, the Treasurer, an Assistant Secretary, or an
Assistant Treasurer of the Company, in their capacities as such,
without personal liability therefor, dated as of Commencement
Time or such Settlement Date, to the effect that:
(1) the representations and warranties of the
Company in this Agreement are true and correct in all
material respects on and as of the date of such certificate
and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied as a condition to your obligations under this
Agreement;
(2) no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened; and
(3) since the date of the most recent financial
statements included or incorporated in the Prospectus, as
amended or supplemented as of the date of such certificate,
there has been no material adverse change, nor any presently
known and existing development that the Company expects to
result in a material adverse change, in the financial
condition, earnings, business or properties of the Company
and its subsidiaries considered as one enterprise, whether
or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in such
Prospectus.
(c) At the date hereof, at Commencement Time and at
each Settlement Date with respect to any Terms Agreement, if
called for by such Terms Agreement, you shall have received from
Ernst & Young (or any other independent certified public
accountants of the Company), a letter, dated as of the
Commencement Time or such Settlement Date, in form and substance
satisfactory to you, confirming that they are independent
accountants within the meaning of the 1933 Act and the 1934 Act
and the Regulations and the 1934 Regulations, that the Response
to Item 10 of the Registration Statement is correct insofar as it
relates to them and containing statements and information of the
type ordinarily included in accountants "comfort letters" to
agents with respect to the financial statements and certain
financial information contained or incorporated by reference in
the Registration Statement and the Prospectus.
(d) At the date hereof, at Commencement Time, at each
Settlement Date with respect to any applicable Terms Agreement
and on each date when the Registration Statement or Prospectus is
amended or supplemented, your counsel shall have been furnished
with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and
sale of the Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy and
completeness of any of the representations and warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance
and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to you and your counsel.
(e) Your obligations to purchase Securities pursuant
to any Terms Agreement will be subject to the following condition
that there shall not have come to your attention any facts that
would cause you reasonably to believe that the Prospectus, at the
time it was required to be delivered to a purchaser of the
Securities, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at
such time, not misleading.
If any condition specified in this Section shall not
have been fulfilled, this Agreement and any Terms Agreement may
be terminated by you by notice to the Company at any time at or
prior to the Commencement Time or applicable Settlement Date, and
such termination shall be without liability of any party to any
other party, except that the covenants set forth in Section 3(d)
hereof, the provisions of Section 4 hereof, the indemnity and
contribution agreements set forth in Sections 7 and 8 hereof, and
the provisions of Sections 10 and 14 hereof shall remain in
effect.
SECTION 6. Additional Covenants. The Company covenants and
agrees that:
(a) each acceptance by it of an offer for the purchase
of Securities, and each sale of Securities to you pursuant to a
Terms Agreement, shall be deemed to be an affirmation that the
representations and warranties of the Company contained in this
Agreement and in any certificate theretofore delivered to you
pursuant hereto are true and correct at the time of such
acceptance or sale, as the case may be, and an undertaking that
such representations and warranties will be true and correct at
the time of delivery to the purchaser or his agent, or you, of
the Securities relating to such acceptance or sale, as the case
may be, as though made at and as of each such time (and it is
understood that such representations and warranties shall relate
to the Registration Statement and the Prospectus as amended and
supplemented to each such time);
(b) each time that the Registration Statement or the
Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the
interest rates of the Securities or a change in the principal
amount of Securities remaining to be sold or similar changes) or,
if so indicated in the applicable Terms Agreement, the Company
sells Securities to you pursuant to a Terms Agreement, the
Company shall furnish or cause to be furnished to you forthwith a
certificate in form satisfactory to you to the effect that the
statements contained in the certificate referred to in
Section 5(b) hereof which were last furnished to you are true and
correct at the time of such amendment or supplement or filing or
sale, as the case may be, as though made at and as of such time
(except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificate, a
certificate of the same tenor as the certificates referred to in
said Section 5(b), modified as necessary to relate to the
Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such certificates;
provided, however, that in the case of quarterly financial data
included in a press release which is incorporated by reference in
the Registration Statement by the filing of a Form 8-K, no such
certificate need be furnished unless the Company sells one or
more Securities through the Agent prior to the time a certificate
is otherwise required to be furnished, in which event the
certificate shall be furnished at least two business days prior
to the anticipated closing date with respect to the Security sold
through the Agent;
(c) each time that the Registration Statement or the
Prospectus shall be amended or supplemented to include additional
financial information or to disclose a material development
(other than quarterly financial data included in a press release
which is incorporated by reference in the Registration Statement
by the filing of a Form 8-K; provided that if the Agent shall
reasonably request this exception shall not apply) or, if so
indicated in the applicable Terms Agreement, the Company sells
Securities to you pursuant to a Terms Agreement, the Company
shall furnish or cause to be furnished forthwith to you and your
counsel a written opinion of counsel to the Company or the Bank,
or other counsel satisfactory to you, dated the date of delivery
of such opinion, in form satisfactory to you, of the same tenor
as the opinion referred to in Section 5(a) hereof but modified,
as necessary, to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of delivery of
such opinion or, in lieu of such opinion, counsel last furnishing
such opinion to you shall furnish you with a letter to the effect
that you may rely on such last opinion to the same extent as
though it were dated the date of such letter authorizing reliance
(except that statements in such last opinion shall be deemed to
relate to the Registration Statement and the Prospectus as
amended and supplemented to the time of delivery of such letter
authorizing reliance);
(d) each time that the Registration Statement or the
Prospectus shall be amended or supplemented to include additional
financial information or, if so indicated in the applicable Terms
Agreement, the Company sells Securities to you pursuant to a
Terms Agreement, the Company shall cause Ernst & Young forthwith
to furnish you a letter, dated the date of filing of such
amendment or supplement with the Commission, or the date of such
sale, as the case may be, in form satisfactory to you, of the
same tenor as the portions of the letter referred to in
Section 5(c) hereof but modified to relate to the Registration
Statement and Prospectus, as amended and supplemented to the date
of such letter, and with such changes as may be necessary to
reflect changes in the financial statements and other information
derived from the accounting records of the Company; provided,
however, that if the Registration Statement or the Prospectus is
amended or supplemented solely to include financial information
as of and for a fiscal quarter, Ernst & Young may limit the scope
of such letter to the unaudited financial statements included in
such amendment or supplement unless any other information
included therein of an accounting, financial or statistical
nature is of such a nature that, in your reasonable judgment,
such letter should cover such other information, provided,
further, that in the case of quarterly financial data included in
a press release which is incorporated by reference in the
Registration Statement by the filing of a Form 8-K, no such
letter need be furnished unless the Company sells one or more
Securities through the agent prior to the time a letter is
otherwise required to be furnished, in which event the letter
shall be furnished at least two business days prior to the
anticipated closing date with respect to the Security sold
through the Agent; and
(e) the Company or its designated agent shall submit
such reports or information as may be required from time to time
by applicable law, regulations and guidelines promulgated by
Japanese governmental and regulatory authorities in respect of
the issue and purchase of Securities denominated in Japanese Yen.
Each of the Company and you represent and agree that
the terms of Securities denominated in Japanese Yen that will be
issued will be limited to those which have been recognized by
Japanese authorities, and in particular no Securities denominated
in Japanese Yen shall be issued which (a) have a maturity of less
than one year and (b) are in denominations of less than
$1,000,000.
Each of the Company and you represent and agree that
neither the Company nor you will offer or sell any Security
directly or indirectly in Japan or to residents of Japan or for
the benefit of any Japanese person (which term as used herein
means any person resident in Japan, including any corporation or
other entity organized under the laws of Japan) or to others for
reoffering or resale directly or indirectly in Japan or to any
Japanese person during the period of 90 days from the issue date
of such Security (which Security is denominated in Japanese Yen)
or 180 days from the issue date of the Security (which Security
is a Dual Currency Note, Reverse Dual Currency Note or Optional
Dual Currency Note, as interpreted by the Ministry of Finance of
Japan) and that thereafter neither the Company nor you will do
so, except under circumstances which will result in compliance
with any applicable laws, regulations and ministerial guidelines
of Japan taken as a whole. Furthermore, in connection with the
issuance of Securities denominated in Japanese Yen, the Company
and you each agree to comply with all applicable laws,
regulations and guidelines as amended from time to time of the
Japanese governmental and regulatory authorities.
SECTION 7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
you and each person who controls you within the meaning of either
the 1933 Act or the 1934 Act against any and all losses, claims,
damages or liabilities, joint or several, to which you, they or
any of you or them may become subject under the 1933 Act, the
1934 Act or other federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement as originally filed or in any amendment thereof, or in
any preliminary prospectus, any preliminary supplemental
prospectus, or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company will not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of
you specifically for use therein or the Statement of Eligibility
and Qualification (Form T-1) under the 1939 Act of the Trustee,
and (ii) such indemnity with respect to any preliminary
prospectus, the Prospectus or any preliminary supplemental
prospectus, shall not inure to the benefit of you (or any person
controlling you), if the Company shall have delivered sufficient
quantities of the Prospectus, as amended or supplemented, to you
within a reasonable time prior to the earlier of the delivery of
the written confirmation of the sale of such Securities or the
delivery of such Securities to the person asserting such loss,
claim, damage, liability or action for which indemnification is
sought, and the Prospectus as so amended or supplemented
(excluding documents incorporated by reference) was not sent or
given to such person at or prior to the earlier of the delivery
of the written confirmation of the sale of such Securities or the
delivery of such Securities to such person in any case where such
sending or giving of a prospectus is required by the 1933 Act and
the untrue statement or omission of a material fact contained in
any preliminary prospectus, the Prospectus or any preliminary
supplemental prospectus, was corrected in the Prospectus, as so
amended or supplemented, provided to you. This indemnity
agreement will be in addition to any liability which the Company
may otherwise have.
(b) You agree to indemnify and hold harmless the
Company, each person, if any, who controls the Company within the
meaning of either the 1933 Act or the 1934 Act, each director of
the Company and each officer of the Company who signs the
Registration Statement or any amendment thereto to the same
extent as the foregoing indemnity from the Company to you, but
only insofar as such losses, claims, damages or liabilities arise
out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made therein in
reliance upon and in conformity with written information supplied
to the Company by or on behalf of you specifically for use in the
documents referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which you may
otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section, notify
the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any
indemnified party otherwise than under this Section. In case any
such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and
to the extent that it may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense
of such action and approval by the indemnified party of counsel,
the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall
have employed separate counsel in connection with the assertion
of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more
than one separate counsel, approved by you in the case of
paragraph (a) of this Section, representing the indemnified
parties under such paragraph (a) who are parties to such action),
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if
clause (i) or (iii) is applicable, such liability shall be only
in respect of the counsel referred to in such clause (i) or
(iii).
SECTION 8. Contribution. In order to provide for just and
equitable contribution in circumstances in which the
indemnification provided for in Section 7 is due in accordance
with its terms but is for any reason held by a court to be
unavailable on grounds of public policy or otherwise, the Company
and you shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) to
which the Company and you may be subject in such proportion so
that you are responsible for that portion represented by the
percentage that (y) the sum of aggregate commissions received by
you hereunder and the aggregate amount of discounts received by
you under all Terms Agreements bears to (z) the aggregate
principal amount of the Securities sold hereunder and under any
such Terms Agreements, and the Company is responsible for the
balance; provided, that 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, each person who controls you within the
meaning of the 1933 Act shall have the same rights to
contribution as you and each person who controls the Company
within the meaning of either the 1933 Act or the 1934 Act, each
officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same
rights to contribution as the Company. Any party entitled to
contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against
another party or parties under this Section, notify such party or
parties from whom contribution may be sought, but the omission to
notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under
this Section. This notice requirement shall be deemed satisfied
by the delivery of the notice contemplated by the first sentence
of subparagraph (c) of Section 7 hereof.
SECTION 9. Status of the Agent. In soliciting purchases of
the Securities from the Company as Agent, you are acting solely
as agent for the Company and not as principal, and you will make
reasonable efforts to assist the Company in obtaining performance
by each purchaser whose offer to purchase Securities from the
Company has been solicited by you and accepted by the Company,
but you shall not have any liability to the Company in the event
any such purchase is not consummated for any reason.
SECTION 10. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements
contained in this Agreement or any Terms Agreement, or contained
in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of you or
any controlling person, or by or on behalf of the Company. All
agreements and covenants of you and the Company shall survive
each delivery of and payment for any of the Securities, but no
representations and warranties of you or the Company contained in
this Agreement or any Terms Agreement shall survive the delivery
of or payment for any of the Securities.
SECTION 11. Termination. This Agreement may be terminated
for any reason, at any time by either party hereto upon the
giving of written notice of such termination to the other party
hereto. You may also terminate any Terms Agreement immediately
upon notice to the Company, at any time prior to the Settlement
Date relating thereto (i) if there has occurred any outbreak or
material escalation of hostilities involving the United States or
there is a declaration of war or national emergency by the United
States, (ii) if there shall have been such a material adverse
change in general economic or financial conditions as to make it,
in your reasonable judgment, impracticable to market the
Securities or enforce contracts for the sale of the Securities,
(iii) if trading in securities generally on the New York Stock
Exchange shall have been suspended or materially limited, or
(iv) if a banking moratorium shall have been declared by either
federal or Pennsylvania authorities. In the event of any
termination, neither party will have any liability to the other
party hereto, except that (i) the Agent shall be entitled to any
commissions earned in accordance with the third paragraph of
Section 2(a) hereof, (ii) if at the time of termination (a) the
Agent shall own any of the Securities with the intention of
reselling them or (b) an offer to purchase any of the Securities
has been accepted by the Company but the time of delivery to the
purchaser or his agent of the Securities relating thereto has not
occurred, the covenants set forth in Sections 3 and 6 hereof
shall remain in effect until such Securities are so resold or
delivered, as the case may be, and (iii) the covenant set forth
in Section 3(d) hereof, the provisions of Section 4 hereof, the
indemnity and contribution agreements set forth in Sections 7 and
8 hereof, and the provisions of Sections 10 and 14 hereof shall
remain in effect.
SECTION 12. 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 Agent shall be directed to
_________________________, _________________________________,
Attention: __________________; notices to the Company shall be
directed to it at Sovereign Bancorp, Inc., 1130 Berkshire
Boulevard, Wyomissing, Pennsylvania 19610, Attention: Chief
Financial Officer.
SECTION 13. Parties. This Agreement and any Terms
Agreement shall inure to the benefit of and be binding upon the
Agent and the Company and their respective successors. Nothing
expressed or mentioned in this Agreement or any Terms Agreement
is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors
referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any Terms Agreement or
any provision herein or therein contained. This Agreement and
any Terms Agreement and all conditions and provisions hereof and
thereof 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 Securities shall be
deemed to be a successor by reason merely of such purchase.
SECTION 14. Governing Law. This Agreement and the rights
and obligations of the parties created hereby shall be governed
by the laws of the State of __________.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument along with all
counterparts will become a binding agreement between you and the
Company in accordance with its terms.
Very truly yours,
SOVEREIGN BANCORP, INC.
By:________________________________
Title:_____________________________
CONFIRMED AND ACCEPTED,
as of the date first
above written.
___________________________
By:________________________
Title:_____________________
<PAGE>
SCHEDULE A
Commission
Scale
<PAGE>
EXHIBIT A
SOVEREIGN BANCORP, INC.
Terms Agreement
[Date]
Sovereign Bancorp, Inc.
Attention:
Re: Distribution Agreement dated
The undersigned agrees to purchase the following principal
amount and currency of Securities:
Principal amount and currency:
Interest Rate:
Date of Maturity:
Purchase Price: ___%
Settlement Date and Time:
Place of Delivery:
[[The certificate referred to in Section 5(b) of the
Distribution Agreement] [the opinion referred to in Section 5(a)
of the Distribution Agreement] [the accountants' letter referred
to in Section 5(c) of the Distribution Agreement] will be
required.]
[The provision of Section 3(k) will apply.]
[Upon request of the Company, _____________________ will
promptly advise the Company as to whether, to its knowledge, the
offering of the Offered Securities as contemplated by this
Agreement has been completed.] [_________________________ will
promptly advise the Company as to when the offering of the
Offered Securities as contemplated by this Agreement has been
completed.]
__________________________
By:________________________________
Title:_____________________________
Accepted:
SOVEREIGN BANCORP, INC.
By:________________________
Title:_____________________
<PAGE>
EXHIBIT B
FORM OF OPINION OF
COUNSEL TO THE COMPANY
The opinion of counsel for the Company, to be delivered
pursuant to this Agreement, shall be to the effect set forth
below. Unless otherwise provided, all references to the
"Registration Statement" shall be to the Registration Statement
as amended as of the date of such opinion and all references to
the "Prospectus" shall be to the Prospectus, as amended or
supplemented as of the date of such opinion.
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Pennsylvania, with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus and is duly registered as a savings
and loan holding company under the Home Owners' Loan Act, as
amended;
(ii) Sovereign Bank, a Federal Savings Bank (the "Bank")
holds a valid charter from the Office of Thrift Supervision to do
business as a federal savings bank under the laws of the United
States and has full corporate power and authority to own its
properties and conduct its business as described in the
Prospectus; and all the outstanding shares of capital stock of
the Bank have been duly and validly authorized and issued, are
fully paid and nonassessable, and are directly owned by the
Company free and clear of liens and encumbrances, except that
under applicable federal and state banking laws, the Company may
be required in certain circumstances to contribute capital to the
Bank;
(iii) the Securities conform to the description thereof
contained in the Prospectus;
(iv) the Indentures have been duly authorized, executed and
delivered by the Company, have been duly qualified under the 1939
Act and constitute valid and binding instruments of the Company
enforceable against the Company in accordance with their terms;
(v) the Securities have been duly authorized by the Company
and, when executed and authenticated in accordance with the
provisions of the applicable Indenture and delivered to and paid
for by the purchasers thereof, will constitute valid and binding
obligations enforceable against the Company in accordance with
their terms and will be entitled to the benefits of the
applicable Indenture;
(vi) to the best knowledge of such counsel, (a) there is no
pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries of a character
required to be disclosed in the Registration Statement which is
not adequately disclosed in the Prospectus, and (b) there is no
franchise, contract or other document which is known to such
counsel of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an
exhibit, which is not described or filed as required;
(vii) (a) the Registration Statement and any amendments
thereto have become effective under the 1933 Act; (b) to the best
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened;
and (c) the Registration Statement, the Prospectus, each
amendment thereof or supplement thereto, and each document
incorporated by reference therein (other than the Statements of
Eligibility and Qualification (Forms T-1) under the 1939 Act of
the Trustees and the financial statements and other financial and
statistical information contained therein as to which such
counsel need express no opinion), as of their respective
effective or issue dates, complied as to form in all material
respects with the applicable requirements of the 1933 Act and the
Regulations and the 1934 Regulations;
(viii) this Agreement has been duly authorized, executed
and delivered by the Company;
(ix) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated in this Agreement,
except such as have been obtained under the 1933 Act and the 1939
Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of
the Securities and the following other approvals, which have been
obtained: _______________________________________; and
(x) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions contemplated in
this Agreement nor the fulfillment of the terms thereof will
conflict with, result in a breach of, or constitute a default
under the certificate of incorporation or by-laws of the Company
or, to the best knowledge of such counsel, under the terms of any
indenture or other agreement or instrument to which the Company
or the Bank is a party or bound, or any order or regulation of
any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Company or the
Bank, which in the case of any indenture, agreement, instrument,
or order, the breach of which might have a material adverse
effect on the holders of the Securities or the financial
condition, earnings, business or properties of the Company and
its subsidiaries, taken as one enterprise.
In addition, such opinion shall also cover, if applicable to
a particular issue of Securities, matters relating to listing on
the New York Stock Exchange, the nonapplicability of the
Pennsylvania usury law, tax matters and such other matters as the
agent may reasonably require.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction
other than the Commonwealth of Pennsylvania or the United States,
to the extent such counsel shall deem proper and specify in such
opinion, upon the opinion of other counsel of good standing whom
such counsel believes to be reliable and who are satisfactory to
counsel for the Underwriters; and (B) as to matters of fact, to
the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
In addition, counsel for the Company shall also state that:
nothing has come to the attention of such counsel to cause such
counsel to believe that the Registration Statement, or any
amendment thereof, at the time it became effective and, if later,
at the time of the filing of the Company's most recent Annual
Report on Form 10-K, 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 the date of this
Agreement or any Terms Agreement and as of the date of such
opinion, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
EXHIBIT 4.8
Form of Registered Domestic Medium-Term Note
[IF THIS IS A GLOBAL SECURITY -- UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS NOTE IS AN UNSECURED OBLIGATION OF SOVEREIGN BANCORP,
INC. ONLY, AND IS NOT A DEPOSIT OR AN OBLIGATION OF ANY BANK OR
NONBANK SUBSIDIARY OF THE CORPORATION. THIS NOTE IS NOT INSURED
BY THE FDIC, BANK INSURANCE FUND, SAVINGS ASSOCIATION INSURANCE
FUND, OR ANY OTHER FEDERAL AGENCY.
<PAGE>
SOVEREIGN BANCORP, INC.
[SENIOR] [SUBORDINATED] MEDIUM-TERM NOTE, SERIES __
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO
MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE
DESIGNATED METHOD) BELOW WILL BE COMPLETED SOLELY FOR THE
PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE
DISCOUNT ("OID") RULES.
Floating Rate Note ___ ____% Fixed Rate Note ___
No. Principal Amount:
CUSIP Maturity Date:
Original Issue Date: Extended Notice of
Issue Price: Maturity Extension
Date(s) Date(s)
Option to Elect Payment in
Specified Currency (Only
applicable if Specified
Currency is other than U.S.
Dollars):
___ Yes ___ No
Authorized Denominations (Only
Redemption Redemption applicable if Specified
Date(s) Price(s) Currency is other than U.S.
Dollars):
Interest Payment Period:
Interest Payment Dates:
Repayment Repayment Total Amount of OID:
Date(s) Price(s) Yield to Maturity:
Initial Accrual
Period OID:
Other Terms:
Only applicable if this is a Floating Rate Note:
Initial Interest Rate: Spread (plus or minus):
Index Maturity:
Base Rate: Spread Multiplier:
Interest Reset Period: Maximum Interest Rate:
Interest Reset Dates: Minimum Interest Rate:
<PAGE>
Sovereign Bancorp, Inc., a Pennsylvania corporation (the
"Corporation"), for value received, hereby promises to pay to
________________________________________ or registered assigns,
the principal sum of ____________________________________________
(Specified Currency)
on the "Maturity Date," as set forth above, and to pay interest
thereon, subject to, and as described on the reverse hereof.
The principal of (and premium, if any) and interest on this
Note are payable by the Corporation in such coin or currency
specified above as at the time of payment shall be legal tender
for the payment of public and private debts (the "Specified
Currency"). If the Specified Currency is other than
U.S. Dollars, the Corporation will arrange to have all such
payments converted into U.S. Dollars in the manner described on
the reverse hereof. Notwithstanding the foregoing, the Holder
hereof may, if so indicated above, elect to receive all payments
in respect hereof in the Specified Currency by delivery of a
written request to the Paying Agent located in __________________
(initially, ____________________) not later than _____ calendar
days prior to the applicable payment date. Such election will
remain in effect until revoked by written notice to such Paying
Agent received not later than _____ calendar days prior to the
applicable payment date.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS
SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN
FULL AT THIS PLACE.
Unless the certificate of authentication hereon has been
manually executed by or on behalf of the Trustee under the
Indenture, this Note shall not be entitled to any benefit under
said Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Corporation has caused this Note to
be duly executed under its corporate seal.
SOVEREIGN BANCORP, INC.
[SEAL] By_________________________________
Title:
Dated: ____________________
Attest:____________________________
Title:
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated herein,
described in the within-mentioned Indenture.
________________, as Trustee
[By:______________________________,
as Authenticating Agent for
the Trustee]
By:________________________________
Authorized Officer
<PAGE>
[Reverse of Registered Domestic Note]
SOVEREIGN BANCORP, INC.
[Senior] [Subordinated] Medium-Term Note, Series __
1. This Note is one of a duly authorized issue of
securities of the Corporation (herein called the "Notes"), issued
and to be issued in one or more series under an Indenture, dated
as of February 1, 1994 [, as amended by the First Supplemental
Indenture dated as of ______________________] (the "Indenture"),
between the Corporation and ______________________________, as
Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Corporation, the Trustee
and the Holders of the Notes and of the terms upon which the
Notes are, and are to be, authenticated and delivered. The Notes
of this series may be issued at various times with different
maturity dates and different principal repayment provisions, may
bear interest at different rates, may be payable in different
currencies and may otherwise vary, all as provided in the
Indenture.
[If this is a subordinated note -- 2. The indebtedness
evidenced by this Note is, to the extent and in the manner set
forth in the Indenture, expressly subordinated and subject in
right of payment to the prior payment in full of all Senior Debt
(as defined in the Indenture) of the Corporation. This Note is
issued subject to such provisions of the Indenture, and each
Holder of this Note, by accepting the same, agrees to and shall
be bound by such provisions and authorizes and directs the
Trustee on his behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate such subordination as
provided in the Indenture and appoints the Trustee his attorney-
in-fact for any and all such purposes.]
[2.A. [3.A.] The Maturity Date is as shown on the face
hereof, provided that the Maturity Date may be extended, at the
option of the Holder, to the Extended Maturity Date or Dates
shown on the face hereof if the Holder so elects, in the manner
specified herein, prior to the applicable Notice of Extension
Date shown on the face hereof. Such election will be irrevocable
and will be binding upon each subsequent Holder of this Note.
Any such election to extend the Maturity Date of this Note
will be effective only if notice thereof is provided to the
Corporation in the manner described below. The Maturity Date of
this Note may be extended, at the option of the Holder hereof, to
each Extended Maturity Date shown on the face hereof if the
Holder presents a duly completed and executed notice in the form
below entitled "Form of Option To Extend Maturity" to the
Corporation at the office of its Paying Agent in
___________________, ____________ prior to but not more than
_____ Business Days prior to the applicable Notice of Extension
Date shown on the face hereof; provided, however, that if a
Holder of this Note does not make an election with respect to a
specified Extended Maturity Date, this Note may not be extended
with respect to a subsequent Extended Maturity Date. Any option
by the Holder to extend the Maturity Date of this Note must be
exercised with respect to the entire principal amount. All
questions as to the validity, eligibility (including time of
receipt) and acceptance of any option to extend the Maturity Date
of this Note will be determined by the Corporation, whose
determination will be final and binding.
[3.A.] [4.A.] The Regular Record Date with respect to any
Interest Payment Date (as defined below) shall be the date
15 calendar days immediately preceding such Interest Payment
Date, whether or not such date shall be a Business Day (as
defined below). Interest which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name this Note is registered at the
close of business on the Regular Record Date for such interest;
provided, however, that interest payable on the Interest Payment
Date occurring at Maturity will be to the Person to whom
principal shall be payable; provided, further, that the first
payment of interest on any Note originally issued between a
Regular Record Date and Interest Payment Date or on an Interest
Payment Date will be made on the Interest Payment Date following
the next succeeding Regular Record Date. Notwithstanding the
foregoing, any interest which is payable but not punctually paid
or duly provided for on any Interest Payment Date shall forthwith
cease to be payable to the registered Holder hereof on this
Regular Record Date, and may be paid to the Person in whose name
this Note is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof having been given to the
Holder of this Note not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other lawful
manner, all as more fully provided in the Indenture. "Business
Day" means any day, other than a Saturday or Sunday, that meets
each of the following applicable requirements: the day is
(a) not a day on which banking institutions are authorized or
required by law or regulation to be closed in the
Commonwealth of Pennsylvania, (b) if this Note is denominated in
a Specified Currency other than U.S. Dollars, (i) not a day on
which banking institutions are authorized or required by law or
regulation to close in the financial center of the country
issuing the Specified Currency (which in the case of ECU shall be
London and Luxembourg City, Luxembourg), and (ii) a day on which
banking institutions in such financial center are carrying out
transactions in such Specified Currency and, (c) with respect to
LIBOR Notes, a London Banking Day. "London Banking Day" means
any day on which dealings in deposits in U.S. Dollars are
transacted in the London interbank market. In connection with
any calculations, all percentages will be rounded, if necessary,
to the nearest one hundredth-thousandth of a percentage point,
with five one-millionths of a percentage point being rounded
upwards and all currency or currency unit amounts used and
resulting from such calculations on this Note will be rounded to
the nearest one-hundredth of a unit (with .005 of a unit being
rounded upwards).
B. If this is a Fixed Rate Note, the Corporation promises
to pay interest on the principal amount at the rate or rates per
annum shown on the face hereof until the principal amount hereof
is paid or duly made available for payment. Unless otherwise
provided on the face hereof, the Corporation will pay interest
semi-annually on _________________ and _________________ (each an
"Interest Payment Date"), commencing with the Interest Payment
Date immediately following the Original Issue Date shown on the
face hereof (subject to the last proviso of the preceding
paragraph) and at Maturity. Interest will accrue from and
including the most recent Interest Payment Date or, if no
interest has been paid or duly provided for, from and including
the Original Issue Date, to but excluding the next succeeding
Interest Payment Date. The amount of such interest payable on
any Interest Payment Date shall be computed on the basis of a
year of twelve 30-day months.
C. If this is a Floating Rate Note, the Corporation
promises to pay interest on the principal amount at the rate per
annum equal to the Initial Interest Rate shown on the face hereof
until the first Interest Reset Date shown on the face hereof
following the Original Issue Date specified on the face hereof
and thereafter at a rate determined in accordance with the
provisions below under the heading "Determination of CD Rate,"
"Determination of Commercial Paper Rate," "Determination of
Federal Funds Rate," "Determination of LIBOR," "Determination of
Treasury Rate" or "Determination of Prime Rate," depending upon
whether the Base Rate specified on the face hereof is CD Rate,
Commercial Paper Rate, Federal Funds Rate, LIBOR, Treasury Rate
or Prime Rate, respectively, until the principal hereof is paid
or duly made available for payment. The Corporation will pay
interest monthly, quarterly, semi-annually or annually as
specified on the face hereof under "Interest Payment Period,"
commencing with the first Interest Payment Date specified on the
face hereof next succeeding the Original Issue Date (subject to
the last proviso of the second preceding paragraph), and at
Maturity. Unless otherwise provided on the face hereof, the
dates on which interest will be payable (each an "Interest
Payment Date") will be, in the case of Notes with a monthly
Interest Payment Period, the third Wednesday of each month; in
the case of Notes with a quarterly Interest Payment Period, the
third Wednesday of March, June, September and December; in the
case of Notes with a semi-annual Interest Payment Period, the
third Wednesday of the two months specified on the face hereof;
and in the case of Notes with an annual Interest Payment Period,
the third Wednesday of the month specified on the face hereof;
provided, however, that if an Interest Payment Date would fall on
a day that is not a Business Day, such Interest Payment Date
shall be the following day that is a Business Day, except that in
case the Base Rate is LIBOR, as specified on the face hereof, if
such date falls in the next calendar month, such Interest Payment
Date shall be the immediately preceding Business Day.
The interest payable on a Floating Rate Note on each
Interest Payment Date will include accrued interest from and
including the Original Issue Date or from and including the last
date in respect of which interest has been paid, as the case may
be, to but excluding such Interest Payment Date; provided,
however, that if the Interest Reset Period is daily or weekly,
the interest payable on each Interest Payment Date, other than at
Maturity, will include accrued interest from and including the
Original Issue Date or from and including the last date in
respect of which interest has been paid, as the case may be, to,
but excluding, the Regular Record Date immediately preceding such
Interest Payment Date, and the interest payable at Maturity will
include accrued interest from and including the Original Issue
Date or from and including the last date in respect of which
interest has been paid, as the case may be, to, but excluding,
the date of Maturity. Such accrued interest will be calculated
by multiplying the principal amount hereof by an accrued interest
factor. This accrued interest factor shall be computed by adding
the interest factors calculated for each day in the period for
which accrued interest is being calculated. The interest factor
(expressed as a decimal) for each such day shall be computed by
dividing the interest rate applicable to such day by 360 if the
Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate,
LIBOR or Prime Rate, as indicated on the face hereof, or by the
actual number of days in the year if the Base Rate is Treasury
Rate, as indicated on the face hereof. The interest rate in
effect on each day will be (a) if such day is an Interest Reset
Date, the interest rate with respect to the Interest
Determination Date (as defined below) pertaining to such Interest
Reset Date or (b) if such day is not an Interest Reset Date, the
interest rate with respect to the Interest Determination Date
pertaining to the next preceding Interest Reset Date; provided,
however, that (i) the interest rate in effect from the Original
Issue Date to the first Interest Reset Date will be the Initial
Interest Rate and (ii) the interest rate in effect for the ten
calendar days immediately prior to Maturity will be that in
effect on the tenth calendar day preceding Maturity.
Notwithstanding the foregoing, the interest rate hereon shall not
be greater than the Maximum Interest Rate, if any, or less than
the Minimum Interest Rate, if any, shown on the face hereof. In
addition, the interest rate hereon shall in no event be higher
than the maximum rate, if any, permitted by Pennsylvania law.
Commencing with the first Interest Reset Date specified on the
face hereof following the Original Issue Date and thereafter upon
each succeeding Interest Reset Date specified on the face hereof,
the rate at which interest on a Floating Rate Note is payable
shall be adjusted as specified on the face hereof under Interest
Reset Period; provided, however, that if any Interest Reset Date
would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the next day that is a
Business Day, except that (i) if the Base Rate is LIBOR and such
Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business
Day or (ii) if the Base Rate is Treasury Rate and the Interest
Reset Date falls on a date which is an auction date, the Interest
Reset Date shall be the following day that is a Business Day.
The "Interest Determination Date" pertaining to an
Interest Reset Date will be, if the Base Rate is CD Rate,
Commercial Paper Rate, Federal Funds Rate or Prime Rate, the
second Business Day next preceding such Interest Reset Date. The
Interest Determination Date pertaining to an Interest Reset Date
will be, if the Base Rate is LIBOR, the second London Banking Day
next preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date will be,
if the Base Rate is Treasury Rate, the day of the week in which
such Interest Reset Date falls on which Treasury bills (as
defined below, of the Index Maturity specified on the face hereof
are auctioned.) Treasury bills are normally auctioned on Monday
of each week, unless that day is a legal holiday, in which case
the auction is normally held on the following Tuesday, except
that such auction may be held on the preceding Friday. If, as a
result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next
succeeding week.
Subject to applicable provisions of law and except as
specified herein, on each Interest Reset Date the rate of
interest shall be the rate determined in accordance with the
provisions of the applicable heading below.
Determination of CD Rate. If the Base Rate is CD Rate,
as indicated on the face hereof, the interest rate shall equal
(a) the rate on the applicable Interest Determination Date for
negotiable certificates of deposit having the Index Maturity
specified on the face hereof (1) as published by the Board of
Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication
of the Board of Governors of the Federal Reserve System (the
"H.15(519)"), under the heading "Cds (Secondary Market)" or
(2) if such rate is not so published by 9 A.M., New York City
time, on the Calculation Date (as defined below) pertaining to
such Interest Determination Date, then as published by the
Federal Reserve Bank of New York in its daily statistical release
"Composite 3:30 P.M. Quotations for U.S. Government Securities"
(the "Composite Quotations") under the heading "Certificates of
Deposit" or (b) if neither of such rates is published by 3 P.M.,
New York City time, on such Calculation Date, the arithmetic mean
as calculated by the Calculation Agent of the secondary market
offered rates as of 10 A.M., New York City time, on such Interest
Determination Date of three leading nonbank dealers in negotiable
U.S. Dollar certificates of deposit in The City of New York
selected by the Calculation Agent (as defined below) for
negotiable certificates of deposit) with a remaining maturity
closest to the Index Maturity (as specified on the face hereof)
in a denomination of $5,000,000, in each of the above cases
adjusted by the addition or subtraction of the Spread, if any,
specified on the face hereof, which is applicable to the Interest
Reset Period, or by multiplication by the Spread Multiplier, if
any, specified on the face hereof, which is applicable to the
Interest Reset Period, provided, however, that if such dealers
are not quoting as mentioned above, the interest rate in effect
hereon until the Interest Reset Date next succeeding the Interest
Reset Date to which such Interest Determination Date relates
shall be the rate in effect hereon on such Interest Determination
Date.
Determination of Commercial Paper Rate. If the Base
Rate is Commercial Paper Rate, as indicated on the face hereof,
the interest rate shall equal (a) the Money Market Yield (as
defined below) on the applicable Interest Determination Date of
the rate for commercial paper having the Index Maturity specified
on the face hereof (1) as published in the H.15(519), under the
heading "Commercial Paper," or (2) if such yield is not so
published by 9 A.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then as published
in the Composite Quotations under the heading "Commercial Paper"
or (b) if neither of such yields is published by 3 P.M., New York
City time, on such Calculation Date, the Money Market Yield of
the arithmetic mean of the offered rates, as of 11 A.M., New York
City time on such Interest Determination Date, of three leading
dealers of commercial paper in The City of New York, selected by
the Calculation Agent, for commercial paper of the Index Maturity
specified on the face hereof placed for an industrial issuer
whose bond rating is "AA," or the equivalent, from a nationally
recognized rating agency, in each of the above cases adjusted by
the addition or subtraction of the Spread, if any, specified on
the face hereof, which is applicable to the Interest Reset
Period, or by multiplication by the Spread Multiplier, if any,
specified on the face hereof, which is applicable to the Interest
Reset Period, provided, however, that if such dealers are not
quoting as mentioned above, the interest rate in effect hereon
until the Interest Reset Date next succeeding the Interest Reset
Date to which such Interest Determination Date relates shall be
the rate in effect hereon on such Interest Determination Date.
"Money Market Yield" shall be the yield calculated in
accordance with the following formula:
Monday Market Yield = D x 360 x 100
360 - (D x M)
where "D" refers to the per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal; and
"M" refers to the actual number of days in the interest period
for which interest is being calculated.
Determination of Federal Funds Rate. If the Base Rate
is Federal Funds Rate, as indicated on the face hereof, the
interest rate shall equal (a) the rate on the applicable Interest
Determination Date for Federal Funds (1) as published in the
H.15(519), under the heading "Federal Funds (Effective)" or
(2) if such rate is not so published by 9 A.M., New York City
time, on the Calculation Date pertaining to such Interest
Determination Date, then as published in the Composite Quotations
under the heading "Federal Funds/Effective Rate" or (b) if
neither of such rates is published by 3 P.M., New York City time,
on such Calculation Date, the arithmetic mean (as calculated by
the Calculation Agent) of the rates for the last transaction in
overnight Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by
the Calculation Agent as of 11 A.M., New York City time on such
Interest Determination Date, in each of the above cases adjusted
by the addition or subtraction of the Spread, if any, specified
on the face hereof, which is applicable to the Interest Reset
Period, or by multiplication by the Spread Multiplier, if any,
specified on the face hereof, which is applicable to the Interest
Reset Period; provided, however, that if such brokers are not
quoting as mentioned above, the interest rate in effect hereon
until the Interest Reset Date next succeeding the Interest Reset
Date to which such Interest Determination Date relates shall be
the rate in effect hereon on such Interest Determination Date.
Determination of LIBOR. If the Base Rate indicated on
the face hereof is LIBOR, with respect to LIBOR indexed to the
offered rates for U.S. Dollar deposits, the interest rate shall
equal the arithmetic mean (as calculated by the Calculation
Agent) of offered rates for deposits in U.S. Dollars having the
Index Maturity specified on the face hereof, commencing on the
second London Banking Day immediately following the applicable
Interest Determination Date, which appear on the Reuters Screen
LIBOR Page as of 11 A.M., London time, on such Interest
Determination Date, adjusted by the addition or subtraction of
the Spread, if any, specified on the face hereof, which is
applicable to the Interest Reset Period or by multiplication by
the Spread Multiplier, if any, specified on the date hereof,
which is applicable to the Interest Reset Period; provided,
however, that if less than two such offered rates so appear, the
Calculation Agent shall request the principal London office of
each of four major banks in the London interbank market selected
by the Calculation Agent to provide a quotation of the rate at
which such bank offered to prime banks in the London interbank
market at approximately 11 A.M., London time, on such Interest
Determination Date, on deposits in U.S. Dollars having the Index
Maturity specified on the face hereof commencing on the second
London Banking Day immediately following such Interest
Determination Date and in a principal amount equal to an amount
not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time, and such rate of
interest hereon shall equal the arithmetic mean of (a) such
quotations, if at least two quotations are provided, or (b) if
less than two quotations are provided, the rates quoted at
approximately 11 A.M., New York City time, on such Interest
Determination Date by three major banks in The City of New York
selected by the Calculation Agent for loans in U.S. Dollars to
leading European banks having the Index Maturity specified on the
face hereof commencing on the second London Banking Day
immediately following such Interest Determination Date and in a
principal amount as aforesaid, in either case, adjusted by the
addition or subtraction of the Spread, if any, specified on the
face hereof or by multiplication by the Spread Multiplier, if
any, specified on the face hereof, provided, however, that if the
three banks selected as aforesaid by the Calculation Agent are
not quoting as mentioned above, the interest rate in effect
hereon until the Interest Reset Date next succeeding the Interest
Reset Date to which such Interest Determination Date relates
shall be the rate in effect hereon on such Interest Determination
Date.
Determination of Treasury Rate. If the Base Rate is
Treasury Rate as indicated on the face hereof, the interest rate
shall equal the rate for the auction held on the applicable
Interest Determination Date of direct obligations of the United
States ("Treasury bills") having the Index Maturity shown on the
face hereof as published in the H.15(519), under the heading
"U.S. Government Securities - Treasury bills - auction average
(investment)" or, if not so published by 9 A.M., New York City
time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury, in either case,
adjusted by the addition or subtraction of the Spread, if any,
specified on the face hereof, which is applicable to the Interest
Reset Period, or, by multiplication by the Spread Multiplier, if
any, specified on the face hereof, which is applicable to the
Interest Reset Period. In the event that the results of the
auction of Treasury bills having the Index Maturity shown on the
face hereof are not published or reported as provided above by
3 P.M., New York City time, on such Calculation Date or if no
such auction is held in a particular week, then the rate of
interest hereon shall be calculated by the Calculation Agent and
shall be a yield to maturity (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 P.M., New York City
time, on such Interest Determination Date, of three leading
primary United States government securities dealers selected by
the Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the Index Maturity shown on the
face hereof, adjusted by the addition or subtraction of the
Spread, if any, specified on the face hereof, which is applicable
to the Interest Reset Period, or by multiplication by the Spread
Multiplier, if any, specified on the face hereof, which is
applicable to the Interest Reset Period; provided, however, that
if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the interest rate
hereon until the Interest Reset Date next succeeding the Interest
Reset Date to which such Interest Determination Date relates
shall be the rate in effect hereon on such Interest Determination
Date.
Determination of Prime Rate. If the Base Rate is Prime
Rate, as indicated on the face hereof, the interest rate shall
equal (a) the rate on the applicable Interest Determination Date
as published in the H.15(519), under the heading "Bank Prime
Loan" or (b) if such rate is not so published by 9 A.M., New York
City time, on the Calculation Date pertaining to such Interest
Determination Date, the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters
Screen NYMF Page (as defined herein) as such bank's prime rate or
base lending rate as in effect for that Interest Determination
Date or (c) if fewer than four such rates appear on the Reuters
Screen NYMF Page for the Interest Determination Date, the
arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of
the close of business on such Interest Determination Date by at
least two of three major money center banks in The City of New
York selected by the Calculation Agent or (d) if fewer than two
such rates are quoted as aforesaid, the interest rate determined
by the Calculation Agent on the basis of the rates furnished in
The City of New York by one or two, as the case may be,
substitute banks or trust companies organized and doing business
under the laws of the United States, or any State thereof, having
total equity capital of at least U.S. $500,000,000 and being
subject to supervision or examination by federal or state
authority, selected by the Calculation Agent (after consultation
with the Corporation) to provide such rate or rates, in each of
the above cases adjusted by the addition or subtraction of the
Spread, if any, specified on the face hereof, which is applicable
to the Interest Reset Period, or by multiplication by the Spread
Multiplier, if any, specified on the face hereof, which is
applicable to the Interest Reset Period; provided, however, that
if the banks selected as aforesaid are not quoting as set forth
above, the interest rate in effect hereon until the Interest
Reset Date next succeeding the Interest Reset Date to which such
Interest Determination Date relates shall be the rate in effect
hereon on such Interest Determination Date. "Reuters Screen NYMF
Page" means the display designated as page "NYMF" on the Reuters
Monitor Money Rates Service (or such other page as may replace
the NYMF page on that service for the purpose of displaying the
prime rate or base lending rate of major United States banks).
The Calculation Date pertaining to an Interest
Determination Date shall be the tenth calendar day after such
Interest Determination Date or if any such day is not a Business
Day, the next succeeding Business Day. Initially, ______________
_________________ shall be the Calculation Agent. The
Calculation Agent shall calculate the interest rate hereon in
accordance with the foregoing and will confirm in writing such
calculation to the Trustee and any Paying Agent immediately after
each determination. Neither the Trustee nor any Paying Agent
shall be responsible for any such calculation. At the request of
the Holder hereof the Calculation Agent will provide the interest
rate hereon then in effect and, if determined, the interest rate
which will become effective as of the next Interest Reset Date.
[4.][5.] Payments in U.S. Dollars of interest (other than
interest payable at Maturity) will be made by check mailed to the
Holder at the address appearing on the Security Register on the
applicable Record Date. [Notwithstanding the foregoing, a Holder
of U.S. $________________ or more in aggregate principal amount
of Notes of the same tenor and terms (or the Holder of the
equivalent thereof in a Specified Currency other than
U.S. Dollars, as determined by the Exchange Rate Agent on the
basis of the Market Exchange Rate (as defined below), may receive
payments in U.S. Dollars by wire transfer of immediately
available funds, but only if appropriate payment instructions
have been received in writing by the Paying Agent in
__________________________ not less than 10 days prior to the
applicable Interest Payment Date.] Simultaneously with any
election by the Holder hereof to receive payments of principal
and any premium and interest in the Specified Currency (if other
than U.S. Dollars), such Holder shall provide appropriate payment
instructions to such Paying Agent, and all such payments will be
made in immediately available funds to an account maintained by
the payee with a bank located outside the United States. The
principal hereof and any premium and interest hereon payable at
Maturity will be paid in immediately available funds upon
surrender of this Note at the office of the Paying Agent in The
City of New York, or at such other office or agency as the
Corporation may designate.
[5.][6.] If specified on the face hereof, this Note may be
redeemed, as a whole or from time to time in part, at the option
of the Corporation, on not less than 30 nor more than 60 days'
prior notice given as provided in the Indenture, on any
Redemption Date(s) and at the related Redemption Price(s) set
forth on the face hereof. If less than all the Outstanding Notes
of like tenor and terms are to be redeemed, the particular Notes
to be redeemed shall be selected by the Trustee not more than
60 days prior to the Redemption Date from the Outstanding Notes
of like tenor or terms not previously called for redemption.
Such selection shall be of principal amounts equal to the minimum
authorized denomination for such Notes or any integral multiple
thereof. Subject to the immediately preceding sentence, such
selection shall be made by any method as the Trustee deems fair
and appropriate. The notice of such redemption shall specify
which Notes are to be redeemed. In the event of redemption of
this Note in part only, a new Note or Notes of this series of
like tenor and terms for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation
hereof.
[6.][7.] If specified on the face hereof, this Note will be
subject to repayment at the option of the Holder hereof on the
Repayment Date(s) and at the Repayment Price(s) indicated on the
face hereof. If no such Repayment Date is set forth on the face
hereof, this Note may not be so repaid at the option of the
Holder hereof prior to Maturity. On each Repayment Date, if any,
this Note shall be repayable in whole or in part at the option of
the Holder hereof at the applicable Repayment Price set forth on
the face hereof, together with interest thereon to the Repayment
Date. For this Note to be repaid in whole or in part at the
option of the Holder hereof, the Paying Agent in _______________,
must receive not less than 30 nor more than 45 days prior to the
Repayment Date (i) the Note with the form entitled "Option to
Elect Repayment" below duly completed or (ii) a telegram, telex,
facsimile transmission or a letter from a member of a national
securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or a trust company in the
United States of America setting forth the name of the Holder of
the Note, the principal amount of the Note, the certificate
number of the Note or a description of the Note's tenor and
terms, the principal amount of the Note to be repaid, a statement
that the option to elect repayment is being exercised thereby and
a guarantee that the Note to be repaid with the form entitled
"Option to Elect Repayment" on the reverse of the Note duly
completed will be received by such Paying Agent no later than
five Business Days after the date of such telegram, telex,
facsimile transmission or letter and such Note and form duly
completed are received by such Paying Agent by such fifth
Business Day. Exercise of such repayment option shall be
irrevocable. Such option may be exercised by the Holder for less
than the entire principal amount provided that the principal
amount remaining outstanding after repayment is an authorized
denomination.
[7.][8.] If the Specified Currency is other than
U.S. Dollars, unless the Holder has elected otherwise, payment in
respect of this Note shall be made in U.S. Dollars based upon the
Exchange Rate as determined by the Exchange Rate Agent (initially
_____________________) appointed by the Corporation for such
purpose based on the highest firm bid quotation for U.S. Dollars
received by such Exchange Rate Agent at approximately 11 A.M. New
York City time on the second Business Day preceding the
applicable payment date (or, if no such rate is quoted on such
date, the last date on which such rate was quoted) from three
recognized foreign exchange dealers in The City of New York
selected by the Exchange Rate Agent and approved by the
Corporation (one of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer, for settlement on such payment
date, of the aggregate amount of the Specified Currency payable
on such payment date in respect of all Notes denominated in such
Specified Currency. All currency exchange costs will be borne by
the Holders of such Notes by deductions from such payments. If
no such bid quotations are available, payments will be made in
the Specified Currency, unless such Specified Currency is
unavailable due to the imposition of exchange controls or to
other circumstances beyond the Corporation's control, in which
case, the Corporation will be entitled to make payments in
respect hereof in U.S. Dollars as provided below.
Except as set forth below, if payment on this Note is
required to be made in a Specified Currency other than
U.S. Dollars and such currency is unavailable due to the
imposition of exchange controls or to other circumstances beyond
the Corporation's control, or is no longer used by the government
of the country issuing such currency or for the settlement of
transactions by public institutions in that country or within the
international banking community, then all payments due on that
due date with respect to this Note shall be made in U.S. Dollars.
The amount so payable on any date in such Specified Currency
shall be converted into U.S. Dollars at a rate determined by the
Exchange Rate Agent on the basis of the most recently available
noon buying rate for cable transfers in The City of New York as
determined by the Federal Reserve Bank of New York (the "Market
Exchange Rate").
If payment on this Note is required to be made in ECU and
ECU is unavailable due to the imposition of exchange controls or
to other circumstances beyond the Corporation's control, or is no
longer used in the European Monetary System, then all payments
due on that due date with respect to this Note shall be made in
U.S. Dollars. The amount so payable on any date in ECU shall be
converted into U.S. Dollars at a rate determined by the Exchange
Rate Agent, as of the second Business Day prior to the date on
which such payment is due on the following basis. The component
currencies of the ECU for this purpose (the "Components") shall
be the currency amounts which were components of the ECU as of
the last date on which the ECU was used in the European Monetary
System. The equivalent of the ECU in U.S. Dollars shall be
calculated by aggregating the U.S. Dollar equivalents of the
Components. The U.S. Dollar equivalent of each of the Components
shall be determined by the Exchange Rate Agent on the basis of
the most recently available Market Exchange Rate for such
Component. If the official unit or any component currency is
altered by way of combination or subdivision, the number of units
of that currency as a Component shall be divided or multiplied in
the same proportion. If two or more component currencies are
consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such
single currency equal to the sum of the amounts of the
consolidated component currencies expressed in such single
currency. If any component currency is divided into two or more
currencies, the amount of that currency as a Component shall be
replaced by amounts of such two or more currencies, each of which
shall have a value on the date of division equal to the amount of
the former component currency divided by the number of currencies
into which that currency was divided.
All determinations referred to above of the Exchange Rate
Agent shall be at its sole discretion (except to the extent
expressly provided herein that any determination is subject to
approval of the Corporation) and, in the absence of manifest
error, shall be conclusive for all purposes and binding upon all
Holders of the Notes and the Exchange Rate Agent shall have no
liability therefor.
[8.][9.] [If this is a subordinated note with limited
acceleration rights -- Payment of principal of this Note may be
accelerated only in case of the bankruptcy of the Corporation,
which is defined in the Indenture as an "Event of Default."
There is no right of acceleration of the payment of principal of
this Note upon default in the payment of principal or interest or
in the performance of any other covenant or agreement in the
Notes.]
If an Event of Default with respect to the Notes shall
occur and be continuing, the principal of all of the Notes may be
declared due and payable in the manner and with the effect
provided in the Indenture. If the principal of any Original
Issue Discount Note (as defined below) is declared to be due and
payable immediately pursuant to this section, the amount of
principal due and payable with respect to such Note shall be
limited to the sum of the aggregate principal amount of such Note
multiplied by the Issue Price (expressed as a percentage of the
aggregate principal amount) plus the original issue discount
accrued from the date of issue to the date of declaration, which
accrual shall be calculated using the "interest method" (computed
in accordance with generally accepted accounting principles) in
effect on the date of declaration. An Original Issue Discount
Note is a Note, including any zero-coupon Note, which has a
stated redemption price at maturity that exceeds its Issue Price
by at least 0.25% of its Principal Amount, multiplied by the
number of full years from the Original Issue Date to the Maturity
Date for such Note.
[9.][10.] The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Corporation and the rights of
the Holders of the Notes of each series under the Indenture to be
effected at any time by the Corporation with the consent of the
Holders of 662/3% in principal amount of the Notes at the time
Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified
percentages in principal amount of the Notes of each series at
the time Outstanding, on behalf of the Holders of all Notes of
such series, to waive compliance by the Corporation with certain
provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by
the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Notes
issued upon the registration of transfer herefor or in exchange
herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
[10.] [11.] No reference herein to the Indenture and no
provision of this Note or of the Indenture shall alter or impair
the obligation of the Corporation, which is absolute and
unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency, herein
and in the Indenture prescribed.
[11.] [12.] The authorized denominations of the Notes
denominated in U.S. Dollars will be U.S. $_____, and any larger
amount that is an integral multiple of U.S. $_____. The
authorized denominations of Notes denominated in currency other
than U.S. Dollars will be as set forth on the face hereof.
[12.] [13.] As provided in the Indenture and subject to
certain limitations therein set forth, the transfer of this Note
is registrable in the Security Register (as defined in the
Indenture), upon surrender of this Note for registration of
transfer at the office of the Security Registrar (as defined in
the Indenture) (initially ________________________ in
_________________________). Every Note presented for
registration of transfer shall (if so required by the Corporation
or the Trustee) be duly endorsed, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation,
the Trustee and the Security Registrar, duly executed by the
Holder hereof or its attorney duly authorized in writing, and one
or more new Notes of like tenor and terms in registered form, of
authorized denominations and for the same aggregate principal
amount, will be issued in the name or names of the designated
transferee or transferees and delivered at the office of the
Security Registrar in __________________________, or mailed, at
the request, risk and expense of the transferee or transferees,
to the address or addresses shown in the Security Register for
such transferee or transferees. The Corporation shall not be
required (i) to register the transfer of any Note or to exchange
it for a period of 15 days immediately preceding the date of
mailing of a notice of redemption, or (ii) to register the
transfer of or to exchange any Note or portion thereof selected
for redemption, except the unredeemed portion of any such Note
being redeemed in part. No service charge shall be made for any
such registration of transfer or exchange, but the Corporation
may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Prior to
due presentment of a Note for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the
Trustee may treat the person in whose name a Note is registered
as the owner thereof for all purposes, whether or not such Note
be overdue, and neither the Corporation, the Trustee nor any such
agent shall be affected by notice to the contrary.
[13.] [14.] Certain of the Corporation's obligations under
the Indenture with respect to Notes of any series may be
terminated if the Corporation irrevocably deposits with the
Trustee money or Eligible Instruments sufficient to pay and
discharge the entire indebtedness on all Notes of such series, as
described in the Indenture.
[14.] [15.] Unless otherwise defined herein, all terms used
in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
[15.] [16.] The Indenture and the Notes shall be construed
in accordance with and governed by the laws of the Commonwealth
of Pennsylvania.
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JR TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - ________ Custodian _________
(Cust) (Minor)
under Uniform Gift to Minors Act ________________________________
(State)
Additional abbreviations may also be used though not in the above
list.
________________
Assignment
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________________
_________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
the within Note, and all rights hereunder, and hereby irrevocably
constitutes and appoints _______________________________ Attorney
to transfer the within Note on the books kept for registration
thereof, with full power of substitution in the premises.
Date: ____________________ ___________________________________
NOTICE: the signature to this
assignment must be guaranteed by a
commercial bank or trust company in
the continental United States or by
a firm or corporation having
membership on any national
securities exchange or in the
National Association of Securities
Dealers, Inc., and must correspond
with the name as written upon the
face of the within instrument in
every particular without alteration
or enlargement or any change
whatever.
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs
the Corporation to repay the within Note (or portion hereof
specified below) pursuant to its terms at a price equal to the
applicable Repayment Price thereof together with interest to the
Repayment Date, to the undersigned at ___________________________
_________________________________________________________________
_________________________________________________________________
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note
is to be repaid, specify the portion thereof which the Holder
elects to have repaid _____________________________; and specify
the denomination or denominations (which shall be in authorized
denominations) of the Notes to be issued to the Holder for the
portion of the within Note not being repaid (in the absence of
any such specification, one such Note will be issued for the
portion not being repaid): ______________________________________
Dated: _______________________ ______________________________
Note: The signature on this
Option to Elect Repayment must
correspond with the name as
written upon the face of this
Note in every particular
without alteration or
enlargement.
<PAGE>
FORM OF OPTION TO EXTEND MATURITY
The undersigned hereby irrevocably requests and instructs
the Corporation to extend the Maturity Date to [ ]
of Sovereign Bancorp, Inc., Medium-Term Note, Series ____
principal amount of $______________ and registered in the name of
the undersigned.
For the Maturity Date of this Note to be extended, the
Corporation must receive a notice in this form duly completed, at
the office or agency of the Corporation set forth in this Note,
not less than two nor more than 10 Business Days preceding the
applicable Related Interest Payment Date shown on the face
hereof.
Date: _______________________ ______________________________
NOTICE: The signature on this
Form must correspond with the
name as written upon the face
of this Note in every
particular without alteration
or enlargement.
EXHIBIT 4.10
FORM OF CERTIFICATE OF DESIGNATIONS
of
__________________________
PREFERRED STOCK, SERIES __
of
SOVEREIGN BANCORP, INC.
SOVEREIGN BANCORP, INC., a corporation organized and
existing under the laws of the Commonwealth of Pennsylvania
(herein referred to as the "Corporation"), in accordance with the
provisions of Section 1306 of the Pennsylvania Business
Corporation Law of 1988, as amended, does hereby CERTIFY:
1. The Articles of Incorporation, as amended, of the
Corporation fixes the total number of shares of all classes of
capital stock which the Corporation shall have the authority to
issue at one hundred seven million five hundred thousand
(107,500,000) shares, of which seven million five hundred
thousand (7,500,000) shares shall be shares of preferred stock,
and one hundred million (100,000,000) shares shall be common
stock, without par value.
2. The Articles of Incorporation, as amended, of the
Corporation expressly grants to the Board of Directors of the
Corporation authority to provide for the issuance of the
preferred stock in one or more series, with such voting powers,
full or limited, or without voting powers, and with such par
value or stated value, designations, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the Articles of Incorporation or any
amendment thereto, or in the resolution or resolutions providing
for the issue of such stock adopted by the Board of Directors.
3. Pursuant to the authority conferred upon the Board
of Directors by the Articles of Incorporation, as amended, of the
Corporation, the Board of Directors, (i) by action duly taken on
___________, 19__, authorized the issuance of _____________
(__________) shares of Series __, without par value [IF
ADDITIONAL SERIES OF PREFERRED STOCK HAVE BEEN AUTHORIZED,
INSERT -- and (__) by action duly taken on ____________ [and by
action of the [Executive Committee] [Pricing Committee] [Pricing
Subcommittee]] duly taken on ____________, authorized the
issuance of ________ (________) shares of ____________ Preferred
Stock, Series __, without par value].
4. Pursuant to the authority conferred upon the Board
of Directors by the Articles of Incorporation, as amended, of the
Corporation, and the authority conferred upon the Pricing
Committee and the Pricing Subcommittee of the Board of Directors
on ____________, the Board of Directors, by actions duly taken on
____________, the Pricing Committee of the Board of Directors, by
actions duly taken on ____________ and the Pricing Subcommittee
of the Board of Directors by action duly taken on ____________,
adopted resolutions that compositely provide for an additional
series of the preferred stock as follows:
"RESOLVED, that an issue of a series of the preferred
stock, without par value, of the Corporation (such preferred
stock being herein referred to as "Preferred Stock," which term
shall include any additional shares of preferred stock of the
same class heretofore or hereafter authorized to be issued by the
Corporation), consisting of ________ (________) shares is hereby
provided for, and the voting power, designation, preference and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, are fixed
hereby as follows:
1. Designation. The designation of such series shall
be ____________________ (hereinafter referred to as the
"Series __ Preferred Stock") and the number of shares
constituting such series is ________ (________). Shares of
Series __ Preferred Stock shall have a stated value of $________
per share. The number of authorized shares of Series __
Preferred Stock may be reduced by further resolution duly adopted
by the Board of Directors of the Corporation or the Executive
Committee of the Board of Directors and by the filing of a
certificate pursuant to the provisions of the Pennsylvania
Business Corporation Law of 1988, as amended, stating that such
reduction has been so authorized, but the number of authorized
shares of Series __ Preferred stock shall not be increased.
2. Dividends. Quarterly Dividend Periods shall
commence on _______ 1, _________ 1, _________ 1 and _________ 1
in each year and shall end on and include the day next preceding
the first day of the next Quarterly Dividend Period. Such
dividends shall be cumulative from the respective dates of
original issue of shares of Series __ Stock and shall be payable,
when and as declared by the Board of Directors, on
______________, _____________, _____________ and _______________
of each year, commencing ____________. Each such dividend shall
be paid to the holders of record of shares of Series __ Preferred
Stock as they appear on the stock register of the Corporation on
such record date, not exceeding 30 days preceding the payment
date thereof, as shall be fixed by the Board of Directors of the
Corporation. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without
reference to any regular dividend payment date, to holders of
record on such date, not exceeding 45 days preceding the payment
date thereof, as may be fixed by the Board of Directors of the
Corporation. If there shall be outstanding shares of any other
series of Preferred Stock ranking on a parity as to dividends
with the Series __ Preferred Stock, the Corporation, in making
any dividend payment on account of arrears on the Series __
Preferred Stock or such other series of Preferred Stock, shall
make payments ratably upon all outstanding shares of Series __
Preferred Stock and such other series of Preferred Stock in
proportion to the respective amounts of dividends in arrears upon
all such outstanding shares of Series __ Preferred Stock and such
other series of Preferred Stock to the date of such dividend
payment. No interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments which
may be in arrears.
The amount of dividends per share payable for each
Quarterly Dividend Period shall be computed by dividing the
Dividend Rate (as defined below) for such Dividend Period by four
and applying such rate against the stated value per share of the
Series __ Preferred Stock. Dividends payable on the Series __
Preferred Stock for any period other than a full Quarterly
Dividend Period shall be computed on the basis of a 360-day year
of twelve 30-day months.
[IF PREFERRED STOCK HAS ADJUSTABLE DIVIDENDS, INSERT THE
FOLLOWING --
3. Dividend Rate. The dividend rates on the shares
of Series __ Preferred Stock shall be: (i) for the period (the
"Initial Dividend Period") from the respective dates of original
issue thereof to and including ____________, ___% per annum and
(ii) for each Quarterly Dividend Period thereafter a rate per
annum of the stated value thereof equal to the Applicable Rate
(as defined below).
Except as provided below in this paragraph, the
"Applicable Rate" for any Quarterly Dividend Period shall be
(a) ___% less than (b) the highest of the Treasury Bill Rate, the
Ten Year Constant Maturity Rate or the Thirty Year Constant
Maturity Rate (each as hereinafter defined) for such Dividend
Period. If the Corporation determines in good faith that for any
reason one or more of such rates cannot be determined for any
Dividend Period, then the Applicable Rate for such Dividend
Period shall be ___% less than the higher of whichever of such
rates can be so determined. If the Corporation determines in
good faith that none of such rates can be determined for any
Dividend Period, then the Applicable Rate in effect for the
preceding Dividend Period shall be continued for such Dividend
Period. Anything herein to the contrary notwithstanding, the
Applicable Rate for any Quarterly Dividend Period shall in no
event be less than ___% per annum or greater than ___% per annum.
Except as provided below in this paragraph, the
"Treasury Bill Rate" for each Quarterly Dividend Period shall be
the arithmetic average of the two weekly per annum market
discount rates (or the one weekly per annum market discount rate,
if only one such rate shall be published during the relevant
Calendar Period as provided below) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board during
the Calendar Period immediately prior to the ten calendar days
immediately preceding the ________________,
_____________________, ____________________ and
___________________, as the case may be, prior to the Quarterly
Dividend Period for which the dividend rate on the Series __
Preferred Stock is being determined. If the Federal Reserve
Board does not publish such a weekly per annum market discount
rate during such Calendar Period, then the Treasury Bill Rate for
such Dividend Period shall be the arithmetic average of the two
weekly per annum market discount rates (or the one weekly per
annum market discount rate, if only one such rate shall be
published during the relevant Calendar Period as provided below)
for three-month U.S. Treasury bills, as published weekly during
such Calendar Period by any Federal Reserve Bank or by any
U.S. Government department or agency selected by the Corporation.
If a per annum market discount rate for three-month U.S. Treasury
bills shall not be published by the Federal Reserve Board or by
any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, then the Treasury Bill Rate
for such Dividend Period shall be the arithmetic average of the
two weekly per annum market discount rates (or the one weekly per
annum market discount rate, if only one such rate shall be
published during the relevant Calendar Period as provided below)
for all the U.S. Treasury bills then having maturities of not
less than 80 nor more than 100 days, as finally published during
such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such rates, by any
Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. If the Corporation
determines in good faith that for any reason no such
U.S. Treasury bill rates are published as provided above during
such Calendar Period, then the Treasury Bill Rate for such
Dividend Period shall be the arithmetic average of the per annum
market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable non-interest
bearing U.S. Treasury securities with a maturity of not less than
80 nor more than 100 days from the date of each such quotation,
as chosen and quoted daily for each business day in New York City
(or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized
U.S. Government securities dealers selected by the Corporation.
If the Corporation determines in good faith that for any reason
the Corporation cannot determine the Treasury Bill Rate for any
Quarterly Dividend Period as provided above in this paragraph,
the Treasury Bill Rate for such Dividend Period shall be the
arithmetic average of the per annum market discount rates based
upon the closing bids during such Calendar Period for each of the
issues of marketable interest-bearing U.S. Treasury securities
with a maturity of not less than 80 nor more than 100 days from
the date of each such quotation, as chosen and quoted daily for
each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation
by at least three recognized U.S. Government securities dealers
selected by the Corporation.
Except as provided below in this paragraph, the "Ten
Year Constant Maturity Rate" for each Quarterly Dividend Period
shall be the arithmetic average of the two weekly per annum Ten
Year Average Yields (or the one weekly per annum Ten Year Average
Yield, if only one such Yield shall be published during the
relevant Calendar Period as provided below), as published weekly
by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding
the __________________, _________________, __________________ and
________________, as the case may be, prior to the Quarterly
Dividend Period for which the dividend rate on the Series __
Preferred Stock is being determined. If the Federal Reserve
Board does not publish such a weekly per annum Ten Year Average
Yield during such Calendar Period, then the Ten Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic
average of the two weekly per annum Ten Year Average Yields (or
the one weekly per annum Ten Year Average Yield, if only on such
Yield shall be published during the relevant Calendar Period as
provided below), as published weekly during such Calendar Period
by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. If a per annum Ten Year
Average Yield shall not be published by the Federal Reserve Board
or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Ten
Year Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the two weekly per annum average yields to
maturity (or the one weekly average yield to maturity, if only
one such yield shall be published during the relevant Calendar
Period as provided below) for all of the actively traded
marketable U.S. Treasury fixed interest rate securities (other
than Special Securities) then having maturities of not less than
eight nor more than twelve years, as finally published during
such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such yields, by any
Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. If the Corporation
determines in good faith that for any reason the Corporation
cannot determine the Ten Year Constant Maturity Rate for any
Quarterly Dividend Period as provided above in this paragraph,
then the Ten Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the per annum average yields
to maturity based upon the closing bids during such Calendar
Period for each of the issues of actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special
Securities) with a final maturity date not less than eight nor
more than twelve years from the date of each such quotation, as
chosen and quoted daily for each business day in New York City
(or less frequently, if daily quotations shall not be generally
available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Thirty
Year Constant Maturity Rate" for each Quarterly Dividend Period
shall be the arithmetic average of the two weekly per annum
Thirty Year Average Yields (or the one weekly per annum Thirty
Year Average Yield, if only one such Yield shall be published
during the relevant Calendar Period as provided below), as
published weekly by the Federal Reserve Board during the Calendar
Period immediately prior to the ten calendar days immediately
preceding the ________________, __________________,
__________________ and ___________________, as the case may be,
prior to the Quarterly Dividend Period for which the dividend
rate on the Series __ Preferred Stock is being determined. If
the Federal Reserve Board does not publish such a weekly per
annum Thirty Year Average Yield during such Calendar Period, then
the Thirty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the two weekly per annum
Thirty Year Average Yields (or the one weekly per annum Thirty
Year Average Yield, if only one such Yield shall be published
during the relevant Calendar Period as provided below), as
published weekly during such Calendar Period by any Federal
Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. If a per annum Thirty Year Average
Yield shall not be published by the Federal Reserve Board or by
any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, then the Thirty Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic
average of the two weekly per annum average yields to maturity
(or the one weekly average yield to maturity, if only one such
yield shall be published during the relevant Calendar Period as
provided below) for all of the actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special
Securities) then having maturities of not less than twenty-eight
nor more than thirty-two years, as finally published during such
Calendar Period by the Federal Reserve Board or, if the Federal
Reserve Board shall not publish such yields, by any Federal
Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. If the Corporation determines in
good faith that for any reason the Corporation cannot determine
the Thirty Year Constant Maturity Rate for any Quarterly Dividend
Period as provided above in this paragraph, then the Thirty Year
Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each
of the issues of actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) with a
final maturity date not less than twenty-eight nor more than
thirty-two years from the date of each such quotation, as chosen
and quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available)
to the Corporation by at least three recognized U.S. Government
securities dealers selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity
Rate and the Thirty Year Constant Maturity Rate shall each be
rounded to the nearest five hundredths of a percentage point.
The Applicable Rate with respect to each Quarterly
Dividend Period will be calculated as promptly as practicable by
the Corporation according to the appropriate method described
herein. The mathematical accuracy of each such calculation will
be confirmed in writing by independent accountants of recognized
standing. The Corporation shall cause each Applicable Rate to be
published in a newspaper of general circulation in New York City
and Wyomissing, Pennsylvania prior to the commencement of the new
Quarterly Dividend Period to which it applies and will cause
notice of such Applicable Rate to be enclosed with the dividend
payment checks next mailed to the holders of the Series __
Preferred Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar
days;
(ii) "Special Securities" shall mean
securities which can, at the option of the holder, be
surrendered at face value in payment of any Federal estate
tax or which provide such tax benefits or which were
originally issued at a deep or substantial discount;
(iii) "Ten Year Average Yield" shall mean
the average yield to maturity for actively traded marketable
U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of ten years); and
(iv) "Thirty Year Average Yield" shall mean
the average yield to maturity for actively traded marketable
U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of thirty years).]
[IF PREFERRED STOCK HAS A FIXED DIVIDEND RATE WITH A CONTINGENT
DIVIDEND RATE ADJUSTMENT, INSERT THE FOLLOWING --
3. Dividend Rate.
(a) Definitions:
(1) "Contingent Dividend Disqualification
Period" shall mean any four consecutive fiscal quarters in
which aggregate Earnings Per Share, on a fully diluted
basis, are greater than $__________.
(2) "Contingent Dividend Qualification
Period" shall mean any four consecutive fiscal quarters
[(other than any fiscal quarters occurring within one year
after a Contingent Dividend Disqualification Period)]
commencing on or after ____________, in which aggregate
Earnings Per Share, on a fully diluted basis, are less than
$__________.
(3) "Earnings Per Share" shall mean earnings
per common share as reported in the Corporation's financial
statements as publicly announced on the respective Reporting
Dates; provided, however, that if for any Dividend Period
earnings per share as reported in the Corporation's
financial statements filed with the Securities and Exchange
Commission ("SEC") in its Quarterly Reports on Form 10-Q and
(for the fourth quarter) in its Annual Report on Form 10-K
(or their successor forms), as the case may be, including
any amendments thereto filed with the SEC, vary from the
earnings per share announced on the Reporting Date, and, as
a result, the dividend rate must be adjusted up, such
adjustment shall be made both retroactively and
prospectively, and any deficiency as a result of such a
retroactive adjustment shall be paid on the next Quarterly
Payment Date that is not less than ___ days after the date
of filing such amendment with the SEC and such deficiency
shall be paid to the persons entitled to receive any
dividends otherwise payable on that Quarterly Payment Date.
If, as a result of an amendment to Earnings Per Share filed
with the SEC, a dividend rate must be adjusted down, such
adjusted dividend rate shall become effective on the first
Quarterly Dividend Period commencing after the amended
earnings per share has been filed with the SEC, and there
shall be no retroactive adjustment.
(4) "Quarterly Payment Dates" shall mean
_______________, __________________, ________________ and
_______________ of each year.
(5) "Reporting Date" shall mean the date on
which the Corporation first publicly announces its results
of operations for an immediately preceding fiscal quarter,
but in no event later than the date on which the
Corporation's Quarterly Report on Form 10-Q or Annual Report
on Form 10-K must be filed with the Securities and Exchange
Commission with respect to that fiscal quarter.
(b) Rate. The dividend rate on the shares of
Series __ Preferred Stock for the period (the "Initial Dividend
Period") from the respective dates of original issue thereof to
and including ____________, shall be ___% per annum. The
dividend rate for each Quarterly Dividend Period thereafter shall
be ___% per annum; provided, however, that in the event of a
Contingent Dividend Qualification Period, the dividend rate shall
be changed to ___% per annum for the first Quarterly Dividend
Period during which the first Reporting Date after the Contingent
Dividend Qualification Period occurs. Such dividend rate shall
remain in effect thereafter provided that, if a Contingent
Dividend Disqualification Period thereafter occurs, the dividend
rate shall again be ___% per annum, beginning with the first
Quarterly Dividend Period commencing four fiscal quarters after
the Contingent Dividend Disqualification Period. The dividend
rate shall continue to be adjusted upon the occurrence of any
subsequent Contingent Dividend Qualification Periods and
Contingent Dividend Disqualification Periods as set forth above.]
[IF THE PREFERRED STOCK HAS A FIXED DIVIDEND RATE, INSERT THE
FOLLOWING --
3. Dividend Rate. The Dividend Rate on the shares of
Series __ Preferred Stock for the period (the "Initial Dividend
Period") from the respective dates of original issue thereof to
and including ___________, and for each Quarterly Dividend Period
thereafter shall be ___% per annum.]
[IF THE PREFERRED STOCK IS REDEEMABLE AT A FIXED PRICE, INSERT
THE FOLLOWING --
4. Redemption.
[(a)] The Corporation, at its option, may redeem
shares of the Series __ Preferred Stock, as a whole or in part,
at any time or from time to time, at a redemption price of
$__________ per share plus accrued and unpaid dividends thereon
to the date fixed for redemption[; provided, however, that no
shares of Series __ Preferred stock shall be redeemed hereunder
prior to __________] [If the Series __ Preferred Stock is
convertible, insert --, unless the closing price of the Common
Stock on the New York Stock Exchange shall have equaled or
exceeded ___% of the conversion price then in effect for at least
20 out of 30 consecutive trading days ending within five trading
days prior to the date notice of redemption is given. The
"conversion price" shall be the quotient of $____ divided by the
then effective conversion rate]].
[IF THE PREFERRED STOCK IS REDEEMABLE BY THE CORPORATION AT A
VARIABLE PRICE, INSERT THE FOLLOWING --
4. Redemption.
[(a)] The Corporation, at its option, may
redeem shares of the Series ___ Preferred Stock, as a whole or in
part, at any time or from time to time, at a redemption price as
set forth below, plus accrued and unpaid dividends thereon to the
date fixed for redemption:
Date of Redemption Redemption Price per Share
On or after _________, ________________
but prior to _________.
On or after _________, ________________
but prior to _________.
On or after _________, ________________
Notwithstanding the foregoing, no shares of Series ___ Preferred
Stock shall be redeemed hereunder prior to _________ [if the
Series ___ Preferred Stock is convertible, unless the closing
price of the Common Stock on the New York Stock Exchange shall
have equaled or exceeded ______% of the conversion price then in
effect for at least 20 out of 30 consecutive trading days ending
within five trading days prior to the date notice of redemption
is given]].
If the Corporation shall redeem shares of Series ___
Preferred Stock pursuant to this subparagraph (a), notice of such
redemption shall be given by publication (not less than 30 nor
more than 90 days prior to the redemption date) at least once in
a newspaper printed in the English language and of general
circulation in the Borough of Wyomissing, Pennsylvania (upon any
secular day of the week) stating such election on the part of the
Corporation and that on the redemption date there will become due
and payable upon each of the shares to be redeemed, at the place
or places specified in such notice, the applicable redemption
price therein specified. A similar notice shall be mailed by
first class mail, postage prepaid, not less than 30 nor more than
90 days prior to the redemption date, to each holder of record of
the shares to be redeemed, at such holder's address as the same
appears on the stock register of the Corporation. Each such
notice shall state: (a) the redemption date; (b) the number of
shares of Series ___ Preferred Stock to be redeemed and, if less
than all the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (c) the
redemption price; (d) the place or places where certificates for
such shares are to be surrendered for payment of the redemption
price; and (e) that dividends on the shares to be redeemed will
cease to accrue on such redemption date. Notice having been
mailed as aforesaid, from and after the redemption date (unless
default shall be made by the Corporation in providing money for
the payment of the redemption price) dividends on the shares of
the Series ___ Preferred Stock so called for redemption shall
cease to accrue, and said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from
the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for
any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so
require and the notice shall no state), such shares shall be
redeemed by the Corporation at the redemption price aforesaid.
If less than all the outstanding shares of Series ___ Preferred
Stock are to be redeemed, shares to be redeemed shall be selected
by the Corporation from outstanding shares of Series ___
Preferred Stock not previously called for redemption by lot or
pro rata (as nearly as may be) in any method determined by the
Corporation in its sole discretion to be equitable.
[IF THE PREFERRED STOCK IS SUBJECT TO MANDATORY REDEMPTION AND A
SINKING FUND, INSERT THE FOLLOWING --
(b) Mandatory Redemption; Sinking Fund.
(1) Sinking Fund. So long as any Series ___
Preferred Stock shall be outstanding, the Corporation shall,
on each of the dates set forth in the following schedule
("Sinking Fund Payment Dates") set aside as and for a
sinking fund for the redemption of the Series ___ Preferred
Stock (the "Sinking Fund"), subject to the subsequent
deferral provided for in paragraph 4(b)(2) hereof, in cash
out of any funds legally available therefor, a sum equal to
the product of (i) the applicable Mandatory-Redemption Price
(as hereinafter defined) multiplied by (ii) the number of
shares of Series ___ Preferred Stock set forth opposite such
Sinking Fund Payment Date:
Number of Shares of
Sinking Fund Series ___ Preferred
Payment Date Stock to be Redeemed
Notwithstanding the foregoing, in no event shall the
Corporation on any Sinking Fund Payment Date be obligated to
set aside in cash an amount with respect to the Series ___
Preferred Stock greater than a sum equal to the product of
the Mandatory-Redemption Price for such series and the
number of the then outstanding shares of such series.
(2) Deferral. Notwithstanding paragraph
4(b)(1) above, each Mandatory-Redemption Date (as
hereinafter defined) for Series ___ Preferred Stock may be
deferred for a period of one year by the holders of the then
outstanding shares of such series if the holders of at least
662/3% of shares of such series consent thereto in writing at
least ten days prior to such date. The right to defer a
Mandatory-Redemption Date maybe exercised any number of
times in the manner set forth herein.
(3) Mandatory-Redemption Price. The
Mandatory-Redemption Price for each share of Series ___
Preferred Stock shall be an amount in cash equal to
$__________________, plus all accrued and unpaid dividends
thereon, whether or not earned or declared, to and including
the date fixed for redemption.
(4) Sinking Fund Requirement Cumulative. If
on any Sinking Fund Payment Date the funds of the
Corporation legally available therefor shall be insufficient
to discharge such Sinking Fund requirement in full, funds to
the extent legally available for such purpose shall be set
aside for the Sinking Fund. Such Sinking Fund requirements
shall be cumulative, so that if for any year or years such
requirements shall not be fully discharged as they accrue,
funds legally available therefor, after such payment or
provision for dividends, for each year thereafter shall be
applied thereto until such requirements are fully
discharged.
(5) Use of Sinking Fund. Thirty days
following each Sinking Fund Payment Date (the "Mandatory-
Redemption Date"), the cash in the Sinking Fund shall be
used to acquire by redemption, in the manner provided below,
the number of shares of Series ___ Preferred Stock specified
opposite the Sinking Fund Payment Date in the schedule
appearing in paragraph 4(b)(1).
(6) Partial Redemption Pro Rata. In the
event of the redemption of only a part of the then
outstanding Series ___ Preferred Stock pursuant to this
paragraph 4(b), the Corporation shall effect such redemption
ratably according to the full amount each holder of the
Series ___ Preferred Stock is otherwise then entitled to
receive.
(7) Mandatory-Redemption Notice. In
addition to the required notice by publication, not less
than 30 days nor more than 90 days prior to the Mandatory-
Redemption Date, written notice (the "Mandatory-Redemption
Notice"), shall be mailed, postage prepaid, to each holder
of record of the Series ___ Preferred Stock to be redeemed
at his post office address last shown on the records of the
Corporation. Such Mandatory-Redemption Notice shall state:
(i) Whether all or less than all of the
outstanding shares of Series ___ Preferred Stock are to
be redeemed and the total number of shares being
redeemed;
(ii) The number of shares of Series ___
Preferred Stock held by the holder that the Corporation
intends to redeem;
(iii) The Mandatory-Redemption Date and
Mandatory-Redemption Price;
(iv) The date upon which the holder's
conversion rights (as hereinafter described) as to such
shares terminate;
(v) That the holder is to surrender to
the Corporation, in the manner and at the price
designated, his certificate or certificates
representing the shares of Series ___ Preferred Stock
to be redeemed; and
(vi) That, with the written consent of
the holders of 662/3% of the then outstanding shares of
such series, the Mandatory-Redemption Date for such
series may be deferred for a period of one year.
(8) Surrender of Certificates; Payment. On
or before the Mandatory-Redemption Date, each holder of
shares of Series ___ Preferred Stock to be redeemed, [unless
such holder has exercised his right to convert the shares as
provided in Section 6 hereof,] shall surrender the
certificate or certificates representing such shares to the
Corporation, in the manner and at the place designated in
the Mandatory-Redemption Notice, and thereupon the
Mandatory-Redemption Price for such shares shall be payable
to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each
surrendered certificate shall be cancelled and retired. In
the event less than all of the shares represented by such
certificate are redeemed, a new certificate representing the
unredeemed shares shall be issued forthwith.
(9) Rights Subsequent to Mandatory-
Redemption. If the Mandatory-Redemption Notice shall have
been duly given, and if on the Mandatory-Redemption Date the
Mandatory-Redemption Price is either paid or made available
for payment through the deposit arrangement specified in
subparagraph (10) below, then notwithstanding that the
certificates evidencing any of the shares of Series ___
Preferred Stock so called for redemption shall not have been
surrendered, the dividends with respect to such shares shall
cease to accrue after the Mandatory-Redemption Date and all
rights with respect to such shares shall forthwith after the
Mandatory-Redemption Date terminate, except only the right
of the holders to receive the Mandatory-Redemption Price
without interest upon surrender of their certificate or
certificates thereof.
(10) Deposit of Funds. On or prior to the
Mandatory-Redemption Date, the Corporation shall deposit
with any bank or trust company in either Berks County,
Pennsylvania, or New York, New York, having a capital and
surplus of at least $100,000,000 as a trust fund, a sum
equal to the aggregate Mandatory-Redemption Price of all
shares of Series ___ Preferred Stock called for redemption
and not yet redeemed or converted, with irrevocable
instructions and authority to the bank or trust company to
pay, on and after the Mandatory-Redemption Date, the
Mandatory-Redemption Price to the respective holders upon
the surrender of their share certificates. From and after
the date of such deposit (but not prior to the Mandatory-
Redemption Date), the shares so called for redemption shall
be redeemed. The deposit shall constitute full payment of
the shares to their holders, and from and after the
Mandatory-Redemption Date the shares shall be deemed to be
no longer outstanding, and the holders thereof shall cease
to be shareholders with respect to such shares and shall
have no rights with respect thereto except the rights to
receive from the bank or trust company payment of the
Mandatory-Redemption Price of the shares, without interest,
upon surrender of their certificates therefor. Any funds so
deposited and unclaimed at the end of one year from the
Mandatory-Redemption Date shall be released or repaid to the
Corporation, after which the holders of shares called for
redemption shall be entitled to receive payment of the
Mandatory-Redemption Price only from the Corporation.]
[(c)] In no event shall the Corporation redeem
or purchase any shares of Series ___ Preferred Stock pursuant to
this Section 4 unless full cumulative dividends shall have been
paid or declared and set apart for payment upon all outstanding
shares of Series ___ Preferred Stock for all past Dividend
Periods, and unless all matured obligations of the Corporation
with respect to all sinking funds, retirement funds or purchase
funds for all series of Preferred Stock then outstanding have
been met.
5. Shares to be Retired. All shares of Series ___
Preferred Stock redeemed by the Corporation shall be retired and
cancelled and shall be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to
series, and may thereafter be issued.
[IF THE PREFERRED STOCK IS NOT CONVERTIBLE, INSERT THE
FOLLOWING --
6. Conversion or Exchange. The holders of shares of
Series ___ Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares of
any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.]
[IF THE PREFERRED STOCK IS CONVERTIBLE, INSERT THE FOLLOWING --
6. Conversion Rights.
The holder of any share or shares of Series ___
Preferred Stock shall have the right, at any time, to convert any
shares of Series ___ Preferred Stock (except any share of
Series ___ Preferred Stock which shall have been called for
redemption pursuant to the provisions hereof, the conversion
right with respect thereto shall terminate on the close of
business of the date fixed for redemption) into fully paid and
non-assessable shares of the common stock of the Corporation, at
a conversion rate of __________________ (______) shares of common
stock for each share of Series ___ Preferred Stock, subject to
adjustment as hereinafter provided. The conversion right herein
granted shall be exercised by the surrender of a certificate or
certificates for Series ___ Preferred Stock to be so converted at
the office of any transfer agent for the Series ___ Preferred
Stock, at any time during its usual business hours, together with
written notice that the holder elects to convert the same, or a
stated number of shares thereof, which notice shall state the
name or names (with addresses) in which the certificate or
certificates of common stock shall be issued. Every such notice
of election to convert shall constitute a contract between the
holder of such Series ___ Preferred Stock and the Corporation,
whereby such holder shall be deemed to subscribe for the amount
of common stock which he will be entitled to receive upon such
conversion and, in payment and satisfaction of such subscription
(and any cash adjustment to which he may be entitled), to
surrender such Series ___ Preferred Stock and to release the
Corporation from all obligation on the shares to be converted and
whereby the Corporation shall be deemed to agree that the
surrender of such shares and the extinguishment of obligation
thereon shall constitute full payment for the common stock so
subscribed for and to be issued upon such conversion.
(b) As promptly as practicable after the
surrender for conversion of any Series ___ Preferred Stock and
the payment in cash of any amount required by paragraph (i) of
this Section 6, the Corporation shall deliver or cause to be
delivered to or upon the written order of the holder of such
Series ___ Preferred Stock certificates representing the number
of shares of common stock issuable upon such conversion, issued
in such name or names as such holder shall have directed,
together with cash in respect of any fractional interest in a
share of common stock issuable upon such conversion and, if only
a part of such Series ___ Preferred Stock is converted, a
certificate or certificates for the unconverted shares of
Series ___ Preferred Stock. Such conversion shall be deemed to
have been made at the close of business on the day of surrender
of the Series ___ Preferred Stock for conversion, and the rights
of the holder of such stock as a Series ___ Preferred Stock, in
respect of the stock surrendered for conversion, shall cease at
such time and the person or persons in whose name or names the
certificates for such shares are to be issued shall be treated
for all purposes as having become the record holder or holders of
common stock at such time and such conversion shall be at the
conversion rate in effect at such time; provided, however, that
no such surrender on any date when the stock transfer books of
the Corporation shall be closed shall be effective to constitute
the person or persons entitled to receive the shares of common
stock upon such conversion as the record holder or holders of
such shares on such date, but such surrender shall be effective
to constitute the person or persons entitled to receive such
shares of common stock as the record holder or holders thereof
for all purposes at the opening of business on the next
succeeding day on which such stock transfer books are open and
such conversion shall be at the conversion rate in effect at the
opening of business on such next succeeding day.
If the last day for the exercise of the conversion
is a legal holiday in the city in which the transfer agent to
which shares are presented for conversion is located, then such
conversion right may be exercised (at the conversion rate in
effect on such last day) upon the next succeeding day not in such
city a legal holiday.
(c) No payment or adjustment shall be made upon
any conversion in respect of dividends accrued and unpaid on the
Series ___ Preferred Stock to the date of conversion or in
respect of any dividends on the common stock issued upon such
conversion.
(d) The conversion rate shall be subject to
adjustment from time to time as follows:
(i) In case the Corporation shall at any
time (A) pay a dividend or make a distribution on shares of
its common stock in shares of its capital stock (whether
shares of common stock or of capital stock of any other
class), (B) subdivide or reclassify its outstanding shares
of common stock into a greater number of securities
(including shares of common stock), or (C) combine or
reclassify its outstanding shares of common stock into a
smaller number of shares (including shares of common stock),
the conversion rate in effect immediately prior thereto
shall be adjusted so that the holder of record of any shares
of Series ___ Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares
of the Corporation which he would have owned or have been
entitled to receive after the happening of any of the events
described above had such shares of Series ___ Preferred
Stock been converted immediately prior to the happening of
such event. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after
the record date in the case of a dividend and shall become
effective immediately after the effective date in the case
of a subdivision or combination. If, as a result of an
adjustment made pursuant to this subparagraph (i), the
holder of any Series ___ Preferred Stock thereafter
converted shall become entitled to receive shares of two or
more classes of capital stock of the Corporation, the Board
of Directors of the Corporation (whose determination shall
be conclusive) shall determine the allocation of the
adjusted conversion rate between or among shares of such
classes of capital stock.
In the event that at any time, as a result of an adjustment
made pursuant to this subparagraph (i), the holder of any
Series ___ Preferred Stock thereafter converted shall become
entitled to receive any shares or other securities of the
Corporation other than shares of common stock, thereafter
the number of such other shares so received upon conversion
of any Series ___ Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with
respect to the shares of common stock contained in this
paragraph 6(d), and other provisions of this Section 6 with
respect to the shares of common stock shall apply on like
term to any such other shares or other securities.
(ii) In case the Corporation shall fix a
record date for the issuance of rights or warrants to all
holders of its common stock entitling them (for a period
expiring within 45 days after such record date) to subscribe
for or purchase common stock (or securities convertible into
common stock) at a price per share (or a conversion price
per share) less than the current market price per share of
common stock (as defined in subparagraph (iv) below) at such
record date, the conversion rate in effect immediately prior
thereto shall be adjusted so that the same shall equal the
rate determined by multiplying the conversion rate in effect
immediately prior to such record date by a fraction of which
the numerator shall be the number of shares of common stock
outstanding on such record date plus the number of
additional shares of common stock offered for subscription
or purchase (or into which the convertible securities so
offered are initially convertible), and of which the
denominator shall be the number of shares of common stock
outstanding on such record date plus the number of shares
which the aggregate offering price of the total number of
shares so offered (or the aggregate initial conversion price
of the convertible securities so offered) would purchase at
such current market price. Such adjustment shall be made
successively whenever such a record date is fixed and shall
become effective immediately after such record date. In
determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of common stock
at less than such current market price, and in determining
the aggregate offering price of such shares, there shall be
taken into account any consideration received by the
Corporation for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the
Board of Directors of the Corporation. Common stock owned
by or held for the account of the Corporation or any
majority owned subsidiary shall not be deemed outstanding
for the purpose of any adjustment required under this
subparagraph (ii).
(iii) In case the Corporation shall fix a
record date for making a distribution to all holders of its
common stock evidences of its indebtedness or assets
(excluding regular quarterly or other periodic or recurring
cash dividends or distributions and cash dividends or
distributions paid from retained earnings or referred to in
subparagraph (i) above) or rights or warrants to subscribe
or purchase (excluding those referred to in
subparagraph (ii) above), then in each such case the
conversion rate shall be adjusted so that the same shall
equal the rate determined by multiplying the conversion rate
in effect immediately prior to such record date by a
fraction of which the numerator shall be the current market
price (as defined in subparagraph (iv) below) per share of
the common stock on such record date, and the denominator of
which shall be such current market price per share of common
stock, less the then fair market value (as determined in
good faith by the Board of Directors, whose determination
shall be conclusive) of the portion of the assets or
evidences of indebtedness so distributed or of such rights
or warrants applicable to one share of common stock. Such
adjustment shall be made successively whenever such a record
date is fixed and shall become effective immediately after
such record date. Notwithstanding the foregoing, in the
event that the Corporation shall distribute any rights or
warrants to acquire capital stock ("Rights") pursuant to
this subparagraph (iii), the distribution of separate
certificates representing such Rights subsequent to their
initial distribution (whether or not such distribution shall
have occurred prior to the date of the issuance of such
Series ___ Preferred Stock) shall be deemed to be the
distribution of such Rights for purposes of this
subparagraph (iii); provided that the Corporation may, in
lieu of making any adjustment pursuant to this
subparagraph (iii) upon a distribution of separate
certificates representing such Rights, make proper provision
so that each holder of such Series ___ Preferred Stock who
converts such Series ___ Preferred Stock (or any portion
thereof) (A) before the record date for such distribution of
separate certificates shall be entitled to receive upon such
conversion shares of common stock issued with Rights and
(B) after such record date and prior to the expiration,
redemption or termination of such Rights shall be entitled
to receive upon such conversion, in addition to the shares
of common stock issuable upon such conversion, the same
number of such Rights as would a holder of the number of
shares of common stock that such Series ___ Preferred Stock
so converted would have entitled the holder thereof to
purchase in accordance with the terms and provisions of and
applicable to the Rights if such Series ___ Preferred Stock
were converted immediately prior to the record date for
such distribution. Common stock owned by or held for the
account of the Corporation or any majority owned subsidiary
shall not be deemed outstanding for the purpose of any
adjustment required under this subparagraph (iii).
(iv) For the purpose of any computation
under subparagraph (ii) and (iii) above, the current market
price per share of common stock at any date shall be deemed
to be the average of the daily Closing Prices for the thirty
consecutive business days commencing forty-five business
days before the day in question. The Closing Price for any
day shall be (A) if the common stock is listed or admitted
for trading on any national securities exchange, the last
sale price (regular way), or the average of the closing bid
and ask prices, if no sale occurred, of common stock on the
principal securities exchange on which the common stock is
listed, (B) if not listed as described in (A), the mean
between the closing high bid and low asked quotations of
common stock in the National Association of Securities
Dealers, Inc., Automated Quotation System, or any similar
system for automated dissemination of quotations of
securities prices then in common use, if so quoted, or
(C) if not quoted as described in clause (B), the mean
between the high bid and low asked quotations for common
stock as reported by the National Quotation Bureau
Incorporated if at least two securities dealers have
inserted both bid and asked quotations for common stock on
at least 5 of the 10 preceding days. If none of the
conditions set forth above is met, the Closing Price of
common stock on any day or the average of such Closing
Prices for any period shall be the fair market value of
common stock as determined by a member firm of the New York
Stock Exchange, Inc. selected by the Corporation.
(v) (A) No adjustment in the conversion
rate shall be required unless such adjustment would
require an increase or decrease of at least 1% in such
rate; provided, however, that any adjustments which by
reason of this subparagraph (v)(A) are not required to
be made shall be carried forward and taken into account
in any subsequent adjustment; further provided,
however, that any adjustments which by reason of this
subparagraph (v)(A) are not otherwise required to be
made shall be made no later than 3 years after the date
on which occurs an event that requires an adjustment to
be made or carried forward.
(B) All calculations under this
Section 6 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
Anything in this Section 6 to the contrary
notwithstanding, the Corporation shall be entitled to
make such increases in the conversion rate, in addition
to those required by this paragraph (d), as it in its
discretion shall determine to be advisable in order
that any stock dividends, subdivision of shares,
distribution of rights to purchase stock or securities,
or distribution of securities convertible into or
exchangeable for stock hereafter made by the
Corporation to its shareholders shall not be taxable.
(vi) In any case in which this paragraph (d)
provides that an adjustment shall become effective
immediately after a record date for an event, the
Corporation may defer until the occurrence of such event
(A) delivering to the holder of any Series ___ Preferred
Stock converted after such record date and before the
occurrence of such event the additional shares of common
stock deliverable upon such conversion by reason of the
adjustment required by such event over and above the common
stock deliverable upon such conversion before giving effect
to such adjustment and (B) paying to such holder any amount
in cash in lieu of any fraction pursuant to paragraph (e),
provided, however, that the Corporation shall deliver to
such holder a due bill or other appropriate instrument
evidencing such holder's rights to receive such additional
shares, and such cash, upon the occurrence of the event
requiring such adjustment. If such event does not occur, no
adjustments shall be made pursuant to this paragraph (d).
(e) No fractional shares of stock shall be issued
upon the conversion of any Series ___ Preferred Stock. If more
than one share of Series ___ Preferred Stock shall be surrendered
for conversion at one time by the same holder, the number of full
shares of common stock which shall be issuable upon conversion
thereof shall be computed on the basis of the aggregate number of
shares of Series ___ Preferred Stock so surrendered. Instead of
any fractional share of common stock which would otherwise be
issuable upon conversion of any Series ___ Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the Closing
Price per share of Common stock on the business day which
immediately precedes the day of conversion.
(f) In case any of the following shall occur
while any Series ___ Preferred Stock is outstanding: (i) any
reclassification or change of the outstanding shares of common
stock deliverable upon conversion of the Series ___ Preferred
Stock (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a
subdivision or combination, but including any change in the
shares of common stock into two or more classes or series of
securities); or (ii) any consolidation or merger to which the
Corporation is a party (other than a consolidation or a merger in
which the Corporation is the continuing corporation and which
does not result in any reclassification of, or change other than
a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination in, the outstanding shares of common stock issuable
upon conversion of the Series ___ Preferred Stock); or (iii) any
sale or conveyance to another corporation of the properties and
assets of the Corporation as an entirety or substantially as an
entirety; then the Corporation, or such successor or purchasing
corporation, as the case may be, shall make appropriate provision
in its charter or otherwise so that the holders of the
Series ____ Preferred Stock then outstanding shall have the right
at any time thereafter to convert such Series ___ Preferred Stock
into the kind and amount of shares of stock and other securities
and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the
number of shares of common stock issuable upon conversion of such
Series ___ Preferred Stock immediately prior to such
reclassification, change, consolidation, merger, sale or
conveyance. Such provision shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6. The above provisions
of this paragraph (f) shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales or
conveyances.
(g) The Corporation will at all times reserve and
keep available out of its authorized but unissued or treasury
stock, solely for the purpose of issue upon conversion of the
Series ___ Preferred Stock as provided in this Section 6, such
number of shares of common stock as shall from time to time be
sufficient to effect the conversion of all outstanding Series ___
Preferred Stock.
(h) Before taking any action which would cause an
adjustment increasing the conversion rate so that the liquidation
value divided by the conversion rate is below the then par value
of the shares of common stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally
issue fully paid and non-assessable shares of common stock at the
conversion rate as so adjusted.
(i) The issuance of certificates for shares of
common stock upon conversion of Series ___ Preferred Stock shall
be made without charge to the converting stockholder for such
certificates or for any tax in respect of the issuance of such
certificates, and such certificates shall be issued in the name
of, or in such name or names as may be directed by, the holder of
the Series ___ Preferred Stock converted. However, if any such
certificate is to be issued in a name other than that of the
holder of the converted Series ___ Preferred Stock, the
Corporation shall not be required to issue or deliver any stock
certificate or certificates unless and until the holder has paid
to the Corporation the amount of any tax which may be payable in
respect of any transfer involved in such issuance or shall
establish to the satisfaction of the Corporation that such tax
has been paid.
(j) Whenever the conversion rate then in effect
is adjusted as herein provided, the Corporation shall mail to
each holder of the Series ___ Preferred Stock at such holder's
address as it shall appear on the books of the Corporation a
statement setting forth the adjusted conversion rate, then and
thereafter effective under the provisions hereof together with
the facts, in reasonable detail, upon which such adjustment is
based.
(k) In case (i) the Corporation shall declare a
dividend (or any other distribution) on its common stock other
than in cash out of its current or retained earnings, or (ii) the
Corporation shall authorize the granting to the holders of its
common stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights
or warrants, or (iii) of any reclassification or change of the
common stock of the Corporation (other than a subdivision or
combination of its outstanding shares of common stock, or a
change in par value, or from par value to no par value, or from
no par value to par value), or of any consolidation or merger to
which the Corporation is a party and for which approval of any
stockholders of the Corporation is required or the sale or
transfer of all or substantially all of the assets of the
Corporation, or (iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation; the Corporation
shall mail to each holder of Series ___ Preferred Stock at such
holder's address as it shall appear on the books of the
Corporation, at least fifteen days prior to the applicable record
date hereinafter specified, a notice stating (x) the record date
for such dividend, distribution or rights, or, if a record is not
to be taken, the date as of which the holders of common stock of
record to be entitled to such dividend, distribution or rights
are to be determined, or (y) the date on which such
reclassification, consolidation, merger, dissolution, liquidation
or winding up is expected to become effective, and the date as of
which it is expected that holders of the common stock of record
shall be entitled to exchange their shares of common stock for
securities or other property deliverable upon such
reclassification, consolidation, merger, dissolution, liquidation
or winding up. No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the legality or
validity of any such transaction or any adjustment in the
conversion rate or conversion price required by this Section 6.]
7. Voting. Except as hereinafter in this Section 7
expressly provided or as otherwise required by law, the Series __
Preferred Stock shall have no voting power.
[IF PREFERRED STOCK IS GENERAL VOTING STOCK, INSERT THE
FOLLOWING --
(a) Special Voting Rights.]
Whenever and as often as dividends payable on any
share or shares of the Preferred Stock at the time outstanding
shall be accumulated and unpaid in an amount equivalent to or
exceeding six quarterly dividends (whether or not declared and
whether or not consecutive), the holders of record of the
Preferred Stock of all series shall thereafter have the right, as
a single class, to elect two directors, and, subject to the terms
of any outstanding series of Preferred Stock, the holders of
record of the common stock, as a single class, shall have the
right to elect the remaining authorized number of Directors. In
any such election, the holders of shares of Series __ Preferred
Stock shall be entitled to cast one vote per share.
Upon the happening of the six dividend defaults
hereinabove set forth, a special meeting of stockholders of the
Corporation then entitled to vote shall be called by the Chairman
of the Board or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of
not less than ten percent of the Preferred Stock then
outstanding. At such special meeting, or, if no such special
meeting shall have been called, then at the next annual meeting
of stockholders, the stockholders of the Corporation then
entitled to vote shall elect, voting as above provided, an
entirely new Board of Directors, and the term of office of the
Directors in office at the time of such election shall expire
upon the election of their successors at such meeting; provided,
however, that nothing herein contained shall be construed to be a
bar to the re-election of any Director at such meeting. At all
meetings of stockholders at which holders of Preferred Stock
shall be entitled to vote for Directors as a single class, the
holders of a majority of the outstanding shares of each class or
series of capital stock of the Corporation having the right to
vote as a single class shall be necessary to constitute a quorum,
whether present in person or by proxy, for the election by that
class or series of its designated Directors. In order to
validate an election of Directors by stockholders voting as a
class, such Directors shall be elected by the vote of at least a
plurality of shares held by such stockholders present or
represented at the meeting. At any such meeting, the election of
Directors by stockholders voting as a class shall be valid
notwithstanding that a quorum of other stockholders voting as one
or more classes may not be present or represented at such
meeting, and if any stockholders voting as a class shall elect
Directors, the Directors so elected shall be deemed to be
Directors of the Corporation unless and until the other
stockholders entitled to vote as one or more classes shall elect
their Directors.
While class voting is in effect with respect to
the Preferred Stock, any Director elected by holders of Preferred
Stock voting as a class may be removed at any annual or special
meeting, by vote of a majority of the stockholders voting as a
class who elected such Director, for any cause deemed sufficient
by such stockholders present at such meeting. In case any
vacancy shall occur among the Directors elected by such
stockholders voting as a class, such vacancy may be filled by the
remaining Director so elected, or his successor then in office,
and the Director so elected to fill such vacancy shall serve
until the next meeting of stockholders for the election of
Directors.
Such voting rights of the holders of Preferred
Stock as a single class, once effective, shall continue only
until all arrears in dividends (whether or not declared) on the
Preferred Stock shall have been paid or declared and set apart
for payment at which time the right of the Preferred Stock to
vote as a single class for the election of Directors, as
hereinabove set forth, shall terminate. Upon such termination, a
special meeting of the stockholders of the Corporation then
entitled to vote may be called by the Chairman of the Board or
the President, and shall be called by the Chairman of the Board
or the President or the Secretary of the Corporation if requested
in writing by the holders of record of not less than one percent
of the common stock then outstanding, and at such special
meeting, or if no such special meeting shall have been called
then at the next annual meeting of the stockholders, the
stockholders of the Corporation then entitled to vote shall elect
an entirely new Board of Directors and the term of office of the
Directors in office at the time of such election shall expire
upon the election of their successors at such meeting; provided,
however, that nothing herein contained shall be construed to be a
bar to the re-election of any such Director at such meeting.
The consent of the holders of at least two-thirds
of the number of shares of Preferred Stock at the time
outstanding, given in person or by proxy, either in writing or at
a meeting of stockholders at which the holders of the Preferred
Stock shall vote separately as a class without regard to series,
the holders of shares of Series __ Preferred Stock being entitled
to cast one vote per share thereon, shall be necessary for
effecting or validating:
(i) any change in the Articles of Incorporation
or certificate supplemental thereto or Bylaws of the
Corporation which would materially and adversely alter or
change the preferences, privileges, rights or powers given
to the holders of the Preferred Stock, provided that if one
or more but not all series of Preferred Stock at the time
outstanding are so affected, only the consent of the holders
of at least two-thirds of each series so affected, voting
separately as a class, shall be required; or
(ii) the issuance of any shares of any other
class of stock of the Corporation ranking prior to the
Preferred Stock.
The term "ranking prior to the Preferred Stock"
shall mean and include all shares of stock of the Corporation in
respect of which the rights of the holders thereof as to the
payment of dividends or as to distributions in the event of a
voluntary or an involuntary liquidation, dissolution or winding
up of the Corporation, are given preference over the rights of
the holders of the Preferred Stock.
[IF PREFERRED STOCK IS GENERAL VOTING CONVERTIBLE STOCK, INSERT
THE FOLLOWING --
(b) General Voting Rights. In addition to the
voting rights conferred by Section 7(a) hereof, the holders of
Series __ Preferred Stock shall be entitled to vote, together
with holders of common stock, on all matters submitted to the
vote of the holders of common stock, including the election of
directors. Upon any matter so submitted to the vote of the
shareholders having voting rights with respect thereto, each
holder of Series __ Preferred Stock shall be entitled to the
number of votes per share of Series __ Preferred Stock equal to
the number of whole shares of common stock into which such share
of Series __ Preferred Stock is convertible on the record date
set for determining the holders of shares entitled to vote upon
the matter submitted to such vote.]
8. Liquidation Preference. In the event of any
liquidation, dissolution or winding up of the Corporation,
voluntary or involuntary, the holders of all shares of Series __
Preferred Stock shall be entitled to be paid in full out of the
assets of the Corporation available for distribution to
stockholders, before any distribution of assets shall be made to
the holders of common stock or of any other shares of stock of
the Corporation ranking as to such distribution junior to the
Series __ Preferred Stock, an amount equal to $_________ per
share plus an amount equal to any accrued and unpaid dividends
thereon to the date fixed for payment of such distribution. If,
upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the amounts payable with respect
to the Series __ Preferred Stock and any other shares of stock of
the Corporation ranking as to any such distribution on a parity
with the Series __ Preferred Stock are not paid in full, the
holders of the Series __ Preferred Stock and of such other shares
shall share ratably in any such distribution of assets of the
Corporation in proportion to the full respective preferential
amounts to which they are entitled. After payment to the holders
of the Series __ Preferred Stock of the full preferential amounts
provided for in this Section 8, the holders of the Series __
Preferred Stock shall be entitled to no further participation in
any distribution of assets by the Corporation.
Consolidation or merger of the Corporation with or into
another corporation or corporations, or a sale, whether for cash,
shares of stock, securities or properties, of all or
substantially all of the assets of the Corporation, shall not be
deemed or construed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this Section 8.
9. Limitation on Dividends on Junior Ranking Stock.
So long as any Series __ Preferred Stock shall be outstanding,
the Corporation shall not declare any dividends on the common
stock of the Corporation or any other stock of the Corporation
ranking as to dividends or distribution of assets junior to the
Series __ Preferred Stock (the common stock and any such other
stock being herein referred to as "Junior Stock"), or make any
payment on account of, or set apart money for, a sinking or other
analogous fund for the purchase, redemption or other retirement
of any shares of Junior Stock, or make any distribution in
respect thereof, whether in cash or property or in obligations or
stock of the Corporation, other than Junior Stock (such
dividends, payments, setting apart and distributions being herein
called "Junior Stock Payments"), unless all of the conditions set
forth in the following subsections A and B shall exist at the
date of such declaration in the case of any such dividend, or the
date of such setting apart in the case of any such fund, or the
date of such payment or distribution in the case of any other
Junior Stock Payment:
(A) Full cumulative dividends shall have been
paid or declared and set apart for payment upon all outstanding
shares of Preferred Stock other than Junior Stock.
(B) The Corporation shall not be in default or in
arrears with respect to any sinking or other analogous fund or
any call for tenders obligation or other agreement for the
purchase, redemption or other retirement of any shares of
Preferred Stock other than Junior Stock.
EXHIBIT 4.11
SOVEREIGN BANCORP, INC.
Form of Debt Warrant Agreement
THIS WARRANT AGREEMENT dated as of
______________________ between Sovereign Bancorp, Inc., a
Pennsylvania corporation (hereinafter called the "Company," which
term includes any successor corporation under the Indenture
hereinafter referred to) and __________________ as Warrant Agent
(herein called the "Warrant Agent").
WHEREAS, the Company has entered into an indenture (the
"[Senior] [Subordinated] Indenture") dated as of February 1,
1994, between the Company and ________________, as trustee (the
"Trustee") providing for the issuance from time to time of its
unsecured [Senior] [Subordinated] debentures, notes or other
evidences of indebtedness (the "[Senior] [Subordinated] Debt
Securities"), to be issued in one or more series as provided in
the [Senior] [Subordinated] Indenture; and
WHEREAS, the Company proposes to sell [if Warrants are
sold with Debt Securities, Common Stock, or Preferred Stock --
[title of Debt Securities or Preferred Stock being offered] (the
"Offered Securities") with] warrant certificates evidencing one
or more warrants (the "Warrants" or individually a "Warrant")
representing the right to purchase [title of Debt Securities
purchasable through exercise of Warrants] (the "Warrant
Securities"), such warrant certificates and other warrant
certificates issued pursuant to this Agreement being herein
called the "Warrant Certificates"; and
WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company in connection with the issuance,
exchange, exercise and replacement of the Warrant Certificates,
and in this Agreement wishes to set forth, among other things,
the form and provisions of the Warrant Certificates and the terms
and conditions on which they may be issued, exchanged, exercised
and replaced;
NOW THEREFORE, in consideration of the premises and of
the mutual agreements herein contained, the parties hereto agree
as follows:
ARTICLE I
ISSUANCE OF WARRANTS AND EXECUTION AND
DELIVERY OF WARRANTS
SECTION 1.01. Issuance of Warrants. [if Warrants
alone -- Upon issuance, each Warrant Certificate shall evidence
one or more Warrants.] [If Offered Securities and Warrants --
Warrants shall be [initially] issued in connection with the
issuance of the Offered Securities [but shall be separately
transferable on and after ______________ (the "Detachable Date")]
[and shall not be separately transferable] and each Warrant
Certificate shall evidence one or more Warrants.] Each Warrant
evidenced thereby shall represent the right, subject to the
provisions contained herein and therein, to purchase a Warrant
Security in the principal amount of __________________. [If
Offered Securities and Warrants -- Warrant Certificates shall be
initially issued in units with the Offered Securities and each
Warrant Certificate included in such a unit shall evidence
_____________ Warrants for each [_________________ principal
amount] [_________ shares of Offered Securities included in such
unit.]
SECTION 1.02. Execution and Delivery of Warrant
Certificates. Each Warrant Certificate, whenever issued, shall
be in [registered] [bearer] form substantially in the form set
forth in Exhibit A hereto, shall be dated _______________________
and may have such letters, numbers, or other marks of
identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as the officers of the
Company executing the same may approve (execution thereof to be
conclusive evidence of such approval) and as are not inconsistent
with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Warrants may be listed, or to conform to usage. The
Warrant Certificates shall be signed on behalf of the Company by
its Chairman of the Board, the Chairman of the Executive
Committee of the Board, a Vice Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, a
Vice Chairman, the Chief Financial Officer, or a Vice President
and by its Treasurer or one of its Assistant Treasurers or its
Secretary or one of its Assistant Secretaries under its corporate
seal reproduced thereon. Such signatures may be manual or
facsimile signatures of such authorized officers and may be
imprinted or otherwise reproduced on the Warrant Certificates.
The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced
on the Warrant Certificates.
No Warrant Certificates shall be valid for any purpose,
and no Warrant evidenced thereby shall be exercisable, until such
Warrant Certificate has been countersigned by the manual
signature of the Warrant Agent. Such signature by the Warrant
Agent upon any Warrant Certificate executed by the Company shall
be conclusive evidence that the Warrant Certificate so
countersigned has been duly issued hereunder.
In case any officer of the Company who shall have
signed any of the Warrant Certificates either manually or by
facsimile signature shall cease to be such officer before the
Warrant Certificates so signed shall have been countersigned and
delivered by the Warrant Agent, such Warrant Certificates may be
countersigned and delivered notwithstanding that the person who
signed such Warrant Certificates ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of
the Company by such persons as, at the actual date of the
execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the execution of
this Agreement any such person was not such officer.
The term "holder" or "holder of a Warrant Certificate"
as used herein shall mean [the bearer of such Warrant
Certificate] [any person in whose name at the time any Warrant
Certificate shall be registered upon the books to be maintained
by the Warrant Agent for that purpose] [If Offered Securities and
Warrants are not immediately detachable -- or [the bearer] [upon
the register] of the Offered Securities prior to the Detachable
Date. [Prior to the Detachable Date, the Company will, or will
cause the registrar of the Offered Securities to, make available
at all times to the Warrant Agent such information as to holders
of the Offered Securities with Warrants as may be necessary to
keep the Warrant Agent's records up to date].
SECTION 1.03. Issuance of Warrant Certificates.
Warrant Certificates evidencing the right to purchase an
aggregate principal amount not exceeding _______________
aggregate principal amount of Warrant Securities (except as
provided in Section 2.03(c), 3.02 and 4.01) may be executed by
the Company and delivered to the Warrant Agent upon the execution
of this Warrant Agreement or from time to time thereafter. The
Warrant Agent shall, upon receipt of Warrant Certificates duly
executed on behalf of the Company, countersign Warrant
Certificates evidencing Warrants representing the right to
purchase up to ______________ principal amount of Warrant
Securities and shall deliver such Warrant Certificates to or upon
the order of the Company. Subsequent to such original issuance
of the Warrant Certificates, the Warrant Agent shall countersign
a Warrant Certificate only if the Warrant Certificate is issued
in exchange or substitution for one or more previously
countersigned Warrant Certificates or in connection with their
transfer, as hereinafter provided or as provided in
Section 2.03(c).
SECTION 1.04. Temporary Warrant Certificates. Pending
the preparation of definitive Warrant Certificates, the Company
may execute, and upon the order of the Company, the Warrant Agent
shall authenticate and deliver, temporary Warrant Certificates
which are printed, lithographed, typewritten, mimeographed or
otherwise produced substantially of the tenor of the definitive
Warrant Certificate in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Warrant Certificates
may determine, as evidenced by their execution of such Warrant
Certificates.
If temporary Warrant Certificates are issued, the
Company will cause definitive Warrant Certificates to be prepared
without unreasonable delay. After the preparation of definitive
Warrant Certificates, the temporary Warrant Certificates shall be
exchangeable for definitive Warrant Certificates upon surrender
of the temporary Warrant Certificates at the corporate trust
office of the Warrant Agent [or ___________________], without
charge to the holder. Upon surrender for cancellation of any one
or more temporary Warrant Certificates the Company shall execute
and the Warrant Agent shall authenticate and deliver in exchange
therefor definitive Warrant Certificates representing the same
aggregate number of Warrants. Until so exchanged, the temporary
Warrant Certificates shall in all respects be entitled to the
same benefits under this Agreement as definitive Warrant
Certificates.
ARTICLE II
WARRANT PRICE, DURATION AND
EXERCISE OF WARRANTS.
SECTION 2.01. Warrant Price. During the period from
___________, through and including __________________, the
exercise price of each Warrant will be ______________ plus
[accrued amortization of the original issue discount] [accrued
interest] from ___________. During the period from
_____________, through and including _______________, the
exercise price of each Warrant will be ________________ plus
[accrued amortization of the original issue discount] [accrued
interest] from _____________. [In each case, the original issue
discount will be amortized at a ____% annual rate, computed on an
annual basis using the "interest" method and using a 360-day year
consisting of twelve 30-day months]. Such purchase price of
Warrant Securities is referred to in this Agreement as the
"Warrant Price". [The original issue discount for each
_______________ principal amount of Warrant Securities is
____________.]
SECTION 2.02. Duration of Warrants. Each Warrant may
be exercised in whole at any time, as specified herein, on or
after [the date thereof] [______________] and at or before
5:00 P.M., [Wyomissing, Pennsylvania] time, on __________________
[or such later date as the Company may designate, by notice to
the Warrant Agent and the holders of Warrant Certificates mailed
to their addresses as set forth in the record books of the
Warrant Agent] (the "Expiration Date"). Each Warrant not
exercised at or before 5:00 P.M. [Wyomissing, Pennsylvania] time,
on the Expiration Date shall become void, and all rights of the
holder of the Warrant Certificate evidencing such Warrant under
this Agreement shall cease.
SECTION 2.03. Exercise of Warrants.
(a) During the period specified in Section 2.02
any whole number of Warrants may be exercised by providing
certain information as set forth on the reverse side of the
Warrant Certificate and by paying in full, in [lawful money of
the United States of America] [applicable currency,] [in cash or
by certified check or official bank check or by bank wire
transfer, in each case,] [by bank wire transfer] [in immediately
available funds] the Warrant Price for each Warrant exercised, to
the Warrant Agent at its corporate trust office [or at __________
], provided that such exercise is subject to receipt within five
business days of such [payment] [wire transfer] by the Warrant
Agent of the Warrant Certificate with the form of election to
purchase Warrant Securities set forth on the reverse side of the
Warrant Certificate properly completed and duly executed
[including any applicable certifications if the Warrant
Securities are issuable in bearer form]. The date on which
payment in full of the Warrant Price is received by the Warrant
Agent shall, subject to receipt of the Warrant Certificate as
aforesaid, be deemed to be the date on which the Warrant is
exercised. The Warrant Agent shall deposit all funds received by
it in payment of the Warrant Price in an account of the Company
maintained with it [if non-dollar denominated funds -- or in such
other account designated by the Company] and shall advise the
Company by telephone at the end of each day on which [payment]
[wire transfer] for the exercise of Warrants is received of the
amount so deposited to its account. The Warrant Agent shall
promptly confirm such telephone advice to the Company in writing.
(b) The Warrant Agent shall, from time to time,
as promptly as practicable, advise the Company and the [Trustee
under the Indenture relating to the Warrant Securities] of
(i) the number of Warrants exercised, (ii) the instructions of
each holder of the Warrant Certificates evidencing such Warrants
with respect to delivery of the Warrant Securities to which such
holder is entitled upon such exercise, (iii) delivery of Warrant
Certificates evidencing the balance, if any, of the Warrants
remaining after such exercise, and (iv) such other information as
the Company or such Trustee shall reasonable require.
(c) As promptly as practicable after the exercise
of any Warrant, the Company shall issue, pursuant to the
Indenture, in authorized denominations to or upon the order of
the holder of the Warrant Certificate evidencing such Warrant,
the Warrant Securities to which such holder is entitled, in
[fully registered form, registered in such name or names as may
be directed by such holder] [bearer form, provided the holder has
furnished to the Warrant Agent all certificates required by
applicable U.S. Treasury regulations for the delivery of bearer
securities and only if the Company has no reason to know that the
certification(s) is false]. If fewer than all of the Warrants
evidenced by such Warrant Certificate are exercised, the Company
shall execute, and an authorized officer of the Warrant Agent
shall manually countersign and deliver, a new Warrant Certificate
evidencing the number of such Warrants remaining unexercised,
[Unless otherwise instructed by the Company, Warrant Securities
in bearer form shall be delivered to or upon the order of the
holder of such Warrant Certificate only outside the United States
and its possessions.]
(d) The Company shall not be required to pay any
stamp or other tax or other governmental charge required to be
paid in connection with any transfer involved in the issue of the
Warrant Securities, and in the event that any such transfer is
involved, the Company shall not be required to issue or deliver
any Warrant Security until such tax or other charge shall have
been paid or it has been established to the Company's
satisfaction that no such tax or other charge is due.
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF
HOLDERS OF WARRANT CERTIFICATES
SECTION 3.01. No Rights as Warrant Securityholder
Conferred by Warrants or Warrant Certificates. No Warrant
Certificate or Warrant evidenced thereby shall entitle the holder
thereof to any of the rights of a holder of Warrant Securities,
including, without limitation, the right to receive the payment
of principal of, premium, if any, or interest on Warrant
Securities or to enforce any of the covenants in the [Indenture
relating to the Warrant Securities].
SECTION 3.02. Lost, Stolen, Mutilated or Destroyed
Warrant Certificates. Upon receipt by the Warrant Agent of
evidence reasonably satisfactory to it and the Company of the
ownership of and the loss, theft, destruction, or mutilation of
any Warrant Certificate and of indemnity reasonably satisfactory
to the Warrant Agent and the Company and, in the case of
mutilation, upon surrender thereof to the Warrant Agent for
cancellation, then, in the absence of notice to the Company or
the Warrant Agent that such Warrant Certificate has been acquired
by a bona fide purchaser, the Company shall execute, and an
authorized officer of the Warrant Agent shall manually
countersign and deliver, in exchange for or in lieu of the lost,
stolen, destroyed or mutilated Warrant Certificate, a new Warrant
Certificate of the same tenor and evidencing a like number of
Warrants. Upon the issuance of any new Warrant Certificate under
this Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and expenses of the Warrant Agent) in connection
therewith. Every substitute Warrant Certificate executed and
delivered pursuant to this Section in lieu of any lost, stolen or
destroyed Warrant Certificate shall represent an additional
contractual obligation of the Company, whether or not the
mutilated, lost, stolen or destroyed Warrant Certificate shall be
at any time enforceable by anyone, and shall be entitled to the
benefits of this Agreement equally and proportionately with any
and all other Warrant Certificates duly executed and delivered
hereunder. The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement of mutilated, lost,
stolen or destroyed Warrant Certificates.
SECTION 3.03. Holder of Warrant Certificate May
Enforce Rights. Notwithstanding any of the provisions of this
Agreement, any holder of a Warrant Certificate, without the
consent of the Warrant Agent, the Trustee, the holder of any
Warrant Securities or the holder of any other Warrant
Certificate, may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise
in respect of, his right to exercise the Warrants evidenced by
his Warrant Certificate in the manner provided in his Warrant
Certificate and in this Agreement.
SECTION 3.04. Merger, Consolidation, Conveyance,
Transfer or Lease. If at any time there shall be a merger,
consolidation, conveyance, transfer or lease of assets subject to
Section 801 of the [Indenture relating to the Warrant
Securities], then in any such event the successor or assuming
corporation referred to therein shall succeed to and be
substituted for the Company, with the same effect, subject to
such Indenture, as if it had been named herein and in the Warrant
as the Company; the Company shall thereupon be relieved of any
further obligation hereunder or under the Warrants, and the
Company as the predecessor corporation thereupon may cause to be
signed, and may issue either in its own name or in the name of
the Company, any or all of the Warrants issuable hereunder which
theretofore shall not have been signed by the Company, and may
execute and deliver Warrant Securities in its own name pursuant
to such Indenture, in fulfillment of its obligations to deliver
Warrant Securities upon exercise of the Warrants. All the
Warrants so issued shall in all respects have the same legal rank
and benefit under this Agreement as the Warrants theretofore or
thereafter issued in accordance with the terms of this Agreement
as though all of such Warrants had been issued at the date of the
execution hereof. In any case of any such consolidation, merger,
conveyance, transfer or lease, such changes in phraseology and
form (but not in substance) may be made in the Warrants
thereafter to be issued as may be appropriate.
The Warrant Agent may receive a written opinion of
legal counsel as conclusive evidence that any such consolidation,
merger, conveyance, transfer or lease complies with the
provisions of this Section 3.04 and such Indenture.
ARTICLE IV
EXCHANGE AND TRANSFER
OF WARRANT CERTIFICATES.
SECTION 4.01. Exchange and Transfer of Warrant
Certificates. [If Offered Securities with Warrants which are
immediately detachable -- Upon] [If Offered Securities with
Warrants which are not immediately detachable -- Prior to the
Detachable Date a Warrant Certificate may be exchanged or
transferred only together with the Offered Security to which the
Warrant Certificate was initially attached, and only for the
purpose of effecting or in conjunction with an exchange or
transfer of such Offered Security. Prior to any detachable Date,
each transfer of the Offered Security [on the register of the
Offered Securities] shall operate also to transfer the related
Warrant Certificates. After the Detachable Date upon] surrender
at the corporate trust office of the Warrant Agent [or __________
_____], Warrant Certificates evidencing Warrants may be exchanged
for Warrant Certificates in other denominations evidencing such
Warrants [or the transfer thereof may be registered in whole or
in part]; provided that such other Warrant Certificates evidence
the same aggregate number of Warrants as the Warrant Certificates
so surrendered. [The Warrant Agent shall keep, at its corporate
trust office [and at __________], books in which, subject to such
reasonable regulations as it may prescribe, it shall register
Warrant Certificates and exchanges and transfers of outstanding
Warrant Certificates, upon surrender of the Warrant Certificates
to the Warrant Agent at its corporate trust office [or _________]
for exchange or registration of transfer, properly endorsed or
accompanied by appropriate instruments of registration of
transfer and written instructions for transfer, all in form
satisfactory to the Company and the Warrant Agent.] No service
charge shall be made for any exchange [or registration of
transfer] of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or
other governmental charge that may be imposed in connection with
any such exchange [or registration of transfer]. Whenever any
Warrant Certificates are so surrendered for exchange [or
registration of transfer], an authorized officer of the Warrant
Agent shall manually countersign and deliver to the person or
persons entitled thereto a Warrant Certificate or Warrant
Certificates duly authorized and executed by the Company, as so
requested. The Warrant Agent shall not be required to effect any
exchange [or registration of transfer] which will result in the
issuance of a Warrant Certificate evidencing a fraction of a
Warrant or a number of full Warrants and a fraction of a Warrant.
All Warrant Certificates issued upon any exchange [or
registration of transfer] of Warrant Certificates shall be the
valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this
Agreement, as the Warrant Certificate surrendered for such
exchange [or registration of transfer].
SECTION 4.02. Treatment of Holders of Warrant
Certificates. [If Offered Securities and warrants are not
immediately detachable -- Prior to the Detachable Date, the
Company, the Warrant Agent and all other persons may treat the
owner of the Offered Security as the owner of the Warrant
Certificates initially attached thereto for any purpose or as the
person entitled to exercise the rights represented by the
Warrants evidenced by such Warrant Certificates, any notice to
the contrary notwithstanding. After the Detachable Date,] [if
registered Warrants -- and prior to due presentment of a Warrant
Certificate for registration of transfer,] the Company, the
Warrant Agent and all other persons may treat the holder of a
Warrant Certificate as the owner thereof for any purpose and as
the person entitled to exercise the rights represented by the
warrants evidenced thereby, any notice to the contrary
notwithstanding.
SECTION 4.03. Cancellation of Warrant Certificates.
Any Warrant Certificate surrendered for exchange[, registration
of transfer] or exercise of the Warrants evidenced thereby shall,
if surrendered to the Company, be delivered to the Warrant Agent
and all Warrant Certificates surrendered or so delivered to the
Warrant Agent shall be promptly canceled by the Warrant Agent and
shall not be reissued and, except as expressly permitted by this
Agreement, no Warrant Certificate shall be issued hereunder in
exchange or in lieu thereof. The Warrant Agent shall deliver to
the Company from time to time or otherwise dispose of canceled
Warrant Certificates in a manner satisfactory to the Company.
ARTICLE V
CONCERNING THE WARRANT AGENT.
SECTION 5.01. Warrant Agent. The Company hereby
appoints _______________ as Warrant Agent of the Company in
respect of the Warrants and the Warrant Certificates upon the
terms and subject to the conditions herein set forth; and _______
________ hereby accepts such appointment. The Warrant Agent
shall have the powers and authority granted to and conferred upon
it in the Warrant Certificates and hereby and such further powers
and authority to act on behalf of the Company as the Company may
hereafter grant to or confer upon it. All of the terms and
provisions with respect to such power and authority contained in
the Warrant Certificates are subject to and governed by the terms
and provisions hereof.
SECTION 5.02. Conditions of Warrant Agent's
Obligations. The Warrant Agent accepts its obligations herein set
forth upon the terms and conditions hereof, including the
following to all of which the Company agrees and to all of which
the rights hereunder of the holders from time to time of the
Warrant Certificates shall be subject:
(a) Compensation and Indemnification. The
Company agrees promptly to pay the Warrant Agent the compensation
to be agreed upon with the Company for all services rendered by
the Warrant Agent and to reimburse the Warrant Agent for
reasonable out-of-pocket expenses (including counsel fees)
incurred without gross negligence by the Warrant Agent in
connection with the services rendered hereunder by the Warrant
Agent. The Company also agrees to indemnify the Warrant Agent
for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of
the Warrant Agent, arising out of or in connection with its
acting as Warrant Agent hereunder, as well as the costs and
expenses of defending against any claim of such liability.
(b) Agent for the Company. In acting under this
Warrant Agreement and in connection with the Warrant
Certificates, the Warrant Agent is acting solely as agent of the
Company and does not assume any obligations or relationship of
agency or trust for or with any of the holders of Warrant
Certificates or beneficial owners Warrants.
(c) Counsel. The Warrant Agent may consult with
counsel satisfactory to it, and the written advice of such
counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the advice of such
counsel.
(d) Documents. The Warrant Agent shall be
protected and shall incur no liability for or in respect of any
action taken or thing suffered by it in reliance upon any Warrant
Certificate, notice, direction, consent, certificate, affidavit,
statement or other paper or document reasonably believed by it to
be genuine and to have been presented or signed by the proper
parties.
(e) Certain Transactions. The Warrant Agent, and
its officers, directors and employees, may become the owner of,
or acquire any interest in, Warrants, with the same rights that
it or they would have if it were not the Warrant Agent hereunder,
and, to the extent permitted by applicable law, it or they may
engage or be interested in any financial or other transaction
with the Company and may act on, or as depositary, trustee or
agent for, any committee or body of Holders of Warrant Securities
or other obligations of the Company as freely as if it were not
the Warrant Agent hereunder. Nothing in this Warrant Agreement
shall be deemed to prevent the Warrant Agent from acting as
Trustee under any of the Indentures.
(f) No Liability for Interest. Unless otherwise
agreed with the Company, the Warrant Agent shall have no
liability for interest on any monies at any time received by it
pursuant to any of the provisions of this Agreement or of the
Warrant Certificates.
(g) No Liability for Invalidity. The Warrant
Agent shall have no liability with respect to any invalidity of
this Agreement or any of the Warrant Certificates (except as to
the Warrant Agent's countersignature thereon).
(h) No Responsibility for Representations. The
Warrant Agent shall not be responsible for any of the recitals or
representations herein or in the Warrant Certificates (except as
to the Warrant Agent's countersignature thereon), all of which
are made solely by the Company.
(i) No Implied Obligations. The Warrant Agent
shall be obligated to perform only such duties as are herein and
in the Warrant Certificates specifically set forth and no implied
duties or obligations shall be read into this Agreement or the
Warrant Certificates against the Warrant Agent. The Warrant
Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or
liability, the payment of which within a reasonable time is not,
in its reasonable opinion, assured to it. The Warrant Agent
shall not be accountable or under any duty or responsibility for
the use by the Company of any of the Warrant Certificates
authenticated by the Warrant Agent and delivered by it to the
Company pursuant to this Agreement or for the application by the
Company of the proceeds of the Warrant Certificates. The Warrant
Agent shall have no duty or responsibility in case of any default
by the Company in the performance of its covenants or agreements
contained herein or in the Warrant Certificates or in the case of
the receipt of any written demand from a holder of a Warrant
Certificate with respect to such default, including, without
limiting the generality of the foregoing, any duty or
responsibility to initiate or attempt to initiate any proceedings
at law or otherwise or, except as provided in Section 6.02
hereof, to make any demand upon the Company.
SECTION 5.03. Resignation and Appointment of
Successor.
(a) The Company agrees, for the benefit of the
holders from time to time of the Warrant Certificates, that there
shall at all times be a Warrant Agent hereunder until all the
Warrants have been exercised or are no longer exercisable.
(b) The Warrant Agent may at any time resign as
such agent by giving written notice to the Company of such
intention on its part, specifying the date on which its desired
resignation shall become effective; provided that such date shall
not be less than three months after the date on which such notice
is given unless the Company otherwise agrees. The Warrant Agent
hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and
specifying such removal and the intended date when it shall
become effective. Such resignation or removal shall take effect
upon the appointment by the Company, as hereinafter provided, of
a successor Warrant Agent (which shall be a bank or trust company
authorized under the laws of the jurisdiction of its organization
to exercise corporate trust powers) and the acceptance of such
appointment by such successor Warrant Agent. The obligation of
the Company under Section 5.02(a) shall continue to the extent
set forth therein notwithstanding the resignation or removal of
the Warrant Agent.
(c) In case at any time the Warrant Agent shall
resign, or shall be removed, or shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or under any other applicable Federal or
State bankruptcy, insolvency or similar law or shall consent to
the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they
become due, or shall take corporate action in furtherance of any
such action, or a decree or order for relief by a court having
jurisdiction in the premises shall have been entered in respect
of the Warrant Agent in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or similar
law; or a decree or order by a court having jurisdiction in the
premises shall have been entered for the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator
(or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of
the Warrant Agent or of its property or affairs for the purpose
of rehabilitation, conservation, winding up or liquidation, a
successor Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with
the successor Warrant Agent. Upon the appointment as aforesaid
of a successor Warrant Agent and acceptance by the successor
Warrant Agent of such appointment, the Warrant Agent shall cease
to be Warrant Agent hereunder.
(d) Any successor Warrant Agent appointed
hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such
appointment hereunder, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become
vested with all the authority, rights, powers, trusts,
immunities, duties and obligations of such predecessor with like
effect as if originally named as Warrant Agent hereunder, and
such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer,
deliver and pay over, and such successor Warrant Agent shall be
entitled to receive, all monies, securities and other property on
deposit with or held by such predecessor, as Warrant Agent
hereunder.
(e) Any corporation into which the Warrant Agent
hereunder may be merged or converted or any corporation with
which the Warrant Agent may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which
the Warrant Agent shall be a party, or any corporation to which
the Warrant Agent shall sell or otherwise transfer all or
substantially all the assets and business of the Warrant Agent,
provided that it shall be qualified as aforesaid, shall be the
successor Warrant Agent under this Agreement without the
execution or filing of any paper or any further act on the part
of any of the parties hereto.
ARTICLE VI
MISCELLANEOUS
SECTION 6.03 Amendment. This Agreement may be
amended by the parties hereto, without the consent of the holder
of any Warrant Certificate, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any
defective provision contained herein, or making any other
provisions with respect to matters or questions arising under
this Agreement as the Company and the Warrant Agent may deem
necessary or desirable; provided that such action shall not
affect adversely the interests of the holders of the Warrant
Certificates.
SECTION 6.02. Notices and Demands to the Company and
Warrant Agent. If the Warrant Agent shall receive any notice or
demand addressed to the Company by the holder of a Warrant
Certificate pursuant to the provisions of the Warrant
Certificates, the Warrant Agent shall promptly forward such
notice or demand to the Company.
SECTION 6.03. Addresses. Any communication from the
Company to the Warrant Agent with respect to this Agreement shall
be addressed to ________________________________________________,
Attention: ________________________________ and any communication
from the Warrant Agent to the Company with respect to this
Agreement shall be addressed to Sovereign Bancorp, Inc.,
1130 Berkshire Boulevard, Wyomissing, Pennsylvania 19610,
Attention: Corporate Secretary (or such other address as shall
be specified in writing by the Warrant Agent or by the Company.
SECTION 6.04. Applicable Law. The validity,
interpretation and performance of this Agreement and each Warrant
Certificate issued hereunder and of the respective terms and
provisions thereof shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania,
without giving effect to any principles of conflict of laws.
SECTION 6.05. Delivery of Prospectus. The Company
will furnish to the Warrant Agent sufficient copies of a
prospectus relating to the Warrant Securities deliverable upon
exercise of the Warrants (the "Prospectus"), and the Warrant
Agent agrees that upon exercise of any Warrant, the Warrant Agent
will deliver to the holder of the Warrant Certificate evidencing
such Warrant, prior to or concurrently with the delivery of the
Warrant Securities issued upon such exercise, a Prospectus. The
Warrant Agent shall not, by reason of any such delivery, assume
any responsibility for the accuracy or adequacy of such
Prospectus.
SECTION 6.06. Obtaining of Governmental Approvals.
The Company will from time to time take all action which may be
necessary to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities
and securities acts filings under United States Federal and State
laws (including without limitation a registration statement in
respect of the Warrants and Warrant Securities under the
Securities Act of 1933), which may be or become requisite in
connection with the issuance, sale, transfer, and delivery of the
Warrant Securities issued upon exercise of the Warrant
Certificates, the exercise of the Warrants, the issuance, sale,
transfer and delivery of the Warrants or upon the expiration of
the period during which the Warrants are exercisable.
SECTION 6.07. Persons Having Rights under Warrant
Agreement. Nothing in this Agreement shall give to any person
other than the Company, the Warrant Agent and the holders of the
Warrant Certificates any right, remedy or claim under or by
reason of this Agreement.
SECTION 6.08. Headings. The descriptive headings of
the several Articles and Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
SECTION 6.09. Counterparts. This Agreement may be
executed in any number of counterparts, each of which as so
executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
SECTION 6.10. Inspection of Agreement. A copy of this
Agreement shall be available at all reasonable times at the
principal corporate trust office of the Warrant Agent for
inspection by the holder of any Warrant Certificate. The Warrant
Agent may require such holder to submit his Warrant Certificate
for inspection by it.
IN WITNESS WHEREOF, Sovereign Bancorp, Inc. and
_______________________ have caused this Agreement to be signed
by their respective duly authorized officers, and the same to be
attested by their respective Secretaries or one of their
respective Assistant Secretaries, all as of the day and year
first written above.
SOVEREIGN BANCORP, INC.
By_________________________________
Title:
Attest:
___________________________
Title:
[Warrant Agent]
By_________________________________
Title:
Attest:
___________________________
Title:
<PAGE>
Exhibit A
FORM OF WARRANT CERTIFICATE
[Face of Warrant Certificate]
[Form of Legend if Prior to ___________ this Warrant
Offered Securities with Certificate cannot be transferred
Warrants which are not or exchanged unless attached to a
immediately detachable. [Title of Offered Securities].]
[Form of Legend if Warrants Prior to ____________, Warrants
are not immediately evidenced by this Warrant
exercisable. Certificate cannot be exercised.]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN
SOVEREIGN BANCORP, INC.
WARRANTS TO PURCHASE
[Title of Warrant Securities]
VOID AFTER 5 P.M. [WYOMISSING, PENNSYLVANIA TIME] ON
_______________
No. ____________ _________________
Warrants
This certifies that [the bearer is the]
[_______________ or registered assigns is the registered] owner
of the above indicated number of Warrants, each Warrant entitling
such owner [if Offered Securities with Warrants which are not
immediately detachable --, subject to the [bearer] [registered
owner] qualifying as a "holder" of this Warrant Certificate, as
hereinafter defined] to purchase, at any time [after 5 P.M.,
[Wyomissing, Pennsylvania] time, on ____________ and] on or
before 5 P.M. [Wyomissing, Pennsylvania] time, on ______________,
____ principal amount of [Title of Warrant Securities] (the
"Warrant Securities"), of Sovereign Bancorp, Inc. (the
"Company"), issued and to be issued under the Indenture (as
hereinafter defined), on the following basis: during the period
from _______________, through and including ________________ the
exercise price of each Warrant will be _____________ plus
[accrued amortization of the original issue discount] [accrued
interest] from ______________; during the period from
______________, through and including _______________, the
exercise price of each Warrant will be ___________ plus [accrued
amortization of the original issue discount] [accrued interest]
from ____________; [in each case, the original issue discount
will be amortized at a ___% annual rate, computed on an annual
basis using the "interest" method and using a 360-day year
consisting of twelve 30-day months] (the "Warrant Price"). [The
original issue discount for each __________ principal amount of
Warrant Securities is ___________.] The holder may exercise the
Warrants evidenced hereby by providing certain information set
forth on the back hereof, including any applicable certificates
if the Warrant Securities are issuable in bearer form, and by
paying in full [in lawful money of the United States of America]
[applicable currency] [in cash or by certified check or official
bank check or by bank wire transfer, in each case,] [by bank wire
transfer] in immediately available funds, the Warrant Price for
each Warrant exercised to the Warrant Agent (as hereinafter
defined) and by surrendering this Warrant Certificate, with the
purchase form on the back hereof duly executed, at the corporate
trust office of [name of Warrant Agent], or its successor as
warrant agent (the "Warrant Agent"), [or ____________], which is,
on the date hereof, at the address on the reverse hereof, and
upon compliance with and subject to the conditions set forth
herein and in the Warrant Agreement (as hereinafter defined).
The term "holder" as used herein shall mean [if Offered
Securities with Warrants which are not immediately detachable --
, prior to ______________ (the "Detachable Date"), the [bearer]
[registered owner] of the Company's [title of Offered Securities]
to which this Warrant Certificate is initially attached, and
after such Detachable Date,] [the bearer of this Warrant
Certificate] [the person in whose name at the time this Warrant
Certificate shall be registered upon the books to be maintained
by the Warrant Agent for that purpose pursuant to Section 4.01 of
the Warrant Agreement].
Any whole number of Warrants evidenced by this Warrant
Certificate may be exercised to purchase Warrant Securities in
registered form in denominations of ___________ and any integral
multiples thereof. Upon any exercise of fewer than all of the
Warrants evidenced by this Warrant Certificate, there shall be
issued to the holder hereof a new Warrant Certificate evidencing
the number of Warrants remaining unexercised.
This Warrant Certificate is issued under and in
accordance with the Warrant Agreement dated as of ____________
(the "Warrant Agreement") between the Company and the Warrant
Agent and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the
holder of this Warrant Certificate consents by acceptance hereof.
Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent [and at
______________].
The Warrant Securities to be issued and delivered upon
the exercise of the Warrants evidenced by this Warrant
Certificate will be issued under and in accordance with an
indenture (the "Indenture"), dated as of February 1, 1994 between
the Company and _____________________, as trustee (the
"Trustee"), and will be subject to the terms and provisions
contained in the Indenture. Copies of the Indenture and the form
of the Warrant Securities are on file at the corporate trust
office of the Trustee [and at _____________].
[If Offered Securities with Warrants which are not
immediately detachable -- Prior to ______________, this Warrant
Certificate may be exchanged or transferred only together with
the [Title of Offered Securities] ("Offered Securities") to which
this Warrant Certificate was initially attached, and only for the
purpose of effecting, or in conjunction with, an exchange or
transfer of such Offered Security. After such date, this] [if
Offered Securities with Warrants which are immediately
detachable -- Transfer of this] Warrant Certificate may be
registered when this Warrant Certificate is surrendered at the
corporate trust office of the Warrant Agent [or ____________] by
the registered owner or his assigns, in person or by an attorney
duly authorized in writing, in the manner and subject to the
limitations provided in the Warrant Agreement.] [effected by
delivery and the Company and the Warrant Agent may treat the
bearer hereof as the owner for all purposes.]
[If Offered Securities with Warrants which are not
immediately detachable -- Except as provided in the immediately
preceding paragraph, after] [If Offered Securities with Warrants
which are immediately detachable or Warrants alone -- After]
countersignature by the Warrant Agent and prior to the expiration
of this Warrant Certificate, this Warrant Certificate may be
exchanged at the corporate trust office of the Warrant Agent [or
_____________] for Warrant Certificates representing the same
aggregate number of Warrants.
This Warrant Certificate shall not entitle the holder
hereof to any of the rights of a holder of the Warrant
Securities, including, without limitation, the rights to receive
payments of principal of, premium, if any, or interest, if any,
on the Warrant Securities or to enforce any of the covenants of
the Indenture.
This Warrant Certificate shall not be valid or
obligatory for any purpose until countersigned by the Warrant
Agent.
Dated as of __________________.
SOVEREIGN BANCORP, INC.
By:________________________________
Authorized Officer
By:________________________________
Authorized Officer
Attest:
___________________________
<PAGE>
Countersigned:
___________________________
As Warrant Agent
By:________________________
Authorized Signature
[Reverse of Warrant Certificate]
Instructions for Exercise of Warrant
To exercise the Warrants evidenced hereby, the holder
must pay in [Dollars] [applicable currency] [in cash or by
certified check or official bank check or by bank wire transfer]
[by bank wire transfer] [in immediately available funds] the
Warrant Price in full for Warrants exercised to [insert name of
Warrant Agent] [corporate trust department] [insert address of
Warrant Agent], Attn. _____________ [or _______________], which
[payment] [wire transfer] must specify the name of the holder and
the number of Warrants exercised by such holder. In addition,
the holder must complete the information required below,
including any applicable certifications if the Warrant Securities
are issuable in bearer form, and present this Warrant Certificate
in person or by mail (certified or registered mail is
recommended) to the Warrant Agent at the appropriate address set
forth below. This Warrant Certificate, completed and duly
executed, must be received by the Warrant Agent within five
business days of the [payment] [wire transfer].
To Be Executed Upon Exercise of Warrant
The undersigned hereby irrevocably elects to exercise
_____________ Warrants, evidenced by this Warrant Certificate, to
purchase ____________ principal amount of the [Title of Warrant
Securities] (the "Warrant Securities") of Sovereign Bancorp, Inc.
and represents that he has tendered payment for such Warrant
Securities in [Dollars] [applicable currency] [in cash or by
certified check or official bank check or by bank wire transfer,
in each case] [by bank wire transfer] in immediately available
funds to the order of Sovereign Bancorp, Inc., c/o [insert name
and address of Warrant Agent], in the amount of ______________ in
accordance with the terms hereof. The undersigned requests that
said principal amount of Warrant Securities be in [bearer] [fully
registered] form in the authorized denominations, registered in
such names and delivered all as specified in accordance with the
instructions set forth below. [However, unless otherwise
designated by the Company, Warrant Securities in bearer form
shall be delivered to or upon the order of the holder of such
Warrant Certificate only outside the United States and its
possessions.]
If the number of Warrants exercised is less than all of
the Warrants evidenced hereby, the undersigned requests that a
new Warrant Certificate representing the remaining Warrants
evidenced hereby be issued and delivered to the undersigned
unless otherwise specified in the instructions below.
Dated:_____________________ Name_______________________________
___________________________ Address____________________________
(Insert Social Security or
Other Identifying Number ____________________________
of Holder)
Signature_____________________
[If registered Warrant -- [If registered Warrant --
Signature Guaranteed (Signature must conform in
_______________________] all respects to name of holder
as specified on face of this
Warrant Certificate and must
bear a signature guarantee by
a bank, trust company or
member broker of the New York,
Midwest or Pacific Stock
Exchange]
The Warrants evidenced hereby may be exercised at the
following addresses:
By hand at __________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
By mail at __________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
[Instructions as to form and delivery of Warrant
Securities and, if applicable, Warrant Certificates evidencing
unexercised Warrants -- complete as appropriate.]
<PAGE>
[If registered Warrant]
Assignment
[Form of Assignment To Be Executed If Holder
Desires To Transfer Warrants Evidenced Hereby]
FOR VALUE RECEIVED _________________________ hereby
sells, assigns and transfers unto
___________________________ ___________________________________
(Please print name) (Please insert social security or
other identifying number)
___________________________
(Address)
___________________________
(City, including zip code)
the Warrants represented by the within Warrant Certificate and
does hereby irrevocably constitute and appoint _______________
Attorney, to transfer said Warrant Certificate on the books of
the Warrant Agent with full power of substitution in the
premises.
Dated:
___________________________________
Signature
(Signature must conform in all
respects to name of holder as specified on the face of this
Warrant Certificate and must bear a signature guarantee by a
bank, trust company or member broker of the New York, Midwest or
Pacific Stock Exchange.)
Signature Guaranteed
___________________________
<PAGE>
CERTIFICATION* AS TO NON-U.S. OWNERSHIP
[To be completed if Securities
in bearer form are requested]
[Form of certificate to be given by person requesting
delivery of bearer Warrant Security upon
exercise of Warrant]
CERTIFICATE
SOVEREIGN BANCORP, INC.
[Title of Warrant Securities] Issuable Upon Exercise of Warrants
("Warrant Securities")
To: Sovereign Bancorp, Inc.
[Name of Warrant Agent], or
Warrant Agent
This certificate is submitted in connection with the
exercise of the Warrant Certificate relating to the Warrant
Securities, by delivery to you of the Election to Purchase dated
as of _______________.
The undersigned hereby certifies that as of the date hereof,
the Warrant Securities which are to be delivered to the
undersigned in bearer form upon the exercise by the undersigned
of such Warrant Certificate (i) are owned by persons that are not
United States Persons, as defined below; (ii) are owned by United
States Persons that are (a) foreign branches of United States
financial institutions (as defined in U.S. Treasury Regulations
Section 1.165.12(c)(1)(v)) ("financial institutions") purchasing
for their own account or for resale, or (b) United States Persons
who acquired the obligations through foreign branches of United
States financial institutions and who hold the obligations
through such financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial
institution provides a certificate in the form that follows this
certificate); or (iii) are owned by United States or foreign
financial institutions for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7)), which United States or foreign
institutions described in clause (iii) above (whether or not also
described in clause (i) or (ii)) certify that they have not
acquired the obligations for purposes of resale directly or
indirectly to a United States Person or to a person within the
Unites States or its possessions. The undersigned undertakes to
advise you by tested telex followed by written confirmation if
the statement in the immediately preceding sentence is not
correct on the date of delivery of the above-captioned Securities
in bearer form.
We understand that this certificate is required in
connection with United States tax laws. We irrevocably authorize
you to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceedings with
respect to the matters covered by this certificate. "United
States Person" shall mean a citizen or resident of the United
States of America (including the District of Columbia), a
corporation, partnership or other entity created or organized in
or under the laws of the United States or any political
subdivision thereof or an estate or trust that is subject to
United States federal income taxation regardless of the source of
its income.
Date:______________________
[Name of Person Entitled to Receive
Warrant Security Described Herein]
___________________________________
(Authorized Signatory)
Name:______________________________
Title:
____________________
Subject to change in accordance with changes in tax laws and
regulations.
<PAGE>
[Form of Certificate of Status as a
Foreign Branch of a United States Financial Institution]
CERTIFICATE
SOVEREIGN BANCORP, INC.
[Title of Warrant Securities] Issuable Upon Exercise of Warrants
("Warrant Securities")
To: Sovereign Bancorp, Inc.
[Name of Warrant Agent], or
Warrant Agent
This certificate is submitted in connection with the
exercise of the Warrant Certificate relating to the Warrant
Securities, by delivery to you of the Election to Purchase dated
as of ________________.
The undersigned represents that it is a branch located
outside the United States of a United States securities clearing
organization, bank or other financial institution (as defined in
U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) that holds
customers' securities in the ordinary course of its trade or
business and agrees that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986 and the regulations thereunder and is not purchasing for
resale directly or indirectly to a United States Person or to a
person within the United States or its possessions. We undertake
to advise you by tested telex followed by written confirmation if
the statement in the immediately preceding sentence is not
correct on the date of delivery of the above-captioned Securities
in bearer form.
We understand that this certificate is required in
connection with the United States tax laws. We irrevocably
authorize you to produce this certificate or a copy hereof to
any interested party in any administrative or legal proceedings
with respect to the matters covered by this certificate.
Date:______________________
[Name of Person Entitled to
Delivery of Warrant Securities
Described Herein]
___________________________________
(Authorized Signatory)
Name:______________________________
Title:_____________________________
____________________
Subject to change in accordance with changes in tax laws and
regulations.
Exhibit 4.12
SOVEREIGN BANCORP, INC.
Form of Preferred Stock Warrant Agreement
THIS WARRANT AGREEMENT dated as of ____________________
between Sovereign Bancorp, Inc., a Pennsylvania corporation
(hereinafter called the "Company"), and ______________________ as
Warrant Agent (herein called the "Warrant Agent").
WHEREAS, the Company proposes to sell [if Warrants are
sold with other securities ____ [title of such other securities
being offered] (the "Offered Securities") with] warrant
certificates evidencing one or more warrants (the "Warrants" or
individually a "Warrant") representing the right to purchase
[title of Preferred Stock purchasable through exercise of
Warrants] (the "Warrant Securities"), such warrant certificates
and other warrant certificates issued pursuant to this Agreement
being herein called the "Warrant Certificates"; and
WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company in connection with the issuance,
exchange, exercise and replacement of the Warrant Certificates,
and in this Agreement wishes to set forth, among other things,
the form and provisions of the Warrant Certificates and the terms
and conditions on which they may be issued, exchanged, exercised
and replaced;
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained, the parties hereto agree
as follows:
_________________
* Complete or modify the provisions of this Form as
appropriate to reflect the terms of the Warrants,
Warrant Securities and Offered Securities.
<PAGE>
ARTICLE I.
ISSUANCE OF WARRANTS AND EXECUTION AND
DELIVERY OF WARRANT CERTIFICATES.
SECTION 1.01. Issuance of Warrants. [If Warrants
alone -- Upon issuance, each Warrant Certificate shall evidence
one or more Warrants.] [If Offered Securities and Warrants --
Warrants shall be [initially] issued in connection with the
issuance of the Offered Securities [but shall be separately
transferable on and after ________________________ (the
"Detachable Date")] [and shall not be separately transferable]
and each Warrant Certificate shall evidence one or more
Warrants.] Each Warrant evidenced thereby shall represent the
right, subject to the provisions contained herein and therein, to
purchase one Warrant Security. [If Offered Securities and
Warrants -- Warrant Certificates shall be initially issued in
units with the Offered Securities and each Warrant Certificate
included in such a unit shall evidence _______ Warrants for each
[_______________ principal amount] [______ shares] of Offered
Securities included in such unit.}
SECTION 1.02. Execution and Delivery of Warrant
Certificates. Each Warrant Certificate, whenever issued, shall
be in registered form substantially in the form set forth in
Exhibit A hereto, shall be dated ________________ and may have
such letters, numbers, or other marks of identification or
designation and such legends or endorsements printed,
lithographed or engraved thereon as the officers of the Company
executing the same may approve (execution thereof to be
conclusive evidence of such approval) and as are not inconsistent
with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation or any stock exchange on
which the Warrants may be listed, or to conform to usage. The
Warrant Certificates shall be signed on behalf of the Company by
its Chairman of the Board, the Chairman of the Executive
Committee of the Board, a Vice Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, a
Vice Chairman, the Chief Financial Officer, or a Vice President
and by its Treasurer or one of its Assistant Treasurers or its
Secretary or one of its Assistant Secretaries under its corporate
seal reproduced thereon. Such signatures may be manual or
facsimile signatures of such authorized officers and may be
imprinted or otherwise reproduced on the Warrant Certificates.
The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced
on the Warrant Certificates.
No Warrant Certificate shall be valid for any purpose,
and no Warrant evidenced thereby shall be exercisable, until such
Warrant Certificate has been countersigned by the manual
signature of the Warrant Agent. Such signature by the Warrant
Agent upon any Warrant Certificate executed by the Company shall
be conclusive evidence that the Warrant Certificate so
countersigned has been duly issued hereunder.
In case any officer of the Company who shall have
signed any of the Warrant Certificates either manually or by
facsimile signature shall cease to be such officer before the
Warrant Certificates so signed shall have been countersigned and
delivered by the Warrant Agent, such Warrant Certificates may be
countersigned and delivered notwithstanding that the person who
signed such Warrant Certificates ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of
the Company by such persons as, at the actual date of the
execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the execution of
this Agreement any such person was not such officer.
The terms "holder" or "holder of a Warrant Certificate"
as used herein shall mean any person in whose name at the time
any Warrant Certificate shall be registered upon the books to be
maintained by the Warrant Agent for that purpose [If Offered
Securities and Warrants are not immediately detachable -- or upon
the register of the Offered Securities prior to the Detachable
Date. Prior to the Detachable Date, the Company will, or will
cause the registrar of the Offered Securities to, make available
at all times to the Warrant Agent such information as to holders
of the Offered Securities with Warrants as may be necessary to
keep the Warrant Agent's records up to date].
SECTION 1.03. Issuance of Warrant Certificates.
Warrant Certificates evidencing the right to purchase an
aggregate not exceeding ________________ Warrant Securities
(except as provided in Section 2.03(c), 3.02 and 4.01) may be
executed by the Company and delivered to the Warrant Agent upon
the execution of this Warrant Agreement or from time to time
thereafter. The Warrant Agent shall, upon receipt of Warrant
Certificates duly executed on behalf of the Company, countersign
Warrant Certificates evidencing Warrants representing the right
to purchase up to __________________ Warrant Securities and shall
deliver such Warrant Certificates to or upon the order of the
Company. Subsequent to such original issuance of the Warrant
Certificates, the Warrant Agent shall countersign a Warrant
Certificate only if the Warrant Certificate is issued in exchange
or substitution for one or more previously countersigned Warrant
Certificates or in connection with their transfer, as hereinafter
provided.
ARTICLE II.
WARRANT PRICE, DURATION AND
EXERCISE OF WARRANTS.
SECTION 2.01. Warrant Price. During the period from
__________, through and including ______________, the exercise
price of each Warrant will be __________. During the period from
_________________, through and including ____________, the
exercise price of each Warrant will be _____________. Such
purchase price of Warrant Securities is referred to in this
Agreement as the "Warrant Price". No adjustment shall be made
for any dividends on any Warrant Securities issuable upon
exercise of any Warrant.
SECTION 2.02. Duration of Warrants. Each Warrant may
be exercised in whole at any time, as specified herein, on or
after [the date thereof] [____________________] and at or before
5 p.m., [Wyomissing, Pennsylvania] time, on ________________ or
such later date as the Company may designate, by notice to the
Warrant Agent and the holders of Warrant Certificates mailed to
their addresses as set forth in the record books of the Warrant
Agent (the "Expiration Date"). Each Warrant not exercised at or
before 5 p.m., [Wyomissing, Pennsylvania] time, on the Expiration
Date shall become void, and all rights of the holder of the
Warrant Certificate evidencing such Warrant under this Agreement
shall cease.
SECTION 2.03. Exercise of Warrants. (a) During the
period specified in Section 2.02 any whole number of Warrants may
be exercised by providing certain information as set forth on the
reverse side of the Warrant Certificate and by paying in full, in
[lawful money of the United States of America] [in cash or by
certified check or official bank check or by bank wire transfer,
in each case,] [by bank wire transfer] [in immediately available
funds] the Warrant Price for each Warrant exercised, to the
Warrant Agent at its corporate trust office [or at
__________________], provided that such exercise is subject to
receipt within five business days of such [payment] [wire
transfer] by the Warrant Agent of the Warrant Certificate with
the form of election to purchase Warrant Securities set forth on
the reverse side of the Warrant Certificate properly completed
and duly executed. The date on which payment in full of the
Warrant Price is received by the Warrant Agent shall, subject to
receipt of the Warrant Certificate as aforesaid, be deemed to be
the date on which the Warrant is exercised. The Warrant Agent
shall deposit all funds received by it in payment of the Warrant
Price in an account of the Company maintained with it and shall
advise the Company by telephone at the end of each day on which a
[payment] [wire transfer] for the exercise of Warrants is
received of the amount so deposited to its account. The Warrant
Agent shall promptly confirm such telephone advice to the Company
in writing.
(b) The Warrant Agent shall, from time to time, as
promptly as practicable, advise the Company of (i) the number of
Warrants exercised, (ii) the instructions of each holder of the
Warrant Certificates evidencing such Warrants with respect to
delivery of the Warrant Securities to which such holder is
entitled upon such exercise, (iii) delivery of Warrant
Certificates evidencing the balance, if any, of the Warrants
remaining after such exercise, and (iv) such other information as
the Company shall reasonably require.
(c) As soon as practicable after the exercise of any
Warrant, the Company shall issue to or upon the order of the
holder of the Warrant Certificate evidencing such Warrant, the
Warrant Securities to which such holder is entitled, in fully
registered form, registered in such name or names as may be
directed by such holder. If fewer than all of the Warrants
evidenced by such Warrant Certificate are exercised, the Company
shall execute, and an authorized officer of the Warrant Agent
shall manually countersign and deliver, a new Warrant Certificate
evidencing the number of such Warrants remaining unexercised.
(d) The Company shall not be required to pay any stamp
or other tax or other governmental charge required to be paid in
connection with any transfer involved in the issue of the Warrant
Securities, and in the event that any such transfer is involved,
the Company shall not be required to issue or deliver any Warrant
Security until such tax or other charge shall have been paid or
it has been established to the Company's satisfaction that no
such tax or other charge is due.
(e) Prior to the issuance of any Warrants there shall
have been reserved, and the Company shall at all times keep
reserved, out of its authorized but unissued Warrant Securities,
a number of shares sufficient to provide for the exercise of the
Warrant Certificates.
ARTICLE III.
OTHER PROVISIONS RELATING TO RIGHTS
OF HOLDERS OF WARRANT CERTIFICATES
SECTION 3.01. No Rights as Warrant Securityholder
Conferred by Warrants or Warrant Certificates. No Warrant
Certificates or Warrant evidenced thereby shall entitle the
holder thereof to any of the rights of a holder of Warrant
Securities, including, without limitation, the right to receive
the payment of dividends or distributions, if any, on the Warrant
Securities or to exercise any voting rights.
SECTION 3.02. Lost, Stolen, Mutilated or Destroyed
Warrant Certificates. Upon receipt by the Warrant Agent of
evidence reasonably satisfactory to it and the Company of the
ownership of and the loss, theft, destruction or mutilation of
any Warrant Certificate and of indemnity reasonably satisfactory
to the Warrant Agent and the Company and, in the case of
mutilation, upon surrender thereof to the Warrant Agent for
cancellation, then, in the absence of notice to the Company or
the Warrant Agent that such Warrant Certificate has been acquired
by a bona fide purchaser, the Company shall execute, and an
authorized officer of the Warrant Agent shall manually
countersign and deliver, in exchange for or in lieu of the lost,
stolen, destroyed or mutilated Warrant Certificate, a new Warrant
Certificate of the same tenor and evidencing a like number of
Warrants. Upon the issuance of any new Warrant Certificate under
this Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and expenses of the Warrant Agent) in connection
therewith. Every substitute Warrant Certificate executed and
delivered pursuant to this Section in lieu of any lost, stolen or
destroyed Warrant Certificate shall represent an additional
contractual obligation of the Company, whether or not the lost,
stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of
this Agreement equally and proportionately with any and all other
Warrant Certificates duly executed and delivered hereunder. The
provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to
the replacement of mutilated, lost, stolen or destroyed Warrant
Certificates.
SECTION 3.03. Holder of Warrant Certificate May
Enforce Rights. Notwithstanding any of the provisions of this
Agreement, any holder of a Warrant Certificate, without the
consent of the Warrant Agent, the holder of any Warrant
Securities or the holder of any other Warrant Certificate, may,
in such holder's own behalf and for such holder's own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise
in respect of, such holder's right to exercise the Warrants
evidenced by such holder's Warrant Certificate in the manner
provided in such holder's Warrant Certificate and in this
Agreement.
SECTION 3.04. Reclassification, Consolidation, Merger,
Sale, Conveyance or Lease. In case any of the following shall
occur while any Warrants are outstanding: (a) any
reclassification or change of the outstanding shares of Warrant
Securities; or (b) any consolidation or merger to which the
Company is party (other than a consolidation or a merger in which
the Company is the continuing corporation and which does not
result in any reclassification of, or change in, the outstanding
shares of Warrant Securities issuable upon exercise of the
Warrants); or (c) any sale, conveyance or lease to another
corporation of the property of the Company as an entirety or
substantially as an entirety; then the Company, or such successor
or purchasing corporation, as the case may be, shall make
appropriate provision by amendment of this Agreement or otherwise
so that the holders of the Warrants then outstanding shall have
the right at any time thereafter, upon exercise of such Warrants,
to purchase the kind and amount of shares of stock and other
securities and property receivable upon such a reclassification,
change, consolidation, merger, sale, conveyance or lease as would
be received by a holder of the number of shares of Warrant
Securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger,
sale, conveyance or lease, and, in the case of a consolidation,
merger, sale, conveyance or lease the Company shall thereupon be
relieved of any further obligation hereunder or under the
Warrants, and the Company as the predecessor corporation may
thereupon or at any time thereafter be dissolved, wound up or
liquidated. Such successor or assuming corporation thereupon may
cause to be signed, and may issue either in its own name or in
the name of the Company, any or all of the Warrants issuable
hereunder which theretofore shall not have been signed by the
Company, and may execute and deliver Warrant Securities in its
own name, in fulfillment of its obligations to deliver Warrant
Securities upon exercise of the Warrants. All the Warrants so
issued shall in all respects have the same legal rank and benefit
under this Agreement as the Warrants theretofore or thereafter
issued in accordance with the terms of this Agreement as though
all of such Warrants had been issued at the date of the execution
hereof. In any case of any such reclassification, change,
consolidation, merger, conveyance, transfer or lease, such
changes in phraseology and form (but not in substance) may be
made in the Warrants thereafter to be issued as may be
appropriate.
The Warrant Agent may receive a written opinion of
legal counsel as conclusive evidence that any such
reclassification, change, consolidation, merger, conveyance,
transfer or lease complies with the provisions of this
Section 3.04.
ARTICLE IV.
EXCHANGE AND TRANSFER
OF WARRANT CERTIFICATES
SECTION 4.01. Exchange and Transfer of Warrant
Certificates. [If Offered Securities with Warrants which are
immediately detachable -- Upon] [If Offered Securities with
Warrants which are not immediately detachable -- Prior to the
Detachable Date a Warrant Certificate may be exchanged or
transferred only together with the Offered Security to which the
Warrant Certificate was initially attached, and only for the
purpose of effecting or in conjunction with an exchange or
transfer of such Offered Security. Prior to any Detachable Date,
each transfer of the Offered Security [on the register of the
Offered Securities] shall operate also to transfer the related
Warrant Certificates. After the Detachable Date upon] surrender
at the corporate trust office the Warrant Agent [or
____________], Warrant Certificates evidencing Warrants may be
exchanged for Warrant Certificates in other denominations
evidencing such Warrants or the transfer thereof may be
registered in whole or in part; provided that such other Warrant
Certificates evidence the same aggregate number of Warrants as
the Warrant Certificates so surrendered. The Warrant Agent shall
keep, at its corporate trust office [and at _______________],
books in which, subject to such reasonable regulations as it may
prescribe, it shall register Warrant Certificates and exchanges
and transfers of outstanding Warrant Certificates, upon surrender
of the Warrant Certificates to the Warrant Agent at its corporate
trust office [or ______________] for exchange or registration of
transfer, properly endorsed or accompanied by appropriate
instruments of registration of transfer and written instructions
for transfer, all in form satisfactory to the Company and the
Warrant Agent. No service charge shall be made for any exchange
or registration of transfer of Warrant Certificates, but the
Company may require payment of a sum sufficient to cover any
stamp or other tax or other governmental charge that may be
imposed in connection with any such exchange or registration of
transfer. Whenever any Warrant Certificates are so surrendered
for exchange or registration of transfer, an authorized officer
of the Warrant Agent shall manually countersign and deliver to
the person or persons entitled thereto a Warrant Certificate or
Warrant Certificates duly authorized and executed by the Company,
as so requested. The Warrant Agent shall not be required to
effect any exchange or registration of transfer which will result
in the issuance of a Warrant Certificate evidencing a fraction of
a Warrant or a number of full Warrants and a fraction of a
Warrant. All Warrant Certificates issued upon any exchange or
registration of transfer of Warrant Certificates shall be the
valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this
Agreement, as the Warrant Certificate surrendered for such
exchange or registration of transfer.
SECTION 4.02. Treatment of Holders of Warrant
Certificates. [If Offered Securities and Warrants are not
immediately detachable -- Prior to the Detachable Date, the
Company, the Warrant Agent and all other persons may treat the
owner of the Offered Security as the owner of the Warrant
Certificates initially attached thereto for any purpose and as
the person entitled to exercise the rights represented by the
Warrants evidenced by such Warrant Certificates, any notice to
the contrary notwithstanding. After the Detachable Date and
prior to due presentment of a Warrant Certificate for
registration of transfer,] [T]he Company and the Warrant Agent
may treat the registered holder of a Warrant Certificate as the
absolute owner thereof for any purpose and as the person entitled
to exercise the rights represented by the Warrants evidenced
thereby, any notice to the contrary notwithstanding.
SECTION 4.03. Cancellation of Warrant Certificates.
Any Warrant Certificate surrendered for exchange, registration of
transfer or exercise of the Warrants evidenced thereby shall, if
surrendered to the Company, be delivered to the Warrant Agent and
all Warrant Certificates surrendered or so delivered to the
Warrant Agent shall be promptly cancelled by the Warrant Agent
and shall not be reissued and, except as expressly permitted by
this Agreement, no Warrant Certificate shall be issued hereunder
in exchange or in lieu thereof. The Warrant Agent shall deliver
to the Company from time to time or otherwise dispose of
cancelled Warrant Certificates in a manner satisfactory to the
Company.
ARTICLE V.
CONCERNING THE WARRANT AGENT
SECTION 5.01. Warrant Agent. The Company hereby
appoints ______________________ as Warrant Agent of the Company
in respect of the Warrants and the Warrant Certificates upon the
terms and subject to the conditions herein set forth; and
_________________ hereby accepts such appointment. The Warrant
Agent shall have the powers and authority granted to and
conferred upon it in the Warrant Certificates and hereby and such
further powers and authority to act on behalf of the Company as
the Company may hereafter grant to or confer upon it. All of the
terms and provisions with respect to such powers and authority
contained in the Warrant Certificates are subject to and governed
by the terms and provisions hereof.
SECTION 5.02. Conditions of Warrant Agent's
Obligations. The Warrant Agent accepts its obligations herein
set forth upon the terms and conditions hereof, including the
following to all of which the Company agrees and to all of which
the rights hereunder of the holders from time to time of the
Warrant Certificates shall be subject:
(a) Compensation and Indemnification. The Company
agrees to pay the Warrant Agent the compensation to be agreed
upon with the Company for all services rendered by the Warrant
Agent and to reimburse the Warrant Agent for reasonable out-of-
pocket expenses (including counsel fees) incurred without gross
negligence by the Warrant Agent in connection with the services
rendered hereunder by the Warrant Agent. The Company also agrees
to indemnify the Warrant Agent for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Warrant Agent, arising
out of or in connection with its acting as Warrant Agent
hereunder, as well as the costs and expenses of defending against
any claim of such liability.
(b) Agent for the Company. In acting under this
Warrant Agreement and in connection with the Warrant
Certificates, the Warrant Agent is acting solely as agent of the
Company and does not assume any obligations or relationship of
agency or trust for or with any of the holders of Warrant
Certificates or beneficial owners of Warrants.
(c) Counsel. The Warrant Agent may consult with
counsel satisfactory to it, and the written advice of such
counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the advice of such
counsel.
(d) Documents. The Warrant Agent shall be protected
and shall incur no liability for or in respect of any action
taken or thing suffered by it in reliance upon any Warrant
Certificate, notice, direction, consent, certificate, affidavit,
statement or other paper or document reasonably believed by it to
be genuine and to have been presented or signed by the proper
parties.
(e) Certain Transactions. The Warrant Agent, and its
officers, directors and employees, may become the owner of, or
acquire any interest in, Warrants, with the same rights that it
or they would have if it were not the Warrant Agent hereunder,
and, to the extent permitted by applicable law, it or they may
engage or be interested in any financial or other transaction
with the Company and may act on, or as depositary, trustee or
agent for, any committee or body of holders of Warrant Securities
or other obligations of the Company as freely as if it were not
the Warrant Agent hereunder. Nothing in this Warrant Agreement
shall be deemed to prevent the Warrant Agent from acting as
Trustee under any of the Indentures.
(f) No Liability for Interest. Unless otherwise
agreed with the Company, the Warrant Agent shall have no
liability for interest on any monies at any time received by it
pursuant to any of the provisions of this Agreement or of the
Warrant Certificates.
(g) No Liability for Invalidity. The Warrant Agent
shall have no liability with respect to any invalidity of this
Agreement or any of the Warrant Certificates (except as to the
Warrant Agent's countersignature thereon).
(h) No Responsibility for Representations. The
Warrant Agent shall not be responsible for any of the recitals or
representations herein or in the Warrant Certificates (except as
to the Warrant Agent's countersignature thereon), all of which
are made solely by the Company.
(i) No Implied Obligations. The Warrant Agent shall
be obligated to perform only such duties as are herein and in the
Warrant Certificates specifically set forth and no implied duties
or obligations shall be read into this Agreement or the Warrant
Certificates against the Warrant Agent. The Warrant Agent shall
not be under any obligation to take any action hereunder which
may tend to involve it in any expense or liability, the payment
of which within a reasonable time is not, in its reasonable
opinion, assured to it. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by
the Company of any of the Warrant Certificates authenticated by
the Warrant Agent and delivered by it to the Company pursuant to
this Agreement or for the application by the Company of the
proceeds of the Warrant Certificates. The Warrant Agent shall
have no duty or responsibility in case of any default by the
Company in the performance of its covenants or agreements
contained herein or in the Warrant Certificates or in the case of
the receipt of any written demand from a holder of a Warrant
Certificate with respect to such default, including, without
limiting the generality of the foregoing, any duty or
responsibility to initiate or attempt to initiate any proceedings
at law or otherwise or, except as provided in Section 6.02
hereof, to make any demand upon the Company.
SECTION 5.03. Resignation and Appointment of
Successor. (a) The Company agrees, for the benefit of the
holders from time to time of the Warrant Certificates, that there
shall at all times be a Warrant Agent hereunder until all the
Warrants have been exercised or are no longer exercisable.
(b) The Warrant Agent may at any time resign as such
agent by giving written notice to the Company of such intention
on its part, specifying the date on which its desired resignation
shall become effective; provided that such date shall not be less
than three months after the date on which such notice is given
unless the Company otherwise agrees. The Warrant Agent hereunder
may be removed at any time by the filing with it of an instrument
in writing signed by or on behalf of the Company and specifying
such removal and the intended date when it shall become
effective. Such resignation or removal shall take effect upon
the appointment by the Company, as hereinafter provided, of a
successor Warrant Agent (which shall be a bank or trust company
authorized under the laws of the jurisdiction of its organization
to exercise corporate trust powers) and the acceptance of such
appointment by such successor Warrant Agent. The obligation of
the Company under Section 5.02(a) shall continue to the extent
set forth therein notwithstanding the resignation or removal of
the Warrant Agent.
(c) In case at any time the Warrant Agent shall
resign, or shall be removed, or shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or under any other applicable Federal or
State bankruptcy, insolvency or similar law or shall consent to
the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they
become due, or shall take corporate action in furtherance of any
such action, or a decree or order for relief by a court having
jurisdiction in the premises shall have been entered in respect
of the Warrant Agent in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or similar
law; or a decree or order by a court having jurisdiction in the
premises shall have been entered for the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator
(or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of
the Warrant Agent or of its property or affairs for the purpose
of rehabilitation, conservation, winding up or liquidation, a
successor Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with
the successor Warrant Agent. Upon the appointment as aforesaid
of a successor Warrant Agent and acceptance by the successor
Warrant Agent of such appointment, the Warrant Agent shall cease
to be Warrant Agent hereunder.
(d) Any successor Warrant Agent appointed hereunder
shall execute, acknowledge and deliver to its predecessor and to
the Company an instrument accepting such appointment hereunder,
and thereupon such successor Warrant Agent, without any further
act, deed or conveyance, shall become vested with all the
authority, rights, powers, trusts, immunities, duties, and
obligations of such predecessor with like effect as if originally
named as Warrant Agent hereunder, and such predecessor, upon
payment of its charges and disbursements then unpaid, shall
thereupon become obligated to transfer, deliver and pay over, and
such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by
such predecessor, as Warrant Agent hereunder.
(e) Any corporation into which the Warrant Agent
hereunder may be merged or converted or any corporation with
which the Warrant Agent may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which
the Warrant Agent shall be a party, or any corporation to which
the Warrant Agent shall sell or otherwise transfer all or
substantially all the assets and business of the Warrant Agent,
provided that it shall be qualified as aforesaid, shall be the
successor Warrant Agent under this Agreement without the
execution or filing of any paper or any further act on the part
of any of the parties hereto.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.01. Amendment. This Agreement may be
amended by the parties hereto, without the consent of the holder
of any Warrant Certificate, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any
defective provision contained herein, or making any other
provisions with respect to matters or questions arising under
this Agreement as the Company and the Warrant Agent may deem
necessary or desirable; provided that such action shall not
affect adversely the interests of the holders of the Warrant
Certificates.
SECTION 6.02. Notices and Demands to the Company and
Warrant Agent. If the Warrant Agent shall receive any notice or
demand addressed to the Company by the holder of a Warrant
Certificate pursuant to the provisions of the Warrant
Certificates, the Warrant Agent shall promptly forward such
notice or demand to the Company.
SECTION 6.03. Addresses. Any communication from the
Company to the Warrant Agent with respect to this Agreement shall
be addressed to ________________________________________________,
Attention: ______________________ and any communication from the
Warrant Agent to the Company with respect to this Agreement shall
be addressed to Sovereign Bancorp, Inc., 1130 Berkshire
Boulevard, Wyomissing, Pennsylvania 19610, Attention: Corporate
Secretary (or such other address as shall be specified in writing
by the Warrant Agent or by the Company).
SECTION 6.04. Applicable Law. The validity,
interpretation and performance of this Agreement and each Warrant
Certificate issued hereunder and of the respective terms and
provisions thereof shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania
without giving effect to any principles of conflict of laws.
SECTION 6.05. Delivery of Prospectus. The Company
will furnish to the Warrant Agent sufficient copies of a
prospectus relating to the Warrant Securities deliverable upon
exercise of the Warrants (the "Prospectus"), and the Warrant
Agent agrees that upon the exercise of any Warrant, the Warrant
Agent will deliver to the holder of the Warrant Certificate
evidencing such Warrant, prior to or concurrently with the
delivery of the Warrant Securities issued upon such exercise, a
Prospectus. The Warrant Agent shall not, by reason of any such
delivery, assume any responsibility for the accuracy or adequacy
of such Prospectus.
SECTION 6.06. Obtaining of Governmental Approvals.
The Company will from time to time take all action which may be
necessary to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities
and securities acts filings under United States Federal and State
laws (including without limitation a registration statement in
respect of the Warrants and Warrant Securities under the
Securities Act of 1933), which may be or become requisite in
connection with the issuance, sale, transfer, and delivery of the
Warrant Securities issued upon exercise of the Warrant
Certificates, the exercise of the Warrants, the issuance, sale,
transfer and delivery of the Warrants or upon the expiration of
the period during which the Warrants are exercisable.
SECTION 6.07. Persons Having Rights under Warrant
Agreement. Nothing in this Agreement shall give to any person
other than the Company, the Warrant Agent and the holders of the
Warrant Certificates any right, remedy or claim under or by
reason of this Agreement.
SECTION 6.08. Headings. The descriptive headings of
the several Articles and Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
SECTION 6.09. Counterparts. This Agreement may be
executed in any number of counterparts, each of which as so
executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
SECTION 6.10. Inspection of Agreement. A copy of this
Agreement shall be available at all reasonable times at the
principal corporate trust office of the Warrant Agent for
inspection by the holder of any Warrant Certificate. The Warrant
Agent may require such holder to submit his Warrant Certificate
for inspection by it.
IN WITNESS WHEREOF, Sovereign Bancorp, Inc. and
________________ have caused this Agreement to be signed by their
respective duly authorized officers, and the same to be attested
by their respective Secretaries or one of their respective
Assistant Secretaries, all as of the day and year first above
written.
SOVEREIGN BANCORP, INC.
By________________________________
Title:
Attest:
______________________________
Title:
[Warrant Agent]
By________________________________
Title:
Attest:
______________________________
Title:
<PAGE>
Exhibit A
FORM OF WARRANT CERTIFICATE
[Face of Warrant Certificate]
[Form of Legend if Offered Prior to _________________
Securities with Warrants which this Warrant Certificate
are not immediately cannot be transferred or
detachable. exchanged unless attached to
a [Title of Offered
Securities].]
[Form of Legend if Warrants Prior to ___________________,
are not immediately exercisable. Warrants evidenced by this
Warrant Certificate cannot be
exercised.]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN
SOVEREIGN BANCORP, INC.
WARRANTS TO PURCHASE
[Title of Warrant Securities]
VOID AFTER 5 p.m. [WYOMISSING, PENNSYLVANIA TIME] ON
________________
No.____________________ __________ Warrants
This certifies that _________________ or registered
assigns is the registered owner of the above indicated number of
Warrants, each Warrant entitling such owner [if Offered
Securities with Warrants which are not immediately detachable --,
subject to the registered owner qualifying as a "holder" of this
Warrant Certificate, as hereinafter defined] to purchase, at any
time [after 5 p.m., [Wyomissing, Pennsylvania] time, on
______________________ and] on or before [Wyomissing,
Pennsylvania] time, on _______________, _____________ shares of
[Title of Warrant Securities] (the "Warrant Securities"), of
Sovereign Bancorp, Inc. (the "Company") on the following basis:
during the period from ____________, through and including
___________________ the exercise price of each Warrant will be
______________; during the period from ________________, through
and including ____________, the exercise price of each Warrant
will be ______________ (the "Warrant Price"). No adjustment
shall be made for any dividends on any Warrant Securities
issuable upon exercise of any Warrant. The holder may exercise
the Warrants evidenced hereby by providing certain information
set forth on the back hereof and by paying in full [in lawful
money of the United States of America] [in cash or by certified
check or official bank check or by bank wire transfer, in each
case,] [by bank wire transfer] in immediately available funds,
the Warrant Price for each Warrant exercised to the Warrant Agent
(as hereinafter defined) and by surrendering this Warrant
Certificate, with the purchase form on the back hereof duly
executed, at the corporate trust office of [name of Warrant
Agent], or its successor as warrant agent (the "Warrant Agent"),
[or _________], which is, on the date hereof, at the address
specified on the reverse hereof, and upon compliance with and
subject to the conditions set forth herein and in the Warrant
Agreement (as hereinafter defined).
The term "holder" as used herein shall mean [if Offered
Securities with Warrants which are not immediately detachable --,
prior to ________ (the "Detachable Date"), the registered owner
of the Company's [title of Offered Securities] to which this
Warrant Certificate is initially attached, and after such
Detachable Date,] the person in whose name at the time this
Warrant Certificate shall be registered upon the books to be
maintained by the Warrant Agent for that purpose pursuant to
Section 4.01 of the Warrant Agreement.
Any whole number of Warrants evidenced by this Warrant
Certificate may be exercised to purchase Warrant Securities in
registered form. Upon any exercise of fewer than all of the
Warrants evidenced by this Warrant Certificate, there shall be
issued to the holder hereof a new Warrant Certificate, there
shall be issued to the holder hereof a new Warrant Certificate
evidencing the number of Warrants remaining unexercised.
This Warrant Certificate is issued under and in accordance
with the Warrant Agreement dated as of _______________ (the
"Warrant Agreement") between the Company and the Warrant Agent
and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the
holder of this Warrant Certificate consents by acceptance hereof.
Copies of the Warrant Agreement are on file at the above-
mentioned office of the Warrant Agent [and at _______________].
[If Offered Securities with registered Warrants which are
not immediately detachable -- Prior to ___________, this Warrant
Certificate may be exchanged or transferred only together with
the [Title of Offered Securities} ("Offered Securities") to which
this Warrant Certificate was initially attached, and only for the
purpose of effecting, or in conjunction with, an exchange or
transfer of such Offered Security. After such date, this] [if
Offered Securities with registered Warrants which are immediately
detachable -- Transfer of this] Warrant Certificate may be
registered when this Warrant Certificate is surrendered at the
corporate trust office of the Warrant Agent [or ____________] by
the registered owner or such owner's assigns, in person or by an
attorney duly authorized in writing, in the manner and subject to
the limitations provided in the Warrant Agreement].
[If Offered Securities with Warrants which are not
immediately detachable -- Except as provided in the immediately
preceding paragraph, after] [If Offered Securities with Warrants
which are immediately detachable or Warrants alone -- After]
countersignature by the Warrant Agent and prior to the expiration
of this Warrant Certificate, this Warrant Certificate may be
exchanged at the corporate trust office of the Warrant Agent [or
________________] for Warrant Certificates representing the same
aggregate number of Warrants.
This Warrant Certificate shall not entitle the holder hereof
to any of the rights of a holder of the Warrant Securities,
including, without limitation, the right to receive payments of
dividends or distributions, if any, on the Warrant Securities or
to exercise any voting rights.
This Warrant Certificate shall not be valid or obligatory
for any purpose until countersigned by the Warrant Agent.
Dated as of __________________
SOVEREIGN BANCORP, INC.
By:_______________________________
Attest:
______________________________
Countersigned:
______________________________
As Warrant Agent
By:___________________________
Authorized Signature
<PAGE>
[Reverse of Warrant Certificate]
Instructions for Exercise of Warrant
To exercise the Warrants evidenced hereby, the holder must
pay in United States dollars [in cash or by certified check or
official bank check or by bank wire transfer] [by bank wire
transfer] [in immediately available funds] the Warrant Price in
full for Warrants exercised to [insert name of Warrant Agent]
[corporate trust department] [insert address of Warrant Agent],
Attn. __________________ [or ____________________], which
[payment] [wire transfer] must specify the name of the holder and
the number of Warrants exercised by such holder. In addition,
the holder must complete the information required below and
present this Warrant Certificate in person or by mail (certified
or registered mail is recommended) to the Warrant Agent at the
appropriate address set forth below. This Warrant Certificate,
completed and duly executed, must be received by the Warrant
Agent within five business days of the [payment] [wire transfer].
To Be Executed Upon Exercise of Warrant
The undersigned hereby irrevocably elects to exercise
____________ Warrants, evidenced by this Warrant Certificate, to
purchase _____ shares of the [Title of Warrant Securities] (the
"Warrant Securities") of Sovereign Bancorp, Inc. and represents
that he has tendered payment for such Warrant Securities in
Dollars [in cash or by certified check or official bank check or
by bank wire transfer, in each case] [by bank wire transfer] in
immediately available funds to the order of Sovereign Bancorp,
Inc., c/o [insert name and address of Warrant Agent], in the
amount of ________________ in accordance with the terms hereof.
The undersigned requests that said principal amount of Warrant
Securities be in fully registered form in the authorized
denominations, registered in such names and delivered all as
specified in accordance with the instructions set forth below.
If the number of Warrants exercised is less than all of the
Warrants evidenced hereby, the undersigned requests that a new
Warrant Certificate representing the remaining Warrants evidenced
hereby be issued and delivered to the undersigned unless
otherwise specified in the instructions below.
Dated: _______________________ Name:_________________________
______________________________ Address_______________________
(Insert Social Security or ______________________________
Other Identifying Number of
Holder)
Signature Guaranteed Signature_____________________
____________________ (Signature must
conform in all
respects to name of
holder as specified
on the face of this
Warrant Certificate
and must bear a
signature guarantee
by a bank, trust
company or member
broker of the New
York, Midwest or
Pacific Stock
Exchange)
The Warrants evidenced hereby may be exercised at the
following addresses:
By hand at ________________________________________
________________________________________
________________________________________
________________________________________
By mail at ________________________________________
________________________________________
________________________________________
________________________________________
[Instructions as to form and delivery of Warrant
Securities and, if applicable, Warrant Certificates evidencing
unexercised Warrants -- complete as appropriate.]
<PAGE>
Assignment
[Form of Assignment To Be Executed If Holder
Desires To Transfer Warrants Evidenced Hereby]
FOR VALUE RECEIVED _________________________________________
hereby sells, assigns and transfers unto
______________________________ ______________________________
(Please print name) (Please insert social security
or other identifying number)
______________________________
(Address)
______________________________
(City, including zip code)
the Warrants represented by the within Warrant Certificate and
does hereby irrevocably constitute and appoint
___________________ Attorney, to transfer said Warrant
Certificate on the books of the Warrant Agent with full power of
substitution in the premises.
Dated:
___________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate and must bear a
signature guarantee by a bank,
trust company or member broker of
the New York, Midwest or Pacific
Stock Exchange)
Signature Guaranteed
______________________________
Exhibit 4.13
________________________________________________________________
SOVEREIGN BANCORP, INC.
AND
________________________________________
________________________________________
Warrant Agent
____________________
COMMON STOCK WARRANT AGREEMENT
Dated as of _______________, 19____
____________________
________________________________________________________________
<PAGE>
TABLE OF CONTENTS*
Page
PARTIES
RECITALS
Section 1. Appointment of Warrant Agent 1
Section 2. Form of Warrant 1
Section 3. Countersignature and Registration 2
Section 4. Transfers and Exchanges 2
Section 5. Exercise of Warrants 3
Section 6. Payment of Taxes 4
Section 7. Mutilated or Missing Warrants 4
Section 8. Reservation of Shares, etc. 4
Section 9. Warrant Price; Adjustments 5
Section 10. Notice to Warrantholders 12
Section 11. Certain Covenants of the Company 12
Section 12. Disposition of Proceeds, etc. 13
Section 13. Merger or Consolidation or Change of Name of
Warrant Agent 13
Section 14. Duties of Warrant Agent 14
Section 15. Change of Warrant Agent 16
Section 16. Identity of Transfer Agent 16
Section 17. Notices 16
Section 18. Supplements and Amendments 17
Section 19. Successors 17
Section 20. Governing Law 17
Section 21. Benefits of This Agreement 17
Section 22. Counterparts 18
Section 23. Acceleration of Warrants by the Company 18
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
EXHIBIT A
(Forms of Warrant, Election to Purchase and
Assignment)
*/ This Table of Contents does not constitute a part of this
Agreement or have any bearing upon the interpretation of any
of its terms and provisions.
<PAGE>
COMMON STOCK WARRANT AGREEMENT dated as of ___________,
19__, between SOVEREIGN BANCORP, INC., a Pennsylvania corporation
(hereinafter called the "Company"), and ________________________
having a corporate trust office in __________________________, as
warrant agent (hereinafter called the "Warrant Agent").
WHEREAS, the Company proposes to issue [Class __]
Purchase Warrants entitling the holders thereof to purchase an
aggregate of ________ shares of Common Stock of the Company (no
par value) ("Shares") at an initial cash purchase price of
$________ per Share at any time [after __________________ and]
prior to 5:00 p.m. Wyomissing, Pennsylvania time on
_____________, 19__ (herein called the "expiration date") (unless
extended as provided in Section 9A hereof); and
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES, INSERT --]
WHEREAS, the Warrants will be offered in units, each of
which consists of _____ and rights to purchase ____ share(s) of
Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company, and the Warrant Agent is willing so to
act, in connection with the issuance, registration, transfer,
exchange and exercise of Warrants to be issued from time to time
by the Company,
NOW THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as
follows:
Section 1. Appointment of Warrant Agent. The Company
hereby appoints the Warrant Agent to act as agent for the Company
in accordance with the instructions hereinafter in this Agreement
set forth, and the Warrant Agent hereby accepts such appointment.
Section 2. Form of Warrant. The text of the Warrants
and the form of election to purchase Shares to be set forth on
the reverse thereof shall be substantially as set forth in
Exhibit A attached hereto. Each Warrant shall, subject to the
terms of this Warrant Agreement, entitle the registered holder
thereof to initially purchase the number of Shares specified
therein at an initial purchase price of $________ per Share;
provided, however, that the warrant exercise price and the number
of Shares issuable upon exercise of Warrants are subject to
adjustment upon the occurrence of certain events, all as
hereinafter provided. The Warrants shall be executed on behalf
of the Company by the manual or facsimile signature of the
present or any future Chairman of the Board, Chairman of the
Executive Committee of the Board, Vice Chairman of the Board,
Chief Executive Officer, President, Chief Operating Officer, Vice
Chairman, Chief Financial Officer, or Vice President of the
Company, under its seal, affixed or in facsimile, and by the
manual or facsimile signature of the present or any future
Secretary or Assistant Secretary of the Company.
The Company shall promptly notify the Warrant Agent
from time to time in writing of the number of Warrants to be
issued and furnish written instructions in connection therewith
signed by an executive officer of the Company; such notification
and instructions may, but need not be, in the form of a general
or continuing authorization to the Warrant Agent.
The Warrants shall be dated by the Warrant Agent as of
the date of each initial issuance, and as of the date of issuance
thereof upon any transfer or exchange thereof.
Section 3. Countersignature and Registration. The
Warrant Agent shall maintain books for the transfer and
registration of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants
in the names of the respective registered holders thereof. The
Warrants shall be countersigned by the Warrant Agent (or by any
successor to the Warrant Agent then acting as warrant agent under
this Agreement) and shall not be valid for any purpose unless so
countersigned. Such Warrants may be so countersigned, however,
by the Warrant Agent (or by its successor as warrant agent) and
be delivered by the Warrant Agent, notwithstanding that the
persons whose manual or facsimile signatures appear thereon as
proper officers of the Company shall have ceased to be such
officers at the time of such countersignature or delivery. Upon
issuance of any Warrant, the Company will present the same, or
cause the same to be presented, to the Warrant Agent for
countersignature of such Warrant.
Section 4. Transfers and Exchanges. The Warrant Agent
shall transfer from time to time, any outstanding Warrants upon
the books to be maintained by the Warrant Agent for that purpose,
upon the surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer. Upon any
such transfer, a new Warrant of like tenor shall be issued to the
transferee and the surrendered Warrant shall be cancelled by the
Warrant Agent. All such Warrants so cancelled shall be delivered
by the Warrant Agent to the Company from time to time. The
Warrants may be exchanged at the option of the holder thereof,
when surrendered at the office in ______________________________,
of the Warrant Agent, for another Warrant, or other Warrants of
different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Shares. The
Warrant Agent is hereby irrevocably authorized to countersign and
deliver, in accordance with the provisions of this Section and
Section 3 of this Agreement, such new Warrants required pursuant
to the provisions of this Section, and the Company, whenever
required by the Warrant Agent, will supply the Warrant Agent with
Warrants duly executed on behalf of the Company for such purpose.
[IF THE WARRANTS ARE ATTACHED TO OTHER SECURITIES, INSERT --
Notwithstanding the foregoing, until _____________,]
the Warrants shall not be transferable apart from the
_______________ to which they are attached, and any transfer of
the ______________ shall be deemed a transfer of the Warrants
attached thereto, and any attempt to transfer the Warrants apart
from the _____________ shall be void and of no effect. Each
Warrant shall contain a legend to the foregoing effect.]
Section 5. Exercise of Warrants. The registered
holder of each Warrant shall have the right, which may be
exercised as in such Warrant expressed, to purchase from the
Company (and the Company shall issue and sell to such registered
holder) the number of Shares specified in such Warrants, upon
surrender to the Company at the office in
_______________________________, of the Warrant Agent of such
Warrant, with the form of election to purchase on the reverse
thereof duly filled in and signed, and upon payment to the
Warrant Agent for the account of the Company of the warrant
exercise price, determined in accordance with the provisions of
Section 9 of this Agreement, for the number of Shares in respect
of which such Warrant is then exercised. Payment of such warrant
exercise price may be made in cash, or by certified check or bank
draft or postal or express money order, payable in United States
dollars, to the order of the Warrant Agent. No adjustment shall
be made for any dividends on any Shares issuable upon exercise of
any Warrant. Subject to Section 6, upon such surrender of
Warrants, and payment of the warrant exercise price as aforesaid,
the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the
registered holder of such Warrants and in such name or names as
such registered holder may designate, a certificate or
certificates for the number of full Shares so purchased upon the
exercise of such Warrants, together with cash, as provided in
Section 9 of this Agreement, in respect of any fraction of a
Share otherwise issuable upon such surrender. Such certificate
or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have
become a holder of record of such Shares as of the date of the
surrender of such Warrants and payment of the warrant exercise
price as aforesaid; provided, however, that if, at the date of
surrender of such Warrants and payment of such warrant exercise
price, the transfer books for the Shares purchasable upon the
exercise of such Warrants shall be closed, no such surrender of
such Warrants and no such payment of such warrant exercise price
shall be effective to constitute the person so designated to be
named herein as the holder of record of such Shares on such date,
but shall be effective to constitute such person as the holder of
record of such Shares for all purposes at the opening of business
on the next succeeding day on which the transfer books for the
Shares purchasable upon the exercise of such Warrants shall be
opened, and the certificates for the Shares in respect of which
such Warrants are then exercised shall be issuable as of the date
on which such books shall next be opened, and until such date the
Company shall be under no duty to deliver any certificate for
such Shares. The rights to purchase represented by the Warrants
shall be exercisable, at the election of the registered holders
thereof, either as an entirety or from time to time for part only
of the Shares specified therein and, in the event that any
Warrant is exercised in respect of less than all of the Shares
specified therein at any time prior to the date of expiration of
the Warrants, a new Warrant or Warrants of like tenor will be
issued for the remaining number of Shares specified in the
Warrant so surrendered, and the Warrant Agent is hereby
irrevocably authorized to countersign and to deliver the required
new Warrants pursuant to the provisions of this Section and of
Section 3 of this Agreement, and the Company, whenever required
by the Warrant Agent, will supply the Warrant Agent with Warrants
duly executed on behalf of the Company for such purpose.
Section 6. Payment of Taxes. The Company will pay any
documentary stamp taxes attributable to the initial issuance of
Shares issuable upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the
issue or delivery of any certificates for Shares in a name other
than that of the registered holder of Warrants in respect of
which such Shares are issued and the Company shall not be
required to issue and deliver the certificates for such Shares
unless and until the holder has paid to the Company the amount of
any tax which may be payable in respect of any transfer involved
in such issuance or shall establish to the satisfaction of the
Company that such tax has been paid.
Section 7. Mutilated or Missing Warrants. In case any
of the Warrants shall be mutilated, lost, stolen or destroyed,
the Company will issue and the Warrant Agent will countersign and
deliver in exchange and substitution for and upon cancellation of
the mutilated Warrant, or in lieu of and substitution for the
Warrant lost, stolen or destroyed, a new Warrant of like tenor
and representing the equivalent right or interest, but only upon
receipt of evidence satisfactory to the Company and the Warrant
Agent of such loss, theft or destruction of such Warrants and
indemnity, if requested, also satisfactory to them. Applicants
for such substitute Warrants shall also comply with such other
reasonable regulations and pay such other reasonable charges as
the Company or the Warrant Agent may prescribe. Any such new
Warrant shall constitute an original contractual obligation of
the Company whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
Section 8. Reservation of Shares, etc. Prior to the
issuance of any Warrants there shall have been reserved, and the
Company shall at all times through the expiration date keep
reserved, out of its authorized and unissued Common Stock, a
number of Shares sufficient to provide for the exercise of the
rights of purchase represented by the Warrants, and the Transfer
Agent for the Shares and every subsequent Transfer Agent for the
Shares issuable upon the exercise of any of the rights of
purchase aforesaid are hereby irrevocably authorized and directed
at all times to reserve such number of authorized and unissued
Shares as shall be requisite for such purpose. The Company will
keep a copy of this Agreement on file with the Transfer Agent for
the Shares issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is hereby
irrevocably authorized to requisition from time to time from such
Transfer Agent certificates required to honor outstanding
Warrants that have been exercised. The Company will supply such
Transfer Agent with duly executed certificates for such purpose
and will itself provide or otherwise make available any cash
which may be issuable as provided in Section 9 of this Agreement.
All Warrants surrendered in the exercise of the rights thereby
evidenced or surrendered for transfer, exchange or partial
exercise shall be cancelled by the Warrant Agent and shall
thereafter be delivered to the Company.
Section 9. Warrant Price; Adjustments.
A. The warrant price per share at which Shares
shall be purchasable upon exercise of Warrants (herein called the
"warrant exercise price") to and including the expiration date
(unless the expiration date is extended as provided below in this
Section 9A) shall be $________ per share, or, if adjusted as
provided in this Section, shall be such price as so adjusted.
The Warrants will not be exercisable prior to [the close of
business on the date of any initial issuance thereof]
[_______________________] and will expire at 5:00 p.m.
Wyomissing, Pennsylvania time on the expiration date; provided
that the Company reserves the right to, and may, in its sole
discretion, at any time and from time to time, at such time or
times as the Company so determines, extend the expiration date of
the Warrants for such periods of time as it chooses; further
provided that in no case may the expiration date of the Warrants
(as extended) be extended beyond five years from the expiration
date set forth above. Whenever the expiration date of the
Warrants is so extended, the Company shall at least 20 days prior
to the then expiration date cause to be mailed to the Warrant
Agent and the registered holders of the Warrants in accordance
with the provisions of Section 17 hereof a notice stating that
the expiration date has been extended and setting forth the new
expiration date.
B. The above provision is, however, subject to
the following:
(1) The warrant purchase price, the number
of Shares purchasable upon exercise of each Warrant and the
number of Warrants outstanding shall be subject to
adjustment as follows:
(a) In case the Company shall at any
time after the date of this Agreement (i) pay a
dividend, or make a distribution on, the Common Stock
which is payable in shares of its Common Stock,
(ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of securities
(including shares of Common Stock), or (iii) combine or
reclassify its outstanding shares of Common Stock into
a smaller number of shares (including shares of Common
Stock), the number of Shares purchasable upon exercise
of each Warrant immediately prior to the occurrence of
such event shall be adjusted so that the holder of each
Warrant shall be entitled to receive upon payment of
the warrant purchase price the aggregate number of
shares of the Company which, if such Warrant had been
exercised immediately prior to the occurrence of such
event, such holder would have owned or have been
entitled to receive immediately after the occurrence of
such event. An adjustment made pursuant to this
subparagraph (a) shall become effective immediately
after the record date in the case of a dividend and
shall become effective immediately after the effective
date in the case of a subdivision or combination. If,
as a result of an adjustment made pursuant to this
subparagraph (a), the holder of any Warrant thereafter
exercised shall become entitled to receive shares of
two or more classes of capital stock of the Company,
the Board of Directors of the Company (whose
determination shall be conclusive) shall determine the
allocation between or among shares of such classes of
capital stock.
In the event that at any time, as a
result of an adjustment made pursuant to this
subparagraph (a), the holder of any Warrant thereafter
exercised shall become entitled to receive any shares
or other securities of the Company other than shares of
Common Stock, thereafter the number of such other
shares so received upon exercise of any Warrant shall
be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock
contained in this paragraph, and other provisions of
this paragraph 9B(1) with respect to the shares of
Common Stock shall apply on like terms to any such
other shares or other securities.
(b) In case the Company shall fix a
record date for the issuance of rights or warrants to
all holders of its Common Stock entitling them (for a
period expiring within 45 days after such record date)
to subscribe for or purchase Common Stock at a price
per share less than the current market price per share
of Common Stock (as defined in subparagraph (e) below)
at such record date, the warrant purchase price shall
be determined by multiplying the warrant purchase price
in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of
Shares of Common Stock outstanding on such record date
plus the number of Shares of Common Stock which the
aggregate offering price of the total number of Shares
so offered would purchase at such current market price,
and the denominator of which shall be the number of
Shares of Common Stock outstanding on such record date
plus the number of additional Shares of Common Stock
offered for subscription or purchase. Such adjustment
shall be made successively whenever such a record date
is fixed, and shall become effective immediately after
such record date. In determining whether any rights or
warrants entitle the holders to subscribe for or
purchase shares of common stock at less than such
current market price, and in determining the aggregate
offering price of such shares, there shall be taken
into account any consideration received by the Company
for such rights or warrants, the value of such
consideration, if other than cash, to be determined by
the Board of Directors of the Company. Common stock
owned by or held for the account of the Company or any
majority owned subsidiary shall not be deemed
outstanding for the purpose of any adjustment required
under this subparagraph (b).
(c) In case the Company shall fix a
record date for making a distribution to all holders of
its Common Stock of evidences of its indebtedness or
assets (excluding regular quarterly or other periodic
or recurring cash dividends or distributions and cash
dividends or distributions paid from retained earnings
or referred to in subparagraph (a) above) or rights or
warrants to subscribe or warrants to purchase
(excluding those referred to in subparagraph (b)
above), then in each such case the warrant purchase
price shall be determined by multiplying the warrant
purchase price in effect immediately prior to such
record date by a fraction (x) the numerator of which
shall be such current market price (as defined in
subparagraph (e) below) per Share of Common Stock on
such record date, less the then fair market value (as
determined in good faith by the Board of Directors,
whose determination shall be conclusive) of the portion
of the assets or evidences of indebtedness so
distributed or of such subscription rights or warrants
applicable to one share of the Common Stock and (y) the
denominator of which shall be the current market price
per share of the Common Stock on such record date.
Such adjustment shall be made successively whenever
such a record date is fixed and shall become effective
immediately after such record date. Notwithstanding
the foregoing, in the event that the Company shall
distribute any rights or warrants to acquire capital
stock ("Rights") pursuant to this subparagraph (c), the
distribution of separate certificates representing such
Rights subsequent to their initial distribution
(whether or not such distribution shall have occurred
prior to the date of the issuance of such Warrants)
shall be deemed to be the distribution of such Rights
for purposes of this subparagraph (c), provided that
the Company may, in lieu of making any adjustment
pursuant to this subparagraph (c) upon a distribution
of separate certificates representing such Rights, make
proper provision so that each holder of such Warrants
who exercises such Warrants (or any portion thereof)
(A) before the record date for such distribution of
separate certificates shall be entitled to receive upon
such conversion shares of Common Stock issued with
Rights and (B) after such record date and prior to the
expiration, redemption, or termination of such Rights
shall be entitled to receive upon such exercise, in
addition to the shares of Common Stock issuable upon
such exercise, the same number of such Rights as would
a holder of the number of shares of Common Stock that
such Warrants so exercised would have entitled the
holder thereof to purchase in accordance with the terms
and provisions of and applicable to the Rights if such
Warrants were exercised immediately prior to the record
date for such distribution. Common Stock owned by or
held for the account of the Company or any majority
owned subsidiary shall not be deemed outstanding for
the purpose of any adjustment required under this
subparagraph (c).
(d) After each adjustment of the number
of shares purchasable upon exercise of each Warrant
pursuant to subparagraph 9B(1)(a), the warrant exercise
price shall be adjusted by multiplying such warrant
exercise price immediately prior to such adjustment by
a fraction of which the numerator shall be the number
of Shares purchasable upon exercise of each Warrant
immediately prior to such adjustment, and the
denominator of which shall be the number of Shares so
purchasable immediately thereafter. After each
adjustment of the warrant exercise price pursuant to
subparagraph 9B(1)(b) or (c), the total number of
Shares or fractional part thereof purchasable upon the
exercise of each Warrant shall be proportionately
adjusted to such number of shares or fractional parts
thereof as the aggregate warrant exercise price of the
number of shares or fractional part thereof purchasable
immediately prior to such adjustment will buy at the
adjusted warrant exercise price.
(e) For the purpose of any computation
under subparagraphs 9B(1)(b) and (c) above, the current
market price per Share of Common Stock at any date
shall be deemed to be the average of the daily closing
prices for the 30 consecutive business days commencing
45 business days before the day in question. The
closing price for each day shall be (i) if the Common
Stock is listed or admitted for trading on any national
securities exchange, the last sale price (regular way),
or the average of the closing bid and ask prices, if no
sale occurred, of Common Stock on the principal
securities exchange on which the Common Stock is
listed, (ii) if not listed as described in (i), the
mean between the closing high bid and low asked
quotations of Common Stock in the National Association
of Securities Dealers, Inc., Automated Quotation
System, or any similar system for automated
dissemination of quotations of securities prices then
in common use, if so quoted, or (iii) if not quoted as
described in clause (ii), the mean between the high bid
and low asked quotations for Common Stock as reported
by the National Quotation Bureau Incorporated if at
least two securities dealers have inserted both bid and
asked quotations for Common Stock on at least 5 of the
10 preceding days. If none of the conditions set forth
above is met, the Closing Price of Common Stock on any
day or the average of such Closing Prices for any
period shall be the fair market value of Common Stock
as determined by a member firm of the New York Stock
Exchange, Inc. selected by the Company.
(f) No adjustment in the warrant
exercise price shall be required unless and until the
earlier of the following shall have occurred: (x) such
adjustment would require an increase or decrease of at
least 1% in the warrant exercise price or (y) a period
of 3 years shall have elapsed from the date of the
occurrence of any event requiring any such adjustment
pursuant to subparagraphs 9B(1)(a), (b) or (c) above.
All adjustments shall be made to the nearest one
hundredth of a Share and the nearest cent, and any
adjustments which by reason of this subparagraph (f)
are not required to be made shall be carried forward
cumulatively and taken into account in any subsequent
adjustment which (including such carry-forward) is
required to be made under this subparagraph (f).
(g) In any case in which this
subparagraph 9B(1) shall require that an adjustment be
made retroactively immediately following a record date,
the Company may elect to defer (but only until five
business days following the mailing of the notice
described in subparagraph 9B(5) below) issuing to the
holder of any Warrant exercised after such record date
the Shares of the Company issuable upon such exercise
over and above the Shares issuable upon such exercise
only on the basis of the warrant exercise price prior
to adjustment.
(h) The Company may, at its option, at
any time until the expiration date, reduce the then
current warrant exercise price to any amount deemed
appropriate by the Board of Directors of the Company
for any period not exceeding twenty (20) consecutive
days (as evidenced in a resolution adopted by such
Board of Directors), but only upon giving the notices
required by subparagraph 9(B)(5) twenty (20) days prior
to taking such action.
(i) Except as herein otherwise
expressly provided, no adjustment in the warrant
exercise price shall be made by reason of the issuance
of Shares, or securities convertible into or
exchangeable for Shares, or securities carrying the
right to purchase any of the foregoing or for any other
reason whatsoever.
(j) Irrespective of any of the
adjustments in the warrant exercise price or the number
of Shares, Warrant Certificates theretofore issued may
continue to express the same prices and number of
shares as are stated in a similar Warrant Certificate
issuable initially, or at some subsequent time,
pursuant to this Agreement and such number of Shares
specified therein shall be deemed to have been so
adjusted.
(2) No fractional Shares of Common Stock
shall be issued upon the exercise of Warrants. If more than
one Warrant shall be exercised at one time by the same
holder, the number of full Shares which shall be issuable
upon such exercise shall be computed on the basis of the
aggregate number of Shares purchased pursuant to the
Warrants so exercised. Instead of any fractional Share of
Common Stock which would otherwise be issuable upon exercise
of any Warrant, the Company shall pay a cash adjustment in
respect of such fraction in an amount equal to the same
fraction of the last sales price (or bid price if there were
no sales) per Share of Common Stock in either case as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange on the business day
which next precedes the day of exercise or, if the Common
Stock is not then listed or admitted to trading on the New
York Stock Exchange, an amount equal to the same fraction of
the market price per share of Common Stock (as determined in
a manner described by the Board of Directors of the
Corporation) at the close of business on the business day
which next precedes the day of exercise.
(3) In case any of the following shall occur
while any Warrants are outstanding: (a) any
reclassification or change of the outstanding Shares of
Common Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value);
or (b) any consolidation or merger to which the Company is a
party (other than a consolidation or a merger in which the
Company is the continuing corporation and which does not
result in any reclassification of, or change in, the
outstanding shares of Common Stock issuable upon exercise of
the Warrants); or (c) any sale or conveyance to another
corporation of the property of the Company as an entirety or
substantially as an entirety; then the Company, or such
successor or purchasing corporation, as the case may be,
shall make appropriate provision by amendment of this
Agreement or otherwise so that the holders of the Warrants
then outstanding shall have the right at any time
thereafter, upon exercise of such Warrants, to purchase the
kind and amount of shares of stock and other securities and
property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as would be
received by a holder of the number of shares of Common Stock
issuable upon exercise of such Warrant immediately prior to
such reclassification, change, consolidation, merger, sale
or conveyance. Such provision shall provide for adjustments
which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 9. The above
provisions of this subparagraph 9B(3) shall similarly apply
to successive reclassifications, changes, consolidations,
mergers, sales or conveyances.
(4) Before taking any action which would
cause an adjustment decreasing the warrant exercise price so
that the warrant exercise price is below the then par value
of the shares of Common Stock, the Company will take any
corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Shares of Common
Stock at the warrant exercise price as so adjusted.
(5) Whenever the warrant exercise price then
in effect is adjusted as herein provided, the Company shall
mail to each holder of the Warrants at such holder's address
as it shall appear on the books of the Company a statement
setting forth the adjusted warrant exercise price, then and
thereafter effective under the provisions hereof together
with the facts, in reasonable detail, upon which such
adjustment is based.
(6) In case (i) the Company shall declare a
dividend (or any other distribution) on its Common Stock
payable otherwise than in cash out of its current or
retained earnings, or (ii) the Company shall authorize the
granting to the holders of its Common Stock of rights to
subscribe for or purchase any shares of capital stock of any
class or of any other rights, or (iii) there is to be any
reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding shares
of Common Stock), or any consolidation or merger to which
the Company is a party and for which approval of any
stockholders of the Company is required, or (iv) any
distribution is to be made on or in respect of the Common
Stock in connection with the dissolution, liquidation or
winding up of the Company, then the Company shall mail to
each holder of Warrants at such holder's address as it shall
appear on the books of the Company, at least twenty days (or
ten days in any case specified in clause (i) or (ii) above)
prior to the applicable record date hereinafter specified, a
notice stating (x) the record date for such dividend,
distribution or rights, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution or rights are
to be determined, or (y) the date on which such
reclassification, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective,
and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation,
merger, dissolution, liquidation or winding up. No failure
to mail such notice nor any defect therein or in the mailing
thereof shall affect any such transaction or any adjustment
in the warrant exercise price required by this Section 9.
Section 10. Notice to Warrantholders. Nothing
contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the holders thereof the right to
vote or to consent or to receive notice as shareholders in
respect of the meetings of shareholders or the election of
directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
Section 11. Certain Covenants of the Company.
A. So long as any unexpired Warrants remain
outstanding and if required in order to comply with the
Securities Act of 1933, as amended (the "Act"), the Company
covenants and agrees that it will file such post-effective
amendments to the registration statement filed pursuant to the
Act with respect to the Warrants (File No. 33-______) (or such
other registration statements or post-effective amendments or
supplements) as may be necessary to permit the Company to deliver
to each person exercising a Warrant a prospectus meeting the
requirements of Section 10(a)(3) of the Act and otherwise
complying therewith, and will deliver such a prospectus to each
such person. The Company further covenants and agrees that it
will obtain and keep effective all permits, consents and
approvals of governmental agencies and authorities, and will use
its best efforts to take all action which may be necessary to
qualify the Shares for sale under the securities laws of such of
the States of the United States of America, as may be necessary
to permit the free exercise of the Warrants, and the issuance,
sale, transfer and delivery of the Shares issued upon exercise of
the Warrants, and to maintain such qualifications during the
entire period in which the Warrants are exercisable.
B. The Company covenants and agrees that it
shall take all such action as may be necessary to ensure that all
Shares will at the time of delivery of certificates for such
Shares (subject to payment of the warrant exercise price) be duly
and validly authorized and issued and fully paid and
nonassessable Shares, free from any preemptive rights and taxes,
liens, charges and security interests created by or imposed upon
the Company.
C. The Company covenants and agrees that it will
take all action which may be necessary to cause the Shares to be
duly listed on the New York Stock Exchange or the National
Association of Securities Dealers Automated Quotations System
("NASDAQ") or any securities exchange on which the other shares
of Common Stock of the Company are listed at the dates of
exercise of the Warrants.
Section 12. Disposition of Proceeds, etc.
A. The Warrant Agent shall account promptly to
the Company with respect to Warrants exercised and concurrently
pay to the Company all moneys received by the Warrant Agent for
the purchase of Shares through the exercise of such Warrants.
B. The Warrant Agent shall keep copies of this
Agreement available for inspection by holders of Warrants during
normal business hours at its principal office in
_____________________.
Section 13. Merger or Consolidation or Change of Name
of Warrant Agent. Any corporation into which the Warrant Agent
may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which
the Warrant Agent shall be a party, or any corporation succeeding
to the corporate trust business of the Warrant Agent, shall be
the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part
of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Warrant Agent
under the provisions of Section 16 of this Agreement. In case at
the time such successor to the Warrant Agent shall succeed to the
agency created by this Agreement, any of the Warrants shall have
been countersigned but not delivered, any such successor to the
Warrant Agent may adopt the countersignature of the original
Warrant Agent and deliver such Warrants so countersigned; and in
case at that time any of the Warrants shall not have been
countersigned, any successor to the Warrant Agent may countersign
such Warrants either in the name of the predecessor Warrant Agent
or in the name of the successor Warrant Agent; and in all such
cases such Warrant shall have the full force provided in the
Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall
be changed and at such time any of the Warrants shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrants so
countersigned; and in case at that time any of the Warrants shall
not have been countersigned, the Warrant Agent may countersign
such Warrants either in its prior name or in its changed name;
and in all such cases such Warrants shall have the full force
provided in the Warrants and in this Agreement.
Section 14. Duties of Warrant Agent. The Warrant
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
A. The statements contained herein and in the
Warrants shall be taken as statements of the Company, and the
Warrant Agent assumes no responsibility for the correctness of
any of the same except such as describe the Warrant Agent or
action taken or to be taken by it. The Warrant Agent assumes no
responsibility with respect to the distribution of the Warrants
except as herein otherwise provided.
B. The Warrant Agent shall not be responsible
for any failure of the Company to comply with any of the
covenants contained in this Agreement or in the Warrants to be
complied with by the Company.
C. The Warrant Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys,
agents or employees, and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, agents or employees or for any
loss to the Company resulting from such neglect or misconduct,
provided reasonable care shall have been exercised in the
selection and continued employment thereof.
D. The Warrant Agent may consult at any time
with counsel satisfactory to it (who may be counsel for the
Company), and the Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant in
respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of
such counsel.
E. The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant for
any action taken in reliance on any notice, resolution, waiver,
consent, order, certificate, or other paper, document or
instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
F. The Company agrees to pay to the Warrant
Agent reasonable compensation for all services rendered by the
Warrant Agent in the execution of this Agreement, to reimburse
the Warrant Agent for all expenses, taxes and governmental
charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify
the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for
anything done or omitted by the Warrant Agent in the execution of
this Agreement except as a result of the Warrant Agent's gross
negligence or bad faith.
G. The Warrant Agent shall be under no
obligation to institute any action, suit or legal proceeding or
to take any other action likely to involve expense unless the
Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity
for any costs and expenses which may be incurred, but this
provision shall not affect the power of the Warrant Agent to take
such action as the Warrant Agent may consider proper, whether
with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of
the Warrants or the production thereof at any trial or other
proceeding relating thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in
its name as Warrant Agent, and any recovery of judgment shall be
for the ratable benefit of the registered holders of the
Warrants, as their respective rights or interests may appear.
H. The Warrant Agent and any stockholder,
director, officer or employee of the Warrant Agent may buy, sell
or deal in any of the Warrants or other securities of the Company
or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to or
otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company
or for any other legal entity.
I. The Warrant Agent shall act hereunder solely
as agent and not in a ministerial capacity, and its duties shall
be determined solely by the provisions hereof. The Warrant Agent
shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own gross
negligence or bad faith.
Section 15. Change of Warrant Agent. The Warrant
Agent may resign and be discharged from its duties under this
Agreement by giving to the Company notice in writing, and to the
holders of the Warrants notice by publication, of such
resignation, specifying a date when such resignation shall take
effect, which notice shall be published at the expense of the
Company at least once a week for two consecutive weeks in a
newspaper of general circulation in the Borough of Wyomissing,
Pennsylvania, and the City of New York, New York, prior to the
date so specified. The Warrant Agent may be removed by the
Company by like notice from the Company to the Warrant Agent and
the holders of Warrants at the expense of the Company. If the
Warrant Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor
to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent or by
the registered holder of a Warrant (who shall, with such notice,
submit his Warrant for inspection by the Company), then at the
expense of the Company, the Warrant Agent or the registered
holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant
Agent. Any successor Warrant Agent, whether appointed by the
Company or by such a court, shall be a bank or trust company, in
good standing, incorporated under the laws of any State or of the
United States of America, having at the time of its appointment
as Warrant Agent a combined capital and surplus of at least
$100,000,000. After appointment the successor Warrant Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant
Agent without further act or deed; but the former Warrant Agent
shall deliver and transfer to the successor Warrant Agent any
property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Failure to file or publish any notice provided
for in this Section, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of
the Warrant Agent or the appointment of the successor Warrant
Agent, as the case may be.
Section 16. Identity of Transfer Agent. Forthwith
upon the appointment of any Transfer Agent for the Shares or of
any subsequent Transfer Agent for Shares issuable upon the
exercise of the rights of purchase represented by the Warrants,
the Company will file with the Warrant Agent a statement setting
forth the name and address of such Transfer Agent.
Section 17. Notices. Any notice pursuant to this
Agreement to be given or made by the Warrant Agent or by the
registered holder of any Warrant to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by
the Company with the Warrant Agent) as follows:
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Attention: Corporate Secretary
Any notice pursuant to this Agreement to be given or made by the
Company or by the registered holder of any Warrant to or on the
Warrant Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the
Company) as follows:
____________________________
____________________________
____________________________
____________________________
Any notice pursuant to this Agreement to be given or
made by the Company or the Warrant Agent to the registered holder
of any Warrant shall be sufficiently given or made (unless
otherwise specifically provided for herein) if sent by first-
class mail, postage prepaid, addressed to said registered holder
at his address appearing on the Warrant register.
Section 18. Supplements and Amendments. The Company
and the Warrant Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Warrants in
order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and
which will not materially adversely affect the interest of the
registered holders of the Warrants.
Section 19. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 20. Governing Law. This Agreement and each
Warrant issued hereunder shall be deemed to be a contract made
under the laws of the Commonwealth of Pennsylvania and for all
purposes shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania, without giving effect to any
principles of conflict of laws.
Section 21. Benefits of This Agreement. Nothing in
this Agreement shall be construed to give to any person or entity
other than the Company and the Warrant Agent and the holders of
Warrants any legal or equitable right, remedy or claim under this
Agreement, but this Agreement shall be for the sole and exclusive
benefit of the Company and the Warrant Agent and the holders of
Warrants.
Section 22. Counterparts. This Agreement may be
executed in any number of counterparts, and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
[IF THE WARRANTS ARE SUBJECT TO ACCELERATION BY THE COMPANY,
INSERT --
Section 23. Acceleration of Warrants by the Company.
A. At any time on or after ______________, the
Company shall have the right to accelerate any or all Warrants at
any time by causing them to expire at the Close of Business on
the day next preceding a specified date (the "Acceleration
Date"), if the Market Price (as hereinafter defined) of the
Common Stock equals or exceeds _______________ percent (___%) of
the then effective warrant exercise price, adjusted as if no
changes in such warrant exercise price had been made pursuant to
subsection 9B, on any twenty (20) Trading Days (as hereinafter
defined) within a period of thirty (30) consecutive Trading Days
ending no more than five (5) Trading Days prior to the date on
which the Company gives notice to the Warrant Agent of its
election to accelerate the Warrants.
B. "Market Price" for each Trading Day shall be
the last reported closing price regular way (or, if no such price
is reported, the average of the reported closing bid and asked
prices regular way) reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange, or if the
Common Stock is not listed or admitted to trading on such
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which
the Common Stock is listed or admitted to trading, or if not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ, or such other system then in use,
or if on any such date the Shares of Common Stock are not quoted
by any such organization, the average of the closing bid and
asked prices as furnished by any New York Stock Exchange firm
selected from time to time by the Company for the purpose.
"Trading Day" shall be each Monday through Friday, other than any
day on which securities are not traded in the system or on the
exchange that is the principal market for the Common Stock, as
determined by the Board of Directors of the Company.
C. In the event of an acceleration of less than
all of the Warrants, the Warrant Agent shall select the Warrants
to be accelerated by lot, pro rata or in such other manner as it
deems, in its discretion, to be fair and appropriate.
D. Notice of an acceleration specifying the
Acceleration Date, shall be sent by mailing first class, postage
prepaid, to each registered holder of a Warrant Certificate
representing a Warrant accelerated as such holder's address
appearing on the Warrant register not more than sixty (60) days
nor less than thirty (30) days before the Acceleration Date.
Such notice of an acceleration also shall be given no more than
twenty (20) days, and no less than ten (10) days, prior to the
mailing of notice to registered holders of Warrants pursuant to
this Section, by publication at least once in a newspaper of
general circulation in the Borough of Wyomissing, Pennsylvania,
and the City of New York, New York.
E. Any Warrant accelerated may be exercised
until 5:00 P.M. Wyomissing, Pennsylvania time on the business day
next preceding the Acceleration Date. The warrant exercise price
shall be payable as provided in Section 5.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first
above written.
SOVEREIGN BANCORP, INC.
By________________________________
Attest:___________________________
_________________________
_________________________
Warrant Agent
By________________________________
Attest:___________________________
<PAGE>
EXHIBIT A
[Form of Warrant]
Unless extended, Void After 5:00 P.M.,
Wyomissing, Pennsylvania time, ____ (The expiration date;
see page 1 of Warrant Agreement) ____, 19__
[IF THE WARRANTS ARE ATTACHED TO OTHER SECURITIES, INSERT THE
FOLLOWING -- [UNTIL ______________,] THE WARRANTS REPRESENTED BY
THIS CERTIFICATE SHALL NOT BE TRANSFERRABLE APART FROM THE
_____________________ TO WHICH THEY ARE ATTACHED, ANY TRANSFER OF
THE ___________________ SHALL BE DEEMED A TRANSFER OF THE
WARRANTS ATTACHED THERETO, AND ANY ATTEMPT OF TRANSFER THE
WARRANTS APART FROM THE ________________ SHALL BE VOID AND OF NO
EFFECT.]
No. WA Warrant to Purchase ______________
Shares of Common Stock
CLASS __ WARRANT
SOVEREIGN BANCORP, INC.
FOR VALUE RECEIVED, Sovereign Bancorp, Inc. (the
"Company"), upon the surrender [after _____________] and prior to
5:00 P.M., Wyomissing, Pennsylvania Time, ____ (the expiration
date; see page 1 of Warrant Agreement) ____, 19__ (unless
extended) of this Warrant for exercise, with the exercise form on
the reverse side hereof duly executed, at the office of
____________, will sell and deliver or cause to be sold and
delivered to _________________________ or assigns (the "Warrant
Holder") a certificate or certificates for the number of whole
shares purchasable, as indicated above, of fully paid and non-
assessable shares of Common Stock (no par value) of the Company
(the "Shares"), for which the Warrant is exercised, at a price of
$___________ per Share (the "Warrant Price"), subject to all the
terms, provisions and conditions of a Common Stock Warrant
Agreement dated as of _________________, 19__ (the "Warrant
Agreement"), executed by the Company and _____________
______________________________________________ (the "Warrant
Agent"), which Warrant Agreement is hereby incorporated herein by
reference and made a part hereof.
1. The Warrant Price shall be payable in cash,
certified check, bank draft or postal or express money order,
payable in United States dollars, to the order of the Warrant
Agent. In certain events the Warrant Price and the number of
Shares deliverable on exercise of this Warrant are subject to
adjustments, as provided in the Warrant Agreement. No
certificates for a fractional Share will be issued. As to any
fraction of a Share which would otherwise be purchasable on the
exercise of a Warrant, the Company shall pay the cash value
thereof determined as provided in the Warrant Agreement.
2. This Warrant is issued in accordance with the
Warrant Agreement in which the rights of the Warrant Holders and
the terms, provisions and conditions upon which this Warrant has
been executed and delivered and may be exercised are more fully
set forth. Every Warrant Holder, by acceptance hereof, assents
to all the terms, provisions and conditions of the Warrant
Agreement. A counterpart of the Warrant Agreement is on file at
the office of the Company in Wyomissing, Pennsylvania, and at the
office of the Warrant Agent in ______________________________.
3. In the event this Warrant shall not be exercised
on or before _____ (the expiration date; see page 1 of Warrant
Agreement) ____, 19__, unless said date is extended as provided
for in Section 9A of the Warrant Agreement, this Warrant shall
become void and all rights hereunder shall cease.
Reference is made to the further provisions of this
Warrant set forth on the reverse hereof. Such further provisions
shall for all purposes have the same effect as though fully set
forth at this place.
This Warrant shall not be valid for any purpose until
it shall have been countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
to be executed in its name and on its behalf by the facsimile
signatures of its duly authorized officers and a facsimile of its
seal.
Dated: _____________, 19__ SOVEREIGN BANCORP, INC.
By________________________________
Attest:___________________________
Countersigned:
_________________________
_________________________
Warrant Agent
By_______________________
Authorized Signature
[REVERSE OF WARRANT]
4. Subject to the provisions of paragraph 3 contained
on the face of this Warrant, (a) this Warrant, with or without
other Warrants, upon surrender at the office of the Warrant
Agent, may be exchanged for another Warrant or Warrants of like
tenor in denominations entitling the Warrant Holder to purchase a
like aggregate number of Shares, but only to the extent provided
in the Warrant Agreement, or (b) this Warrant may be transferred
at the office of the Warrant Agent by the Warrant Holder or his
assigns, in person or by attorney duly authorized in writing, but
only in the manner provided in the Warrant Agreement and upon
surrender of this Warrant. If this Warrant shall be exercised in
part, the Warrant Holder shall be entitled to receive, upon
surrender hereof, another Warrant or Warrants of like tenor for
the number of whole Shares not purchased upon such exercise.
5. No Warrant Holder shall be entitled to vote or
receive dividends or be deemed the holder of Shares of the
Company for any purpose, nor shall anything contained in the
Warrant Agreement or herein be construed to confer upon the
Warrant Holder, as such, any of the rights of a Shareholder of
the Company or any right to vote for the election of directors of
the Company, or upon any matter submitted to Shareholders at any
meeting thereof, or to give or withhold consent to any action
(whether upon any recapitalization, issue of securities,
reclassification of securities, consolidation, merger, conveyance
or otherwise) or to receive notice of meetings or other action
affecting Shareholders (except for notices as provided for in the
Warrant Agreement), or to receive dividends or subscription
rights or otherwise, until this Warrant shall have been exercised
and the Shares purchasable on the exercise thereof shall have
become deliverable as provided in the Warrant Agreement.
6. Every holder of a Warrant, by accepting this
Warrant, consents and agrees with the Company, the Warrant Agent
and with every subsequent holder of this Warrant that until this
Warrant is transferred on the books of the Warrant Agent, the
Company and the Warrant Agent may treat the registered holder
hereof as the absolute owner hereof for all purposes
notwithstanding any notice to the contrary.
7. The Company represents and warrants that the
Shares to be issued by it as provided in the Warrant Agreement
have been duly authorized and, when so issued in accordance with
the Warrant Agreement, will be validly issued, fully-paid and
nonassessable. The Company represents and warrants that it has
authority to execute and deliver the Warrant Agreement and the
Warrants thereunder, but the Warrant Agent makes no
representation with respect thereto, or with respect to the
validity or sufficiency of the Warrants, the Warrant Agreement or
the Shares.
<PAGE>
FORM OF EXERCISE
(Form of exercise to be executed by the Warrant Holder
at the time of exercise)
To__________________
_____________________ Warrant
Agent:
The undersigned, holder of the within Warrant,
(1) exercises his right to purchase ______ of the Shares of
Common Stock (no par value) of Sovereign Bancorp, Inc., which the
undersigned is entitled to purchase under the terms of the within
Warrant, and (2) makes payment in full for the number of Shares
of Common Stock so purchased by payment of $____________ in cash.
Please issue the certificate for Shares of Common Stock
(and any new Warrants in the case of a partial exercise) as
follows:
________________________________________________________________
Print or Type Name
________________________________________________________________
Social Security or other Identifying Number
________________________________________________________________
Street Address
________________________________________________________________
City State Zip Code
and deliver it (together with any new Warrants in the case of a
partial exercise) to the above address unless a different address
is indicated below.
Dated: _____________
__________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
To be used only for special instructions for delivery.
Deliver to:
________________________________________________________________
Print or Type Name
________________________________________________________________
Street Address
________________________________________________________________
City State Zip Code
<PAGE>
ASSIGNMENT
(Form of assignment to be executed if
Warrant Holder desires to transfer Warrant)
FOR VALUE RECEIVED, ______________________ hereby
sells, assigns and transfers unto ___________________________
________________________________________________________________
Print or Type Name
________________________________________________________________
Street Address
________________________________________________________________
City State Zip Code
the right represented by the within Warrant to purchase ______
Shares of Common Stock (no par value) of Sovereign Bancorp, Inc.
to which the within Warrant relates and appoints _____________
attorney to transfer such right on the books of the Warrant Agent
with full power of substitution in the premises.
Dated: __________________
__________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
Signature Guaranteed
_________________________
Exhibit 12.1
SOVEREIGN BANCORP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three Months
Ended Year Ended December 31,
March 31, 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Interest on Deposits $ 51,700 $210,267 $121,812 $108,070 $ 96,607 $106,243
Interest on Borrowings 37,295 108,538 76,929 45,248 21,978 19,083
________ ________ ________ ________ _______ ________
Total Fixed Charges 88,995 318,805 198,741 153,318 118,585 125,326
Preferred Stock Dividends(1) 4,112 7,561 0 0 0 0
________ ________ ________ ________ _______ ________
Total Fixed Charges and
Preferred Stock
Dividends 93,107 326,366 198,741 153,318 118,585 125,326
Income before Taxes 25,310 85,947 74,865 58,612 34,695 21,516
Total Fixed Charges 88,995 318,805 198,741 153,318 118,585 125,326
________ ________ ________ ________ _______ ________
Total Earnings(2) $114,305 $404,752 $273,606 $211,930 $153,280 $146,842
Earnings/Fixed Charges:
Including Interest on
Deposits 1.28 1.27 1.38 1.38 1.29 1.17
Excluding Interest on
Deposits 1.68 1.79 1.97 2.30 2.58 2.13
Earnings/(Fixed Charges and
Preferred Stock Dividends):
Including Interest on
Deposits 1.23 1.24 1.38 1.38 1.29 1.17
Excluding Interest on
Deposits 1.51 1.68 1.97 2.30 2.58 2.13
________________
<FN>
(1) Preferred stock dividends have been grossed-up to reflect the pre-tax
amount of earnings required to fund the obligation.
(2) Earnings have been calculated in accordance with the requirements of
Item 503(d)(3) of Regulation S-K.
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as
Trustee
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section
305(b)(2) _______________
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer
Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Daniel G. Donovan, Harris Trust and Savings Bank,
111 West Monroe Street, Chicago, Illinois, 60603
312-461-2908
(Name, address and telephone number for agent for service)
SOVEREIGN BANCORP, INC.
(Name of Obligor)
Pennsylvania 23-2453088
(State of Incorporation) (I.R.S. Employer
Identification No.)
1130 Berkshire Boulevard,
Wyomissing, Pennsylvania 19610
(Address of principal executive offices)
Subordinated Debt Securities
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as
to the Trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Commissioner of Banks and Trust Companies, State
of Illinois, Springfield, Illinois; Chicago
Clearing House Association, 164 West Jackson
Boulevard, Chicago, Illinois; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board
of Governors of the Federal Reserve
System,Washington, D.C.
(b) Whether it is authorized to exercise corporate
trust powers.
Harris Trust and Savings Bank is authorized to
exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate
of the Trustee, describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as
now in effect which includes the authority of the
trustee to commence business and to exercise corporate
trust powers.
A copy of the Certificate of Merger dated April 1, 1972
between Harris Trust and Savings Bank, HTS Bank and
Harris Bankcorp, Inc. which constitutes the articles of
association of the Trustee as now in effect and
includes the authority of the Trustee to commence
business and to exercise corporate trust powers was
filed in connection with the Registration Statement of
Louisville Gas and Electric Company, File No. 2-44295,
and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed
in connection with the Registration Statement of C-Cube
Microsystems, Inc., File No. 33-97166, and is
incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b)
of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
(included as Exhibit B on page 3 of this statement)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the Trustee, HARRIS TRUST AND SAVINGS BANK, a corporation
organized and existing under the laws of the State of Illinois,
has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the
City of Chicago, and State of Illinois, on the 10th day of July,
1996.
HARRIS TRUST AND SAVINGS BANK
By: /s/D.G. Donovan
-------------------------------
D. G. Donovan
Assistant Vice President
EXHIBIT A
The consents of the Trustee required by Section 321(b) of
the Act.
Harris Trust and Savings Bank, as the Trustee herein named,
hereby consents that reports of examinations of said trustee by
Federal and State authorities may be furnished by such
authorities to the Securities and Exchange Commission upon
request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/D.G. Donovan
-------------------------------
D.G. Donovan
Assistant Vice President
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of
condition of Harris Trust and Savings Bank as of March 31, 1996,
as published in accordance with a call made by the State Banking
Authority and by the Federal Reserve Bank of the Seventh Reserve
District.
HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at
the close of business on March 31, 1996, a state banking
institution organized and operating under the banking laws of
this State and a member of the Federal Reserve System. Published
in accordance with a call made by the Commissioner of Banks and
Trust Companies of the State of Illinois and by the Federal
Reserve Bank of this District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
OF DOLLARS
ASSETS
<S> <C>
Cash and balances due from depository
institutions:
Non-interest bearing balances and
currency and coin . . . . . . . . $ 971,800
Interest bearing balances . . . . . 508,198
Securities:
a. Held-to-maturity securities . . . 0
b. Available-for-sale securities . . 2,925,091
Federal funds sold and securities
purchased under agreements to resell
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds sold. . . . . . . . . 304,450
Securities purchased under
agreements to resell. . . . . . . 0
Loans and lease financing receivables:
Loans and leases, net of unearned
income. . . . . . . . . . . . . . $7,653,290
LESS: Allowance for loan and lease
losses. . . . . . . . . . . . . . 97,833
----------
<PAGE>
Loans and leases, net of unearned
income, allowance, and reserve
(item 4.a minus 4.b). . . . . . . 7,555,457
Assets held in trading accounts . . . . 107,161
Premises and fixed assets (including
capitalized leases) . . . . . . . . . 139,122
Other real estate owned . . . . . . . . 203
Investments in unconsolidated
subsidiaries and associated
companies . . . . . . . . . . . . . . 200
Customer's liability to this bank on
acceptances outstanding . . . . . . . 71,355
Intangible assets . . . . . . . . . . . 18,251
Other assets. . . . . . . . . . . . . . 474,460
-----------
TOTAL ASSETS $13,075,748
===========
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices . . . . . . . . . 4,830,361
Non-interest bearing. . . . . . . 2,390,307
Interest bearing. . . . . . . . . 2,440,054
In foreign offices, Edge and
Agreement subsidiaries, and IBF's . 2,990,031
Non-interest bearing. . . . . . . 71,451
Interest bearing. . . . . . . . . 2,918,580
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds purchased . . . . . . . 882,146
Securities sold under agreements to
repurchase. . . . . . . . . . . . . 2,020,913
Trading Liabilities . . . . . . . . . . 66,711
Other borrowed money:
a. With remaining maturity of one
year or less. . . . . . . . . . . 897,852
b. With remaining maturity of more
than one year . . . . . . . . . . 11,520
Bank's liability on acceptances
executed and outstanding. . . . . . . 71,355
Subordinated notes and debentures . . . 295,000
Other liabilities . . . . . . . . . . . 186,774
-----------
TOTAL LIABILITIES $12,252,663
===========
<PAGE>
<CAPTION>
EQUITY CAPITAL
<S> <C>
Common stock. . . . . . . . . . . . . . 100,000
Surplus . . . . . . . . . . . . . . . . 275,000
a. Undivided profits and capital
reserves. . . . . . . . . . . . . 470,392
b. Net unrealized holding gains
(losses) on available-for-sale
securities. . . . . . . . . . . . (22,307)
-----------
TOTAL EQUITY CAPITAL $ 823,085
===========
Total liabilities, limited-life
preferred stock, and equity capital . $13,075,748
===========
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank,
do hereby declare that this Report of Condition has been prepared
in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best
of my knowledge and belief.
STEVE NEUDECKER
4/30/96
We, the undersigned directors, attest to the correctness of
this Report of Condition and declare that it has been examined by
us and, to the best of our knowledge and belief, has been
prepared in conformance with the instructions issued by the Board
of Governors of the Federal Reserve System and the Commissioner
of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
MARIBETH S. RAHE
Directors.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as
Trustee
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section
305(b)(2) _______________
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer
Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Daniel G. Donovan, Harris Trust and Savings Bank,
111 West Monroe Street, Chicago, Illinois, 60603
312-461-2908
(Name, address and telephone number for agent for service)
SOVEREIGN BANCORP, INC.
(Name of Obligor)
Pennsylvania 23-2453088
(State of Incorporation) (I.R.S. Employer
Identification No.)
1130 Berkshire Boulevard,
Wyomissing, Pennsylvania 19610
(Address of principal executive offices)
Senior Debt Securities
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as
to the Trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Commissioner of Banks and Trust Companies, State
of Illinois, Springfield, Illinois; Chicago
Clearing House Association, 164 West Jackson
Boulevard, Chicago, Illinois; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board
of Governors of the Federal Reserve
System,Washington, D.C.
(b) Whether it is authorized to exercise corporate
trust powers.
Harris Trust and Savings Bank is authorized to
exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate
of the Trustee, describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as
now in effect which includes the authority of the
trustee to commence business and to exercise corporate
trust powers.
A copy of the Certificate of Merger dated April 1, 1972
between Harris Trust and Savings Bank, HTS Bank and
Harris Bankcorp, Inc. which constitutes the articles of
association of the Trustee as now in effect and
includes the authority of the Trustee to commence
business and to exercise corporate trust powers was
filed in connection with the Registration Statement of
Louisville Gas and Electric Company, File No. 2-44295,
and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed
in connection with the Registration Statement of C-Cube
Microsystems, Inc., File No. 33-97166, and is
incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b)
of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
(included as Exhibit B on page 3 of this statement)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the Trustee, HARRIS TRUST AND SAVINGS BANK, a corporation
organized and existing under the laws of the State of Illinois,
has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the
City of Chicago, and State of Illinois, on the 10th day of July,
1996.
HARRIS TRUST AND SAVINGS BANK
By: /s/D.G. Donovan
-------------------------------
D. G. Donovan
Assistant Vice President
EXHIBIT A
The consents of the Trustee required by Section 321(b) of
the Act.
Harris Trust and Savings Bank, as the Trustee herein named,
hereby consents that reports of examinations of said trustee by
Federal and State authorities may be furnished by such
authorities to the Securities and Exchange Commission upon
request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/D.G. Donovan
-------------------------------
D.G. Donovan
Assistant Vice President
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of
condition of Harris Trust and Savings Bank as of March 31, 1996,
as published in accordance with a call made by the State Banking
Authority and by the Federal Reserve Bank of the Seventh Reserve
District.
HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at
the close of business on March 31, 1996, a state banking
institution organized and operating under the banking laws of
this State and a member of the Federal Reserve System. Published
in accordance with a call made by the Commissioner of Banks and
Trust Companies of the State of Illinois and by the Federal
Reserve Bank of this District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
OF DOLLARS
ASSETS
<S> <C> <C>
Cash and balances due from depository
institutions:
Non-interest bearing balances and
currency and coin . . . . . . . . $ 971,800
Interest bearing balances . . . . . 508,198
Securities:
a. Held-to-maturity securities . . . 0
b. Available-for-sale securities . . 2,925,091
Federal funds sold and securities
purchased under agreements to resell
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds sold. . . . . . . . . 304,450
Securities purchased under
agreements to resell. . . . . . . 0
Loans and lease financing receivables:
Loans and leases, net of unearned
income. . . . . . . . . . . . . . $7,653,290
LESS: Allowance for loan and lease
losses. . . . . . . . . . . . . . 97,833
----------
<PAGE>
Loans and leases, net of unearned
income, allowance, and reserve
(item 4.a minus 4.b). . . . . . . 7,555,457
Assets held in trading accounts . . . . 107,161
Premises and fixed assets (including
capitalized leases) . . . . . . . . . 139,122
Other real estate owned . . . . . . . . 203
Investments in unconsolidated
subsidiaries and associated
companies . . . . . . . . . . . . . . 200
Customer's liability to this bank on
acceptances outstanding . . . . . . . 71,355
Intangible assets . . . . . . . . . . . 18,251
Other assets. . . . . . . . . . . . . . 474,460
-----------
TOTAL ASSETS $13,075,748
===========
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . 4,830,361
Non-interest bearing. . . . . . . 2,390,307
Interest bearing. . . . . . . . . 2,440,054
In foreign offices, Edge and
Agreement subsidiaries, and IBF's . 2,990,031
Non-interest bearing. . . . . . . 71,451
Interest bearing. . . . . . . . . 2,918,580
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds purchased . . . . . . . 882,146
Securities sold under agreements to
repurchase. . . . . . . . . . . . . 2,020,913
Trading Liabilities . . . . . . . . . . 66,711
Other borrowed money:
a. With remaining maturity of one
year or less. . . . . . . . . . . 897,852
b. With remaining maturity of more
than one year . . . . . . . . . . 11,520
Bank's liability on acceptances
executed and outstanding. . . . . . . 71,355
Subordinated notes and debentures . . . 295,000
Other liabilities . . . . . . . . . . . 186,774
-----------
TOTAL LIABILITIES $12,252,663
===========
<PAGE>
<CAPTION>
EQUITY CAPITAL
<S> <C> <C>
Common stock. . . . . . . . . . . . . . 100,000
Surplus . . . . . . . . . . . . . . . . 275,000
a. Undivided profits and capital
reserves. . . . . . . . . . . . . 470,392
b. Net unrealized holding gains
(losses) on available-for-sale
securities. . . . . . . . . . . . (22,307)
-----------
TOTAL EQUITY CAPITAL $ 823,085
===========
Total liabilities, limited-life
preferred stock, and equity capital . $13,075,748
===========
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank,
do hereby declare that this Report of Condition has been prepared
in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best
of my knowledge and belief.
STEVE NEUDECKER
4/30/96
We, the undersigned directors, attest to the correctness of
this Report of Condition and declare that it has been examined by
us and, to the best of our knowledge and belief, has been
prepared in conformance with the instructions issued by the Board
of Governors of the Federal Reserve System and the Commissioner
of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
MARIBETH S. RAHE
Directors.
